The exemptions, known as licenses, are an example of how the UK’s new financial sanctions system, put together after Brexit, has proved shaky. In some cases, oligarchs were allowed more than $1 million a year in living expenses. In others, officials had to abandon criminal investigations and remove sanctions after legal battles.
“We will keep increasing the pressure on Putin and cut off funding for the Russian war machine,” the British foreign secretary said last spring as she announced Russian sanctions in the first weeks of the war in Ukraine. In the months that followed, Britain was quietly more welcoming. It granted Russian banking tycoon Mikhail Fridman a license to pay for 19 members of staff, including drivers, private chefs, housekeepers and handymen, during the first year of the war, according to documents reviewed by NYT. The payment came to 300,000 over about 10 months. Fridman also received a roughly 7,000 monthly allowance to cover his family’s basic needs.
Officials permitted his former business partner, Petr Aven, a monthly allowance of 60,000. The majority went to a security firm owned by Aven’s financial manager, who has been under probe for potentially helping Aven evade sanctions, court records show. Fridman and Aven have been described as “pro-Kremlin oligarchs” who are closely associated with President Putin, a claim they deny and are challenging in court. “We are politically neutral businessman,” Aven has said.
The former business partners are among several Russians who have had sanctions imposed in public since the war, only to see those restrictions eased in secret. The British treasury granted at least 82 licenses last year and many more applications are pending, according to official figures seen by NYT. Law enforcement agents have at times been frustrated with those decisions and by a licensing system that they see as undermining the sanctions.
Licenses are part of sanctions systems across the world. But while the US typically grants licenses for humanitarian reasons or to cover basic living expenses and legal fees, Britain’s criteria are broader. Among the considerations, according to interviews with lawyers and ex-treasury officials, is whether a license will keep money flowing into the economy.
A spokesperson for the UK treasury declined to comment on specific cases but said licenses were granted to allow payments for “basic needs” and are “strictly monitored.”