Twelve hours after the first Russian missiles exploded in Ukraine, Vladimir Putin summons 37 oligarchs to the Kremlin to warn them for the painful sanctions from the West that will come.

Twelve hours after the first Russian missiles exploded in Ukraine, Vladimir Putin summons 37 oligarchs to the Kremlin to warn them for the painful sanctions from the West that will come. © Aleksey Nikolskyi, EPA

Putin’s oligarchs the EU prefers not to punish

Ten months after Russia invaded Ukraine, eleven oligarchs who belong to president Putin's inner circle have still not been sanctioned by the European Union. ‘Brussels’ does not want to explain why, but Europe’s dependency on Russian energy and raw materials seems to be a key factor. Remarkably, the Russian company that produces the chassis for the BUK missile system is also amongst the companies that are off the hook. ‘These businessmen are "too big to sanction",’ says sanctions expert Maria Shagina.

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  • On the day of the Russian invasion, Putin summoned 37 oligarchs to the Kremlin. The European Union would use attending this meeting as a reason for imposing sanctions on several of these businessmen, but eleven oligarchs - including the two richest people in Russia - escaped EU sanctions.  
  • The procedure that leads to sanctions is highly secretive, but there is clear evidence that those oligarchs with interests in the energy sector are kept off the hook.  
  • Since the start of the war, European imports of liquified gas (LNG) and nickel from Russia have increased significantly.
  • Several European companies either own shares in or have long-term contracts with some of the companies owned by the elusive oligarchs. These include the French rolling stock company Alstrom, energy giant TotalEnergies and the world's leading chemical company BASF from Germany.  
  • The Hungarian government of Viktor Orbán is opposed to heavy sanctions. An important reason for this is that Rosatom, Russia’s state owned nuclear energy corporation, is building a new nuclear plant in Hungary.
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The snow-white columns of the Kremlin Palace’s Saint Catherine Hall tower over thirty-seven men wearing suits and facemasks. These are Russia’s most powerful oligarchs and they have been summoned here on this afternoon of February 24. They sit in a semicircle made up of three rows of classic chairs and in front of them, about ten metres away, sits Vladimir Putin behind a large white desk with golden edges. 

Twelve hours earlier, the first Russian missiles exploded in Ukraine and ground forces entered the country. 

This war was unavoidable, Putin tells the gathering of oligarchs. ‘There was a great risk that endangered the survival of our country.’ The Russian president asks them to support the government and for their understanding for the prospect of the painful sanctions that would surely follow. 

It takes the European Union only two weeks to decide that eight of the oligarchs who were present will be sanctioned. They will not be able to travel to the EU and their European assets are frozen. By six months, twenty-six of them have been hit by sanctions from Brussels. 

But eleven of the oligarchs who listened in silence to Putin that afternoon have not been blacklisted by the EU to this day, including the two richest people in Russia. 

This is remarkable because the EU explicitly states that attending this specific meeting is a reason for sanctioning Tigran Khudaverdyan, the CEO of internet company Yandex, and Mikhail Poluboyarinov, the boss of the airline Aeroflot, among others.

‘The fact that he was invited to attend this meeting shows that he is a member of the inner circle of oligarchs close to Vladimir Putin and that he is supporting or implementing actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, as well as stability and security in Ukraine,’ states the official announcement of the sanctions against twelve individuals. 

But who are these eleven men for whom this reasoning apparently does not apply? Are they untouchable? Why does the EU refuse to take away the property and freedom of movement  of these Kremlin henchmen?

Sanctions expert Roland Papp of the NGO Transparency International has his suspicions. ‘There is clear evidence to sanction these eleven individuals because they were present at the meeting in the Kremlin. That they have not been is most likely because of political reasons.’

