It is no secret that Russian oligarchs have a great deal of wealth. They are often considered some of the richest people in the world. Many people have wondered how they became so wealthy, and whether or not Western firms have had anything to do with it.
In this blog post, we will take a closer look at Russian oligarchs and see if Western firms have enabled them to amass their fortunes.
Does Western Firms Enabled Russian Oligarchs?
A small team of professionals administers billions of dollars for a Russian tycoon behind a set of ominous metal doors in an unassuming office building in a New York City suburb.
According to persons familiar with the situation, a group of affluent Russians has been using Concord Management LLC, a financial advisory firm in Tarrytown, New York, for years to covertly invest in significant US hedge funds and private equity firms.
It is challenging to determine with certainty whose money Concord controls due to a web of offshore shell corporations. However, a number of the sources said Roman Abramovich, a close supporter of Russian President Vladimir Putin, is the rightful owner of the majority of the cash.
Concord is one of many American and European advisors, including some of the biggest law firms in the world, who have long assisted Russian oligarchs in navigating the financial, legal, political, and media landscapes of the West.
Companies are debating what to do with these lucrative but contentious clients now that US and European sanctions target those close to Putin.
Many people are dumping them. Some seem to be continuing to use them. Others are silent about their actions.
Financial advisers and Lawyers are currently under scrutiny for work that was almost exclusively being done behind the public’s back just a few weeks ago.
Congress’s investigators have focused on Concord, whose representatives have declined to comment. In a letter sent to the Biden administration on Wednesday, a congressman asked for the Concord money belonging to Abramovich to be frozen.
Lawmakers have spoken out on the floor of Parliament in Britain, where there is a robust market for lawyers who specialize in hiding assets, to condemn attorneys and legal companies that are still representing oligarchs.
Those acquainted with the market claim that due to bureaucratic hurdles and reputational risks, the typical rate for law and lobbying firms defending sanctioned oligarchs has risen to millions of dollars.
For many businesses, the payoffs fall short of compensating for the reputational risks associated with partnering with oligarchs with ties to the Kremlin. Recently, a flurry of Western law, lobbying, and PR firms discontinued their work with or operations in Russia.
A representative for the sanctioned, oligarch-controlled Alfa Bank announced the law firm Skadden Arps is “in the process of concluding our representations of Alfa Bank.”
Norton Rose Fulbright and Linklater, two international law firms, have announced their exit from Russia. A representative for Debevoise & Plimpton, a different sizable firm, announced that it is ending multiple client ties and would not be accepting any new customers in Moscow.
A significant law firm with a presence in London, Ashurst, declared that it will not “act for any new or existing Russian clients, whether or not they are subject to sanctions.”
Accounting behemoths PWC, KPMG, Deloitte, and EY — who have offered substantial services to oligarchs and their networks of offshore shell firms — also said they were leaving Russia or cutting connections with their regional affiliates.
Some companies cut ties with Russian clientele whose virtues they had been extolling in the days preceding the invasion.
In a letter to the White House last month, a former Treasury official who is now a lobbyist argued that Russia’s Sovcombank should not be subject to sanctions, citing the bank’s dedication to gender equity, environmental stewardship, and social responsibility.
Sovcombank had agreed to pay Mercury Public Affairs, the lobbyist’s company, $90,000 per month for its services.
The Sovcombank was recently penalized by the Biden administration. Mercury filed documents with the Justice Department a few hours after the announcement stating that it was ending its partnership with Sovcombank.
Russian businessman Alisher Usmanov, a longtime supporter of Putin, was represented by the British legal firm Schillings as recently as mid-February.
Usmanov received sanctions from the US Treasury and the European Union two weeks later. A Schillings representative, Nigel Higgins, stated that the company is “not acting for any sanctioned persons or entities.”
On behalf of clients like Russian oligarch Oleg Deripaska, another attorney, Thomas Clare, has sent threatening letters to press organizations. He forewarned, for instance, that he might attempt to hold The New York Times “liable for the catastrophic economic consequences” Deripaska, who was at the time facing sanctions, would face in 2019.
Since working for Deripaska stopped in September, according to Clare, his firm, Clare Locke LLP, “and we do not anticipate doing that again in the future.”
Leading US law firms like DLA Piper, White & Case, Latham & Watkins, Dechert, and Baker Botts have represented Russian businesses like VTB, Rosneft, Gazprom, Alfa Bank, and Sberbank that are currently subject to sanctions.
None of those corporations would confirm whether they are currently collaborating with Russian businesses.
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