Hundreds of companies from the USA and Europe violate sanctions while working in annexed Crimea

5 years of annexation of Crimea and 5 years of sanctions. During this time, dozens of owners of companies operating on the peninsula had to either sell the business or come up with ways to circumvent restrictions. Not everyone agreed to part with their assets. For a year and a half, journalists Present Time and Municipal Scanner investigated a business in Crimea and found evidence that over a hundred companies violate international sanctions.

Фото: Depositphotos

Documents obtained by journalists indicate that the economic restrictions of the EU, the USA and Ukraine are violated by billionaires Rinat Akhmetov and Dmitry Firtash, companies that transported the “green men”, Russian businessman and shareholder of Novaya Gazeta Alexander Lebedev, former Minister of Defense of Ukraine Pavel Lebedev and many other businessmen. Also on the peninsula are companies associated with the German air carrier Lufthansa, the producer of the famous Medoff vodka, the world's largest depositary bank, Bank of New York Mellon.

Back at the end of 2018, Deputy Minister of Economic Development of annexed Crimea Andrei Kulik said that companies from the EU and the USA continue to operate on the peninsula, but due to sanctions, “not all of them would like their names to be advertised.” Already in the summer of 2019, the Russian government allowed to hide information about Crimean companies from the state register. Data will be classified if the company is under foreign sanctions, works with state defense orders or has its branches there. Also, since the summer of 2019, a bill has been under consideration in the State Duma that could introduce criminal liability for “promoting anti-Russian sanctions.”

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Sanctions of the EU, USA and Ukraine

The United States was the first to introduce economic restrictions in March 2014. They forbade their citizens and companies to conduct any business on the peninsula and import Crimean goods to America - even indirectly.

Following the sanctions, the European Union introduced it, banning its companies from opening a new business on the annexed peninsula and investing in several industries: tourism, transport, telecommunications, real estate and energy. In Brussels, they said that assistance and consultation in these sectors are considered violations. Indirect business ownership is also considered a violation - that is, through a chain of companies, regardless of where they are registered.

EU sanctions and offshore violations that were created in Cyprus or the British Virgin Islands violate and are still used to save on taxes.

The USA, EU, Ukraine and several other Western countries have personal sanctions - cooperation with companies or people from these lists is also considered a violation. But in practice, everything is much more complicated.

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Why is it difficult to investigate?

In the EU, member states must be responsible for complying with and sanctioning sanctions. But it was not possible to obtain clarification on specific cases from any responsible agency in any of the EU countries involved in the investigation. Only the governments of Lithuania and Sweden made contact. But even in Sweden they couldn’t decide which body was responsible for enforcing the sanctions and sent the journalists to the Foreign Ministry, to the prosecutor’s office, to the Ministry of Finance, or to the police station. In Lithuania, investigations have been ongoing for the second year, but not a single sentence has yet been passed.

Brussels does not interfere in the internal affairs of member countries, said Adam Kaznowski, spokesman for the European External Relations Service, to HB. In 2018, MEP Petras Austriavičius talked about the fact that the current EU policy on compliance with sanctions is ineffective in practice.

In Ukraine, the SBU and the National Security and Defense Council are responsible for the sanctions, but they refuse to comment on specific cases: the information relates to national security and is therefore secret. And in the USA, consideration of questions about possible violations takes from several weeks to several years.

U.S. and EU sanctions experts who have spoken to Current Times have said that it is often difficult to determine what constitutes a violation — laws are worded in an abstract.

“The sanctions law is very difficult to understand. It seems to me that sometimes wording is made ambiguous on purpose. One of my favorite phrases: “Sanctions laws are not written to address every possible business scenario, but to achieve a specific political goal,” says Eric Ferrari, a US lawyer with Ferrari & Associates, PC.

“There is very little explanation there. Lawyers can give their legal assessment of what these documents mean - this is largely my job. But the European Court is the court that will determine the [precise] interpretations. Otherwise, people have to figure out for themselves what these laws mean,” said Maya Lester, QC of the Brick Court Chambers Association from the UK.

During the time of the investigation, a small part of European and American companies left the peninsula and actually stopped violating the sanctions. But, as experts in sanctions law say, this does not relieve them of responsibility, even if the economic restrictions are completely lifted.

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