Court lifts EU sanctions on Russian billionaires Fridman and Aven

Court lifts EU sanctions on Russian billionaires Fridman and Aven
The European court in Luxembourg has lifted EU sanctions from Russian billionaires Mikhail Fridman and Petr Aven. / bne IntelliNews
By bne IntelliNews April 10, 2024

The European Court of Justice in Luxembourg has lifted sanctions on two of Russia’s richest men, Petr Aven and Mikhail Fridman of Alfa Group, RBC business portal reports citing the documents published on the court's website on April 10.

Forbes estimates Aven and Fridman's fortunes at $4.3bn and $13.1bn respectively. They are two of Russia’s best known oligarchs that rose to prominence in the 1990s during the chaotic Yeltsin-era when the first generations of super-rich emerged.

“The General Court upholds the requests of Petr Aven and Mikhail Fridman and annuls both the initial acts and the acts maintaining the lists of [EU] restrictive measures for the period from 28 February 2022 to 15 March 2023,” the document reads.

The court believes that “although the grounds put forward by the [European] Council may be such as to establish, as the case may be, a degree of proximity between Petr Aven and Mikhail Fridman and Vladimir Putin or his entourage, they do not demonstrate that they have supported actions or policies that undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, or that they have provided material or financial support to the Russian decision-makers responsible for the annexation of Crimea or the destabilisation of Ukraine, or that they have benefited from those decision-makers.”

To remind, in March 2023, the EU Council has redacted the grounds for sanctioning Aven and Fridman, labelling them as "leading entrepreneurs involved in sectors of the economy providing a substantial source of income to the government of the Russian Federation".

The sanctions under this criterion continue to be challenged by Aven and Fridman in separate lawsuit proceedings, with no judgement on these complaints yet. The two businessmen still formally remain on the EU sanctions list.

Fridman commented to RBC that he was satisfied with the EU court's decision to lift sanctions against him. "We are satisfied with this decision," he said.

As followed by bne IntelliNews, in 2022 some 20 Russian billionaires threatened to contest sanctions imposed on them by the EU following Russia’s invasion of Ukraine.

This includes the family members of metals and tech tycoon Alisher Usmanov, Dmitry Konov, the former CEO of petrochemicals manufacturer Sibur, who is also appealing against the sanctions against him, industrialist and former EuroChem director Andrey Melnichenko and others.

Fridman and Aven join a slowly growing list of oligarchs that have been removed from the sanctions list. In July the UK government lifted its sanctions on exiled Russian banker Oleg Tinkov, who published a sharp foul-mouthed critique of the "insane war" in Ukraine on his social media, but then was forced to sell his TCS banking group to Russian oligarch Vladimir Potanin.

bne IntelliNews already suggested that Tinkov being cleared of sanctions could pave the way for separating Russia’s richest into “good” and “bad” oligarchs by the West.

In March 2024, the EU has lifted sanctions on Arkady Volozh, the founder of Russian internet giant Yandex. The lawyers of Volozh had reportedly formally requested for the EU sanctions on him to be lifted back in August 2023.

Their arguments are understood to have gained more traction after Volozh publicly condemned Russia’s “barbaric war” full-scale military invasion of Ukraine. However, the sanctions were not lifted until the completion of Volozh's exit from Yandex in the largest corporate exit from the country since Russia invaded Ukraine in February 2022.

As closely followed by bne IntelliNews, Fridman and Aven's Alfa Group has also exited most of its Russian assets. Although neither have explicitly condemned the war in Ukraine, they have offered mild criticism calling for an end to the hostilities.

Veon (47.9% owned by LetterOne, an investment vehicle of Alfa Group’s main shareholders Fridman, German Khan and Alexei Kuzmichev) in the end of 2023 completed the exit from its anchor asset Russian mobile major VimpelCom through a management buyout (MBO) in a cashless deal.

Alfa Group also sold another major asset in Russia – one of the largest private banks Alfa Bank – for RUB178bn ($2.3bn) to long-time partner Andrei Kosogov. Apart from Alfa Bank and VimpelCom, another Alfa’s major asset in Russia is the country’s largest offline food retailer X5 Group, owned by Luxembourg-based CTF Holdings.

So far, no reports suggested that X5 could be up for sale, but the company redomiciled to Russia and was included in the state list of economically important organisations (EEO).