The eleven 'Kremlin oligarchs' who so far escaped EU sanctions


How the EU determines who is and who is not punished for their close ties to the Russian regime is shrouded in secrecy. EU diplomats and the European Commission refuse to provide any insight into this process. ‘We do not comment on which persons or entities have been or will be proposed, but nothing is off the table,’ said a Commission spokesperson in response to questions from Follow the Money. She does emphasise, however, that an oligarch will not be placed on the sanctions list until all 27 EU Member States reach a unanimous decision.

‘Hungary has been blackmailing other Member States and blocked important decisions’

The diplomatic dance that must be done to lead to consensus is meticulously orchestrated. It starts with what in the corridors of Brussels came to be known as ‘confessionals’: diplomats from each EU Member State must 'confess' as to which individuals and entities it is willing to sanction. Only when the European Commission is fairly certain that no country will object is a list of names drawn up. 

Next, couriers take copies of the lists drawn up in Brussels to all the European capitals. Nothing is sent digitally to prevent the names from leaking out. An ineffective measure, according to the Hungarian-born sanctions expert Papp. ‘Hungary has been blackmailing the other Member States during the sanctions negotiations. Unfortunately, decisions on sanctions have to be unanimous, so leaving Hungary or other countries out is not an option, even though they have been blocking important decisions.’

At the end of the diplomatic dance, foreign ministers have to give their final approval before the final list can be published in the Official Journal of the European Union. If all goes according to plan, which almost never happens, it is only at that stage that a Russian oligarch will know that his European assets are being frozen and that he is no longer welcome in the EU. 

The most recent session of confessionals ended on December 7. This should lead to the adoption later this week of the ninth European sanctions package since the start of the war.

It will hurt

The sanctions against individuals go well beyond confiscating superyachts and penthouses in Amsterdam or Paris. The companies that oligarchs own or control are also affected. ‘The word “control” is a kind of catch-all term the European Union uses for when someone is not the owner, but does have influence on the business,’ says lawyer Sebastiaan Bennink, who specialises in sanctions. ‘All the Russian oligarchs have now reduced their share of ownership. But these individuals are so powerful that they still have control over the companies they founded or used to own.’

‘This aim of pleasing everyone leads to weak outcomes’

Sanctions create a dilemma because they not only hurt the Russians but also Europeans. This is especially evident in the case of natural gas and several raw materials for which Europe is highly dependent on Russian imports. ‘Each subsequent sanctions package hurts a little bit more. It hurts the other side, of course, but it also hurts us. That is the inherent nature of sanctions,' said Frans Timmermans, Executive Vice-President of the European Commission, on June 2 when giving a lecture in the Dutch city of The Hague. 'Each time a sanctions package is discussed, countries have to consider whether that pain is justified because if not, it can lead to deep social unrest. When that happens, we are still helping Putin who aims to fuel division in Europe.’

Roland Papp of Transparency International does not agree with Timmermans’ assessment. ‘At the end of the day, this aim of pleasing everyone leads to giving up too much. It makes European decision-making slow and less effective. I know this is how decisions are made in Brussels, but in the case of sanctions, it is problematic. It leads to weak outcomes.’

The King of Nickel

Weak sanctions are exactly what benefits men like Vladimir Potanin (net worth $31.4 billion) and Leonid Mikhelson (net worth $28.2 billion). According to the Bloomberg Billionaires Index, these two oligarchs are the two richest people in Russia, and both were present in the Kremlin on February 24.

Potanin's career is intimately intertwined with the cowboy capitalism and nepotism that has dominated Russia since the fall of the Communist regime in 1991. The firesale of state property in the 1990s was devised by Potanin and gave him a monopoly in the Russian mining and metal industries. He later financed the 2014 Winter Olympics in Sochi and became President Putin's ice hockey buddy.

‘Potanin is a major shareholder in investment company Interros and therefore also in Nornickel, one of the largest mining companies in the world. Nornickel plays an essential role in the mining of metals such as nickel and palladium,’ says sanctions lawyer Bennink. ‘This company is responsible for 20 percent of all nickel and 40 percent of the global palladium production. This makes Nornickel extremely important for our Teslas and the production of rechargeable batteries.’

