UK lawmakers urge curbs on Russia sovereign debt

MOSCOWThe UK should seek European Union (EU) action to bar Russian sovereign debt from clearing houses and work with allies to stop companies whose owners have links to President Vladimir Putin from listing on global stock markets, according to a committee of lawmakers in London.

“The government should work with the EU, and with the US, to prohibit the purchase of bonds in which a sanctioned entity has acted as book runner,” the UK Foreign Affairs Select Committee concluded in a non-binding report published on Monday. “It should also seek EU agreement to bar the European clearing houses from making available Russian sovereign debt.”

The committee said the government should “investigate the gaps in the sanctions regime” that allowed billionaire Oleg Deripaska’s En+ Group plc to raise around US$1.5 billion (RM6 billion) in a London listing that involved VTB Capital and Gazprombank JSC, banks that have been under sectoral sanctions since 2014.

The UK should work with Group of Seven partners whose markets dominate the financial system and other international partners “to close those gaps as soon as possible”, according to the report.

Deripaska wasn’t under sanctions in November when his En+, the power and commodities company which owns 48% in United Co Rusal plc, carried out Russia’s biggest initial public offering in four years, selling shares in London and Moscow. The US sanctioned him as well as En+ and his other companies on April 6.

The report, “Moscow’s Gold: Russia Corruption in the UK”, was published as British ministers have threatened a crackdown on Russian interests in the country following the nerveagent poisoning of former spy Sergei Skripal and his daughter Yulia in March.

Despite the UK’s “strong rhetoric, Putin’s allies have been able to exploit gaps in the sanctions and anti-money laundering regimes that allow them to hide and launder assets in London,” the committee concluded.

Russia’s ability to issue new sovereign debt on global markets with help from sanctioned banks also “undermines the global sanctions regime and supports the aggressive behaviour of the Russian state”, it said. “Any action taken to limit or prohibit the issuance of Russian debt on global markets, however, must be taken jointly by the EU, US and other international partners in order for it to be effective,” the committee concluded. — Bloomberg