Alfa Group was part of a consortium of Russian oligarchs AAR (Alfa Access Renova) that held a major share in the Russo-British oil joint venture TNK-BP that they sold to state-owned oil major Rosneft in March 2013 in a $55bn deal. Fridman took his share of the proceeds and set up LetterOne (aka L1) in London. Prior to Russia's invasion of Ukraine this investment vehicle had been trying to get back into the oil business internationally, as well as making other profitable investments.

Fridman grew to prominence in the 1990s after his Alfa Group made him a billionaire. After getting his start as a window cleaner in the aftermath of the collapse of the Soviet Union he went on to found a business empire that includes Alfa Bank, the highly successful X5 retail and supermarket group and numerous other businesses.

Volkov criticises the decision 

The decision to lift sanctions on the two tycoons was not welcomed by Leonid Volkov, the former head of the late opposition activist Alexei Navalny who died in prison on February 16.

Volkov was ensnared in a scandal when it emerged that he had written to the EU supporting Fridman’s application to have sanctions lifted. As an active member of the anti-Putin movement, critics said it was inappropriate for such a high-profile opposition leader to be lobbying on behalf of an oligarch that was seen to be supporting the Russian regime by maintaining profitable businesses in Russia. Volkov was forced to resign.

However, reversing his former support for Fridman, Volkov condemned the decision in a post on X, saying there were no grounds for the EU’s change of heart.

“When a year and a half ago I (extremely unsuccessfully) tried to act as a mediator between the owners of Alpha and European officials, the point of the story was to

a) create a precedent, open the way for the escape of the pro-Putin elites,

b) condition the lifting of sanctions on a public break with Putin and active repentance,

c) create a transparent, reproducible mechanism for getting out of sanctions.

“It didn't work out – but I still think there was a point in trying. But what the Europeans have done now makes no sense.

“Fridman and Aven never said a word publicly against the war and did not come into conflict with Putin. The EU Court simply gave them what they wanted on a silver platter. For what? What signal does the court send to Putin, his friends, and Russian oligarchs? A transparent mechanism for exiting sanctions through a public break with Putin and active repentance has not been created. ‘Better hire more European lawyers and lobbyists,’ says the court. This is all very, very bad,” Volkov wrote.

Setting a precedent

But the two Alfa Group tycoons are not out of the woods yet. The ruling by the European court in Luxembourg was clear that one set of sanctions will be lifted, but the second set will remain in place – a partial victory.

Influential Russian academic Vladislav Inozemtsev, the former director of the Moscow-based non-profit think tank Centre for Research on Post-Industrial Societies and now classed as a “foreign agent” by the government after he fled into exile, said in a post on Telegram that he was sure the Council of Europe lift the sanctions on Fridman and Aven and set an important precedent by doing so.

“It is unlikely that the Council of the EU will not implement the decision of the Court - and if it does, it will create an important precedent for challenging sanctions decisions made without proper legal grounds,” Inozemtsev wrote. “I am not saying that all sanctions are wrong, but I am pointing out that politicians are not too "bothered” when they were introduced,” Inozemtsev added.

Inozemtsev points out that fellow tycoon Alisher Usmanov was placed on the same sanctions list as Aven and Fridman on the same day at the start of the war in Ukraine, accused of acting as a front for Russian President Vladimir Putin’s financial affairs, as reported by Forbes.

Part of the text of that article, “migrated to the decision of the EU Council in the best Russian traditions - simple copy-paste,” says Inozemtsev.

However, that article is no longer available as Forbes was forced to remove it after a court in Hamburg three months ago ruled the claims were baseless, Inozemtsev points out, citing a bne IntelliNews report on the case.

Inozemtsev speculates that given the precedent set in the Fridman-Aven case will have a knock on for other cases such as Usmanov’s battle to have his name cleared. Usmanov appealed against his inclusion in the sanctions list, but in February his plea to have his name removed was rejected.

I think that now the decision on A. Usmanov will not stand up in the EU Court either. In general, the precedent of M. Fridman and P. Aven shows that in the West the judiciary is still able to correct the mistakes of the executive branch. This is certainly good news for the West itself: with the likely increase of populism in developed countries, the courts will have more work to do in the coming years....” says Inozemtsev.


This story has been updated with comments from Volkov and Inozemtsev