Since the start of the war, nickel importing from Russia to the European Union has increased by 22 percent, according to the news agency Reuters. The value of Dutch imports of Russian nickel even doubled over the first eight months of the year. 

The Finnish village of Harjavalta illustrates more than any other place the close relationship that exists between Nornickel and the EU. It is where the German multinational chemical company BASF is building a factory for the processing of nickel and cobalt to be used in batteries for electric cars. This location was selected because of its neighbour, a Nornickel refinery. In 2018, the two companies signed a long-term contract which ‘ensures Europe's local supply of raw materials for battery production,’ according to BASF’s annual financial report

In response to questions from Follow the Money, BASF claims that because of the war, it has phased out ‘almost all’ activities in Russia. However, this does not apply to the existing contracts with Nornickel. ‘If BASF were to stop cooperating with Nornickel Harjavalta on the supply of nickel and cobalt, an important value chain would be disrupted from the European production of batteries for electric cars,’ says the email. BASF also points out that these specific metals are not part of the EU sanctions.

Potatin's growing empire

Meanwhile, the richest man in Russia did not just sit still; he seized every opportunity the war offered. In April, Vladimir Potanin added the bank of Kremlin-critic Oleg Tinkov to his business empire. According to the former owner, Potanin only paid a fraction of what it was really worth. ‘I couldn’t discuss the price. It was like being a hostage — you just took what you were offered. I couldn’t negotiate,’ Tinkov told the New York Times.

The Russian activities of the French bank Société Générale and United Card Services, a subsidiary of the American company Global Payments, also ended up in the hands of Russians richest oligarch.

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Benjamin Sprecher, who works at the Delft University of Technology and is an expert on the scarcity of critical raw materials, understands that the EU does not want to jeopardise the supplies of nickel, copper and palladium from Russia. ‘A company cannot simply switch suppliers, because the entire process is geared to the specific quality and shape of a metal. It even matters whether it is delivered in blocks or rolls.’

According to Sprecher, even if Potanin or his company Nornickel were to end up on the sanctions list, it would not hurt the oligarch. ‘It wouldn’t do much because metals are super easy to transport. Certainly the metals that are traded in small volumes, such as palladium. You load it onto a truck, drive it to China and us Europeans buy it there. It would only lead to Chinese middlemen making a lot of money and higher prices for us Europeans. It’s a game of whack-a-mole.’

The EU spent 12.5 billion euros on Russian LNG this year, five times as much as in the same period last year

‘This war has shown how intertwined our economy is with Russian companies,’ observes sanctions lawyer Bennink. ‘All those connections and interdependencies play a part when considering whether or not to sanction someone.’

Energy as insurance 

Like Potanin, the second richest Russian also trades in a product that Europe needs. Leonid Mikhelson sells liquefied natural gas (LNG), imports of which have increased by 40 percent since the invasion of Ukraine. The vast majority of this comes from Mikhelson's company Novatek.

The EU spent 12.5 billion euros on LNG from Russia between January and September of this year, five times as much as in the same period last year. France in particular is a keen buyer: in February and March, no country in the world bought more liquefied gas from Russia, according to a study by Columbia University.

The French connection with Mikhelson and his gas company Novatek goes far beyond just buying LNG. The energy company TotalEnergies owns a 19.4 percent stake in Novatek. It also has 20 percent of Novatek's main liquified gas project: LNG Yamal. TotalEnergies’ participation in Russian projects delivered dividend payments of $748 million in the first nine months of this year.

While other European energy companies – such as Shell and BP – decided this spring to withdraw from Russian partnerships, CEO Patrick Pouyanne made it clear during a hearing in the French parliament that, as long as there are no sanctions, TotalEnergies will maintain its Russian activities. ‘Our only motive is to bring LNG to Europe.’

