UK-linked firms suspected of busting Russia sanctions

The UK government is currently conducting investigations into 37 businesses that are suspected of violating sanctions related to Russian oil. These investigations have come to light following the invasion of Ukraine by Russia in 2022, which prompted the UK and other Western nations to impose financial sanctions on Russia. While the identities of the businesses under investigation remain undisclosed, it is believed that some of them may be maritime insurance companies. The UK Treasury has stated that it will take appropriate action, but the complexity of these cases has resulted in a lengthy process, and as of now, no fines have been imposed on any of the companies involved. Sir William Browder, a prominent critic of Russian President Vladimir Putin, has expressed his disappointment over the lack of prosecutions or penalties for the companies being investigated. He described the situation as an embarrassment and pointed out that the UK is one of the least effective enforcers of such laws. The sanctions against Russia include a price cap on Russian oil, which was implemented to prevent Russia from profiting excessively from its oil sales. The cap prohibits British businesses from facilitating the transportation of Russian oil sold for more than $60 per barrel. Sir William Browder, who leads the Global Magnitsky Justice Campaign, emphasized that the UK has a significant issue with enforcing these laws. He noted that there seems to be both a lack of resources and a cultural problem when it comes to prosecuting economic crimes or violations of sanctions. Critics of the sanctions have argued that they are not achieving their intended goals. Data obtained by the BBC through Freedom of Information requests reveals that the Treasury has opened investigations into 52 UK-connected companies suspected of breaching the price cap since December 2022. As of August, 37 of these investigations are still active, while 15 have been concluded, yet no fines have been issued. Louis Wilson, who leads fossil fuel investigations at the anti-corruption organization Global Witness, expressed astonishment at the absence of penalties. He described the oil price cap as a 'paper tiger' that fails to effectively address rule-breaking behavior. Wilson believes that if the UK government takes stronger action to prevent British businesses from enabling Putin's profits, it could encourage other countries to follow suit. The investigations into potential violations of the oil price cap and other financial sanctions are conducted by a specialized unit within the Treasury known as the Office of Financial Sanctions Implementation (OFSI). In March, OFSI received an additional £50 million in funding to enhance the enforcement of the UK's sanctions regime. However, Wilson pointed out that companies under investigation often find it relatively easy to obtain documents that allow them to evade penalties. He described these documents as 'basically promises' that can be easily acquired, even if the company was involved in transporting oil sold above the price cap. He suggested that either these businesses will find the necessary paperwork to navigate the process, or the UK government may quietly drop the cases. Wilson also noted that the US is hesitant to tighten Western sanctions because they fear that stricter enforcement could disrupt the Russian oil trade and lead to higher oil prices. Dame Harriett Baldwin, a Conservative shadow foreign office minister, stated that sanctions are intended to cut off funding for Russia's military operations and to bring an end to the illegal invasion. She acknowledged that there is likely more that could be done by both the government and the oil sector, as it appears that UK importers are still bringing in oil that originated in Russia. Baldwin emphasized the importance of OFSI imposing financial penalties when deliberate wrongdoing is identified. A Treasury spokesperson stated that enforcement action will be taken where appropriate and that they are putting sanction violators on notice. They also highlighted that the price cap is reducing Russia's tax revenues from oil, with data from Russia's own finance ministry indicating a 30% drop in revenue last year compared to 2022. Earlier this year, the former chair of Parliament’s Treasury Select Committee initiated an inquiry into the effectiveness of sanctions on Russia. Baldwin mentioned that she received evidence suggesting that the oil price cap is being circumvented by refining Russian oil in third countries before exporting it to the UK. The BBC has been investigating this issue, but parliamentary committees are disbanded when an election is called, and the findings of the Treasury committee inquiry were never published. It remains unclear whether the new Treasury Select Committee will resume this work. Recently, OFSI issued its first penalty related to Russia, fining a concierge company £15,000 for having a sanctioned individual on its client list. Integral Concierge Services, based in London, was found to have made or received 26 payments involving a person whose assets were frozen due to the sanctions.