European legal experts add to the growing debate on the legitimacy of the sanctions on Russia’s richest men

European legal experts add to the growing debate on the legitimacy of the sanctions on Russia’s richest men
European legal experts add to the debate questioning the legality of the sancitons regime on Russia's richest men. / bne IntelliNews
By Ben Aris in Berlin February 19, 2024

The EU General Court in Luxembourg recently dismissed the sanctions appeal of the Uzbek-born Russian billionaire Alisher Usmanov's appeal against sanctions imposed on him, but legal experts polled by European Interest have criticised the ruling for “lowering the bar to just “good enough”,” as the debate on how to treat Russia's sanctions businessmen grows in the European press.

Nearly two years after Russia's full-scale invasion of Ukraine, the EU continues to strengthen the sanctions regime on Russia and try to improve the enforcement of the previous twelve rounds, making Russia the most sanctioned nation globally.

With the anticipated roll-out of the thirteenth sanctions package, slated to appear on the second anniversary of the start of the war on February 24, the EU's list of targeted individuals and entities is expected to increase dramatically beyond the current 1,950 individuals currently on the lists. The new sanctions are expected to increasingly focus on business people and less on products.

But because of the slipshod nature of much of the “evidence” used to justify the sanctions and seizure of their property, dozens of oligarchs and Russian politicians are challenging the legality of the sanctions in European courts, and the German-speaking press in particular, has been questioning the legitimacy and legality of the sanctions policy against individuals.

It’s a battle between the EU powers to freeze assets of potential wrong-doers vs Europe’s strong property right laws, which technically offer rich Russians the same level of protection for their assets in Europe as they do for EU citizens.

The thorny legal question of how to ascribe guilt to successful Russian businessmen and their complicity in Russia’s war in Ukraine has recently surfaced again after Der Spiegel caused a media storm in Germany after it wrote about the case of Arkady Volozh, the founder and former CEO of Yandex, Russia’s leading search engine and the most valuable tech company in Europe.

Volozh has just sold Yandex on February 5 and left Russia before the war started. He is also one of only two senior Russian businessmen to openly and unreservedly criticise what he called Russian President Vladimir Putin’s barbaric war in Ukraine. As a result he has been pilloried by the Kremlin as a “traitor” but at the same time remains on the EU’s sanction list for supporting the Kremlin by dint of his ownership in Yandex and its payment of taxes that go into the war budget.

The authorities have wide ranging powers to freeze assets during an investigation into wrongdoing, but those assets remain the property of their owner and can only be seized (ownership transferred away) if there is a criminal conviction in a court of law. And that is one of the problems as none of Russia’s oligarchs are facing criminal charges in a European court, nor are there any plans to bring charges, which they would welcome. They argue as a result, their assets are frozen indefinitely without legal cause or a mechanism to defend themselves, and that is a de facto appropriation of their property.

Following the Usmanov ruling, who denies he is “close to Putin” and says that he has never been an oligarch, European Interest polled independent legal experts and scrutinised the court's decision, who criticised the court’s ruling for seemingly endorsing the EU Council's stance “without thoroughly examining the allegations against Usmanov.”

According to the experts, the court’s judgement suggests that it is focused “on vindicating the position of the Council at any cost, no matter how far-fetched and speculative its allegations are,” European Interest reported.

Usmanov has been accused of being "Putin’s favourite oligarch”, an accusation that appears to have originated as an unsubstantiated accusation made by Swedish economist and high-profile Kremlin critic Anders Aslund, according to bne IntelliNews research. He has also been accused of influencing media narratives through his ownership of Kommersant, a leading business daily, a claim that bne IntelliNews debunked in a deep dive into how Russian journalists can work during the war. The EU's sanctions cited Usmanov's alleged role in curbing the newspaper's editorial freedoms and promoting pro-Kremlin views.

In addition, the EU clashed with comments from one U.S. Treasury official who called Kommersant “one of Russia’s most independent remaining publishing companies” in March 2022. The Economist also described Kommersant as one of the remaining outlets in Russia that are “not propaganda organs.” These claims suggest that the EU selectively used press reports to justify its sanctions and little actual research went into the decision.