Under the pressure of mounting criticism, TotalEnergies decided on December 9 to revalue the shares it owns in Novatek from 3.7 billion euros to zero. However, the company will retain its equity interest in Yamal LNG and the 10 percent it owns in another Russian liquefied gas project: Arctic LNG 2.

Despite the fact that many European companies are phasing out their activities in Russia, the Russian oligarchs who are active in the energy sector are better placed to escape punishment for being part of Putin’s inner circle. The bosses of Lukoil, Gazprom, Gazprom Neft and Gazprombank were all in the Kremlin on February 24, but none have had sanctions imposed on them by the European Union.

The nuclear power plant in Hungary

Since the beginning of the war, most European politicians have avoided meeting with Russian oligarchs. But not Peter Szijjártó, the Hungarian Minister of Foreign Affairs and Trade. Between May and September, he had three meetings with Aleksei Likhachev, the boss of Russia's state-owned nuclear energy company Rosatom. Twice he flew to Istanbul and the third meeting was in Vienna. In October, Szijjártó also visited an energy conference in Moscow where he joined Novatek CEO Mikhelson on stage. 

Rosatom supplies almost 20 percent of all uranium that is used in the EU

The Hungarian government has been frustrating European efforts to impose sanctions on Russian individuals and companies – something that became very clear when it succeeded in keeping the Russian Orthodox church leader Patriarch Kirill off the sanctions list. Prime Minister Viktor Orbán wants to see all sanctions against Russia lifted before the end of the year.

Rosatom is currently building a new nuclear power plant in Hungary: the Paks 2. The Hungarian government wants to make sure that none of the sanctions interfere with this project. ‘The expansion of the Paks nuclear power plant is in our strategic interests and our national security interests,’ said the Hungarian minister Szijjártó, after a fourth meeting with Rosatom boss Likhachev, this time in Uzbekistan. ‘So far, we have been able to prevent Brussels from imposing sanctions against Russia on our nuclear developments, and we will continue to do so in the future.’

Hungary is not the only EU country for which nuclear energy might be a reason to keep oligarch Likhachev out of the wind. Figures from the European nuclear agency Euratom show that Rosatom supplies almost 20 percent of all uranium that is used in the EU. For enriched uranium, Europe's dependence on the Russian state-owned company is even greater: almost 24 percent. There are also Russian-built nuclear reactors in five EU countries: the Czech Republic (6), Hungary (4), Slovakia (4), Bulgaria (2) and Finland (2). They depend on Rosatom for maintenance work. 

Although France uses a different type of nuclear power plant, they are also heavily dependent on Russia and Rosatom. According to the newspaper Le Monde, nuclear waste from France can only be processed in Siberia. The French state is the majority shareholder of the company Onano, which sends used uranium to Rosatom's Siberian nuclear power plant Seversk. There the uranium is processed so that some of it can be reused. Greenpeace has shown that this trade is continuing, despite the war in Ukraine. 

Another French company, Framatome, signed a long-term contract with Rosatom just a few months before the invasion. Framatome is a subsidiary of energy company EDF, which is fully owned by the government of France.

‘These businessmen are in the "too big to sanction" league’

Raw materials for batteries, liquefied natural gas, nuclear energy: the energy sector appears to be a safe haven for Russian oligarchs. ‘These businessmen are in the "too big to sanction" league,’ notes Maria Shagina, an energy and sanctions expert at the International Institute for Strategic Studies in Berlin. ‘These are systemic companies and the impact of sanctions on a company and an individual would be hard to untangle, as well as having global reverberations if sanctions are imposed on their owners. Targeting Mikhelson, for example, would have major effects on Novatek’s operations and as a result, it would be detrimental to the EU's efforts to scramble for LNG cargoes.’ A price the EU is not willing to pay.

