Dozens of UK Companies Under Investigation for Avoiding Russian Sanctions

The UK is investigating several British companies under suspicion that they had been sidestepping sanctions applied against Russian oil – so far without penalty. 

The government is looking into at least 37 businesses. Details of the companies have not been released, but some are reportedly maritime insurance firms.

International sanctions were brought in against several sectors of the Russian economy after it launched its full-scale invasion of Ukraine in 2022. The restrictions against Russian oil companies are intended to strip the Kremlin of profits gleaned from high oil prices that became inflated due to the war. 

But several companies appear to have uncovered loopholes allowing them to avoid the sanctions, dodging the regulations by using third-party subsidiaries or lobbying European officials for exemptions for their industry. 

The British Treasury said it would act on the possible sanction-busters when and where appropriate, in a statement to BBC. They said such investigations are complex and take time.

Russian oil is capped at a price of $60 per barrel and UK companies are prohibited from facilitating the transposition of that oil at higher prices.

Sir William Browder, a longstanding critic of Russian President Vladimir Putin and head of the Global Magnitsky Justice Campaign, told BBC that such sanction-busting was typical of the UK and an “embarrassment” to the country.

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The UK is “one of the most lax enforcers of these types of laws,” he said. “The UK doesn’t do prosecutions well and I don’t know if that can be fixed overnight.”

Several European countries have come under fire in recent months for finding backdoors into the Russian economy despite sanctions meant to limit such trade having been in place for years.

“There seems to be both a resource problem and a culture problem when it comes to prosecuting people for economic crimes or sanctions evasion here,” Sir William said.

The British Treasury has opened 52 investigations into UK-based companies on suspicion of breaking sanctions since December 2022, according to data obtained by the BBC using Freedom of Information laws. Records indicated that 15 of those investigations have been closed while 37 are still live. 

The EU has issued 14 rounds of sanctions since Russia's February 2022 full-scale invasion began. The restrictions have grown increasingly stringent, but extensive loopholes persist. The next round of sanction proposals, which is set to be discussed later this month, will aim to close these gaps. Between the US and EU, over 20,000 sanctions have been leveled against Russia since it invaded Ukraine.

But Russia is still making billions of euros from exports of its raw materials to Europe, despite the majority of European countries being counted as Ukraine’s closest allies. In some instances sanctions intended to curb Russian aggression are even being loosened, like steel slabs.

Companies in other countries have also come under fire recently for sanction-busting. CBC News reported on Oct. 3 that numerous Canadian nationals and companies have been implicated in helping to export sanctioned electronics from the nation to Russia, some with charges pressed by the US, but Canada has yet to follow suit. Canada is reportedly aware of the illicit exports of microelectronics to Russia but has done nothing to curb them, reports said.

And a French avionics company reportedly opened its own investigation into its supply line after being accused of supplying parts to Russian end clients in violation of current sanction rules. The company denied using Kazakhstan as a third-party subsidiary to supply the Kremlin with aviation equipment.