The EU court cited several negative articles in the media while striking down testimonies by current and former newspaper employees, who know its editorial policy first hand, as “irrelevant or insufficiently credible.”

“To put it simply,” the expert said, “the court is saying that the evidence of [Usmanov’s] alleged actions and Kommersant’s pro-government editorial policy is relevant, whereas the evidence to the contrary is irrelevant. Such an obvious logical fallacy can only be explained by a lack of impartiality,” one of the legal experts, who were granted anonymity due to the politically charged nature of the topic, told European Interest.

One of the most damning pieces of evidence held against Usmanov was Kommersant ’s decision to publish a pre-war op-ed by Deputy Chairman of Russia’s Security Council Dmitry Medvedev that appeared to justify the invasion. Kommersant’s editor-in-chief Vladimir Zhelonkin justified to bne IntelliNews in an exclusive interview, saying, “He is a former president and so that makes his opinion newsworthy, even if you disagree with it. Every Western publication would have published it if it was their ex-president speaking on such a serious topic.”

When Usmanov took control of the business daily Kommersant , the newspaper’s editorial freedoms were curtailed and it “took a manifestly pro-Kremlin stance,” something that Zhelonkin denied to bne IntelliNews in an exclusive interview, adding that the paper’s editorial policy is constricted by repressive media laws on reporting on the war that the Kremlin introduced after the start of hostilities.

European Interest’s legal experts opined that, “First, it suggests that the owner of a media outlet should be personally responsible for, and/or personally agrees with, every piece of content published by that outlet. This contradicts the generally established view that the owner of a news outlet should be impartial and avoid mixing personal views with editorial policy,” the experts said. “Second, the court appeared to disregard Kommersant’s long track record of publishing a variety of opinions from across the political spectrum,” that include the only wartime interview with Ukrainian President Volodymyr Zelenskiy by a Russian newspaper and an April 2023 interview with U.S. Ambassador Lynne Tracy that criticised the state of bilateral relations with Russia and drew the ire of the Russian Foreign Ministry.

The experts noted the court's narrow focus on Usmanov's alleged destabilisation efforts through Kommersant, disregarding other accusations, making it impossible for the sanctioned individuals to defend themselves.

“It is typical for the EU General Court to review only one accusation, leaving the rest unchecked,” one of the legal experts said. “In so doing, it avoids having to address the remaining allegations on their merit. While convenient for the EU General Court, this approach leaves sanctioned individuals without any means of defending themselves against defamatory statements made by the Council, even though these statements have major negative effects on their lives and reputations.”

Reviewing the case -- court’s detailed judgement was published online – the experts complained that the “evidence” presented as grounds for imposing sanctions was almost exclusively based on press reports that were taken at face value. The use of unsubstantiated press reports has become increasingly in focus. Usmanov and fellow tycoon Roman Abramovich have won multiple defamation cases in European courts, forcing papers to retract claims they were “close to Putin” among other accusations. In one of the most recent, this January a German court issued a ruling against Forbes magazine, which had published an article claiming that Usmanov had, “repeatedly fronted for Putin and solved his business problems” as unsubstantiated.

The EU court likewise ignored an earlier ruling against the Austrian newspaper Kurier, which was banned from calling Usmanov “one of Putin’s favourite oligarchs, as Putin himself called him” after failing to provide any evidence of this claim. Until that ban, the “favourite oligarch” claim also featured prominently in Usmanov’s sanctions reasoning and has become a widely repeated meme, obscuring the claim’s origin.

According to the legal experts consulted for this analysis, the court’s decision against Usmanov’s sanctions appeal suggests that the European legal system has lowered the bar, moving away from concrete evidence and logical reasoning towards a “good enough” approach.

“The court’s approach undermines the reputation of the EU’s judicial system and shows that the court has decided to act as an instrument to safeguard political decisions, and not as an institution responsible for restoring justice,” one of the legal experts, based in Brussels, concluded.