Moscow to Paris by train

Not all the companies owned or controlled by the eleven oligarchs who have so far escaped European sanctions are active in the energy sector. Transmashholding builds locomotives, railway equipment and – last but not least – the chassis of the BUK missile system: the missile system which shot down Malaysia Airlines flight MH17 in 2014 and killed 298 people. Why does the EU refuse to put this company on the sanctions list? 

Sanctions lawyer Bennink: ‘Transmashholding is one of the larger companies in transport and technology worldwide. I can imagine that it is important for certain European countries.’

In the absence of an explanation from the EU, we can only guess at the real reason why this company escapes sanctions. However, a closer inspection of this company once more reveals French and Hungarian connections.

On 27 May 2011, two major train manufacturers join forces. The French company Alstom buys 25 percent of the shares in Transmashholding. ‘Russia represents a key market for Alstom,’ says CEO Patrick Kron. ‘We are very proud that Transmashholding and its shareholders chose Alstom to help them modernise the Russian rail sector.’

One of Transmashholding's main shareholders is oligarch Andrey Bokarev. Two years earlier, in 2009, he signed a strategic cooperation agreement with Alstom under the watchful eyes of French President Nikolas Sarkozy and his Russian counterpart Dmitry Medvedev.

Thirteen years later, a war is raging in Ukraine and the close cooperation between Alstom and Transmashholding has become a problem for the French. In March, Alstom said it no longer wants to invest in Russia, but it still owns 20 percent of the shares of Transmashholding. The stock market value of that share is 482 million euros, but the French train manufacturer informs Follow the Money that they have downgraded it to zero.

Alstom would still like to sell those shares, but Alstom's current CEO, Henri Poupart-Lafarge, does not think it will happen. ‘As you can imagine, nobody wants to buy a 20 percent share in Transmashholding,’ he said at the shareholders' meeting last July. ‘We made our first investments in 2007 with the expectation that the Russian market would open up, but that did not happen.’

Transmashholding also has strong ties with Hungary, in particular with the Minister of Defence, Kristóf Szalay-Bobrovniczky. Until a few months after his appointment earlier this year, he was co-owner of Transmashholding Hungary, the other owner being the Russian parent company. This Hungarian branch won a controversial one-billion-euro contract for the construction of 1,300 rail cars to be deployed in Egypt.

Metrowagonmash is another subsidiary of Transmashholding. It supplies and maintains the metro cars for one of Budapest's underground lines. An investigation by the renowned Hungarian investigative journalist Szabolcs Panyo showed the nepotism at the heart of this pricey deal which left the citizens of the Hungarian capital with metro trains that broke down time and time again. 

Transmashholding’s daughter company Metrowagonmash builds the chassis of the BUK missile system, and has not had sanctions imposed against it by the EU to this day. 

Silence in Brussels

Should the European Commission and EU countries provide a more thorough explanation as to why some oligarchs have sanctions against them and others not? It was a question posed by the European Ombudsman, Emily O'Reilly, on June 3 of this year. She wrote a letter to the Council of the EU, the institutions representing all EU Member States. 

‘The public should – to the fullest extent possible – be able to trace the decision-making process and to understand how the final decision came about,’ writes O’Reilly. ‘Transparency in this area can also help maintain public support for such sanctions, during this difficult time.’

The Council of the EU disagreed. They even told O’Reilly that the answers to her questions should be kept secret. Making them public would be ‘harmful to the Council’. And so the Ombudsman agreed not to publish the reply.

Sanctions experts with whom Follow the Money spoke doubt whether more transparency is possible when it comes to deciding on who gets sanctions imposed against them. But they also question the lack of clarity about why some of the oligarchs who were in the Kremlin on February 24 have escaped punishment.

‘We are not suggesting that there should be an open discussion on who should be on the list and who should not, because then we are basically tipping them off. It’s normal that this information is not publicly available,’ says Roland Papp of Transparency International. ‘But when they cross out people because of political or economic benefits to a certain sector or certain people, that is definitely not okay. If our goal is to cripple the Russian war economy, then we have to pay a price.’