The recent headline, “MI6 raises concerns after energy oligarch linked to Vladimir Putin makes £1bn on London Stock Exchange”, proves that conducting business with Russian companies remains challenging and risky. This headline relates to the listing of EN +, the energy company controlled by Oleg Deripaska, on the London Stock Exchange in November 2017. However, these reports only appeared in February 2018. The key concern of the MI6 sources appears to be not only Oleg Deripaska’s links to Putin but also that company also owns half of Rusal, a giant Russian aluminium company which until recently said on its website that a fine metal powder it produced was used “in the production of military equipment”. The media reports state that the same type of powder was used in the production of a Russian-built Buk missile that Dutch investigators said downed Flight MH17 over Ukraine in 2014. However, the UK Listing Authority, which assesses the suitability of companies to float on the exchange, said that the decision to allow the flotation was approved by the Treasury. MI6 reportedly was not consulted. US officials are now reported to have expressed concern over the listing and whether it undermined the Sanctions against Russia.
A second recent headline to catch the eye is “Russian oligarchs living in UK ‘will be forced to account for their wealth,’ minister says”, again highlights the need to conduct sufficient due diligence before any business dealings. It is well known that Russians have invested heavily in the London property market as well as other businesses, reputedly a high proportion of the funds are acquired through criminal activity. The TV programme McMafia, based on a factual book, portrays Russian organised crime and oligarchs in London.
These headlines are obviously unwelcome for any current or potential investors or business partners. It is a timely reminder to conduct sufficient due diligence into any potential investment or business transaction with a Russian company/individual. This due diligence should be in addition to that conducted by lawyers and accountants. It should cover looking at the backgrounds and reputations of the principals behind the company. Furthermore, particularly relevant now, the current political stance of the USA to Russia and the current sanctions that are in place against them, will have an effect on the way US views any business deal. Falling foul of US authorities could have long term negative implications.
Page Group are experts in conducting background checks on companies and individuals in Russia and other Central and Eastern European jurisdictions and we are standing by willing to assist.