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Oligarch Side-steps Sutton Place Sanction While SCC ‘Doing All It Can’ to Cut Russian Connections

Published on: 23 Mar, 2022
Updated on: 25 Mar, 2022

Sutton Place Image Wikimedia

By Emily Coady-Stemp local democracy reporter

and Martin Giles

As it emerges that Russian oligarch, Alisher Usmanov appears to have circumvented sanction restrictions by placing Sutton Place and other assets in trusts, Surrey County Council says it is “doing all it can” to relinquish all connections with Russian companies.

Following a BBC/Guardian investigation, the Russian billionaire says he no longer owns many former properties, potentially putting them beyond the reach of the law as Mr Usmanov’s spokesman says he is no longer the legal owner of many of those assets.

Alisher Usmanov

The BBC reports a spokesman for Mr Usmanov saying most of the billionaire’s UK property, as well as his yacht, had already been “transferred into irrevocable trusts” which cannot usually be amended, modified, or revoked after they’re created.

“Mr Usmanov withdrew from the beneficiaries of the trusts, donating his beneficial rights to his family,” the spokesperson said.

And Surrey County Council councillors yesterday (March 22) unanimously resolved to rid itself of any ties to companies that have Russian interests, following the country’s president’s unprovoked aggression and invasion of Ukraine.

The council leader said all Surrey County Council’s gas was supplied by TotalEnergies and its electricity by EDF, both French companies.

Their only exposure to Russia had been with Gazprom, which supplied its eight care homes earmarked for closure, and that ended in 2020.

Councils across the UK are talking about cutting ties with this Russian state-owned gas company, and McDonald’s, Siemens and Biffa are said to be among the businesses doing the same.

Cllr Tim Oliver

Surrey’s leader Tim Oliver said Surrey County Council has not used them since 2020.

“Since then there has been no contract or relationship with Gazprom,” he said.

Although many Surrey schools buy their utilities through the CCS framework used by the county council, they are not obliged to.

“So it is not impossible that either maintained schools or academies may still be buying gas from Gazprom,” said Cllr Oliver.

“I hope that isn’t the case but that is a decision for them. Any that want to get onto the CCS framework need to make contact with this council and we will help facilitate that.”

The Surrey Pension Fund has minor exposure – less than 0.25 per cent of the fund as of the end of February 2022 – to direct holdings in Russia, Belarus and Ukraine, through VEB, Gazprom and Lukoil sovereign bonds.

The £12 million investment, out of a fund value of £5 billion, has been valued down to zero but Surrey Pension Fund continues to hold the assets, with a zero value.

It is looking to exit these investments, now that the Russian stock exchange has partially reopened this week and trading of bonds can begin.

It was not able to sell them before due to the sanctions by the UK Government and reciprocal actions taken by the Russian Government.

Scores of schools and colleges and the borough and district councils participate in the Surrey Pension Fund administered by Surrey County Council.

The Surrey Pension Fund Committee’s vice-chair, Cllr Trefor Hogg, told the council at its meeting today: “Our responsible investment policy must consider the real financial risks from governments that do not believe in a peaceful, just society with effective, accountable and inclusive institutions.

“Our £6 million of Russian equity investments have already dropped out of the index funds they were held by, and effectively they have been exited.

“Our £6 million of bond assets are held by Border to Coast. The 11 county council pension funds which co-own and are customers of Border to Coast have agreed they will follow an approach to exiting in due course, as and when markets permit, so it’s good that the markets have opened. Simply abandoning ownership of these bonds will only benefit the Russian and Belarusian governments.”

He added: “We are also working to identify any indirect investment exposure to Russia and Belarus, such as through BP and Shell, both of which have already shown an intention to exit their Russian investments.”

A spokesperson for Surrey Pension Fund said last week: “The Surrey Pension Fund is saddened by and strongly condemns the invasion of Ukraine by Russia. Given the current circumstances we have immediately suspended making any further investments in Russia and Belarus and continue to review our existing investments with a view to exiting in due course as and when markets permit, as long as the current circumstances prevail. This is above and beyond the UK sanctions currently in place.”

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