Sanction Chase. How to Stop a Business That Continues Cooperate with Russia — Olexandr Dubilet

22 June, 12:19 PM
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In George Orwell's famous novella "Animal Farm," some four-footed animals said they were more equal than others.

Likewise, even after the European Union banned cooperation with Russia, some companies there have decided they are better than the rest, and come to the conclusion that financing the Kremlin’s war with Ukraine is not such a shameful thing when they stand to make huge profits – especially in the sale of military or dual-use goods.

As such cases have become so frequent and systemic, I decided to initiate a project to put legal pressure on businesses that undermine the EU’s sanctions regime.

Oleksandr Dubilet,

Chairman of the Board of CB "PrivatBank" (1997-2016), Financial and banking expert

Materials published in the media showed a large amount of direct evidence of the "schemes" used by European companies to cooperate with Russian companies, despite the sanctions that are in place.

Therefore, it is important that lawyers continue to properly work out the evidence base. I set a clear task for our team of lawyers – to take all appropriate actions to bring violators to justice. However, the main KPI (Key Performance Indicator) is to create such an amount of pressure that European companies stay away from Russia by themselves.

Lawyers are hunting

How do the project's lawyers act in this situation?

The work on the project can be roughly divided into several stages.

The investigation and collection of evidence confirming a company's violation of sanctions is the first stage. This is the key one.

For example, our team learned from the public initiative Sanctions.don't.work how the Belgian company New Lachaussee was violating the sanctions regime.

Later, a posting on Facebook of a photo of a thermal imager made by the French company Thales on a BMD-4 (a Russian infantry fighting vehicle) became the basis for lawyers to conduct a thorough investigation into this company. We have already prepared motions to the relevant authorities based on the revealed facts.

The lawyers also study publications, videos shot by volunteers and military experts on social networks, where they review enemy hardware and analyze its equipment. Later, we compare the characteristics of the detected weapons with the characteristics of the goods of foreign companies.

An analysis of materials, fact-finding, and a comparison of facts and consequences allows us to form a convincing evidence base to claim that certain European companies have knowingly violated EU law.

The second stage of work is legal. It involves informing the authorized bodies of the EU and law enforcement agencies of EU member states about the violation of sanctions.

I will demonstrate the work of this stage with  the example of the Belgian company New Lachaussee. The company supplied equipment for the manufacture of ammunition for Russia's Kalashnikov Concern through an intermediary, namely Lipetsk Mechanical Plant.

The lawyers prepared a statement to the Council of the EU, the body that imposes sanctions, and reported the violations committed by New Lachaussee.

Depending on the jurisdiction, liability for violating sanctions may be administrative or criminal. In the case of New Lachaussee, we requested an investigation by the federal prosecutor's office of Belgium.

In addition, in each case, the lawyers fully disclose the corporate structure of the company and contact its founders and/or beneficiaries. The goal is to persuade the founders to conduct a corporate investigation into the facts provided, apply measures of influence to the top managers of violating companies, as well as ensuring the termination of any cooperation with Russia.

The use of indirect legal mechanisms to create maximum "inconvenience" in the company's work is the third stage. The range of options can be wide here, but, as a rule, the following set of tactics has an effect:

• Informing other stakeholders: financial monitoring bodies (primary and secondary), non-governmental organizations whose members are violating companies, stock exchanges listing the violating companies/their founders, etc.

• Registration of petitions in the EU Parliament on the proper monitoring of compliance with sanctions legislation by EU members.

Oleksandr Dubilet
Фото: Oleksandr Dubilet

As a result, the active work of the lawyers of my "sanctions" project is gradually achieving its goals: neither European authorities (institutional, law enforcement, etc.) nor the companies themselves can turn a blind eye to obvious violations of civilized rules of the business game.

Long game

The Ukrainian military is at the forefront of the struggle for European civilization. Behind them , Ukrainian lawyers are actually creating unique precedents for punishing audacious violators of European sanctions law.

Why is it so? Because there is no similar experience in bringing companies to legal and criminal responsibility for ignoring EU sanctions. But the project's lawyers have in-depth expertise in corporate investigations, gained in the process of bringing unscrupulous contractors to justice in Ukraine (through criminal proceedings and the use of mechanisms of indirect influence).

Russia's Almaz-Antey concern, a manufacturer of missiles fired on peaceful cities of Ukraine, must prepare: Lawyers are already preparing documents for the international prosecution of this company.

After all, we will uncork the champagne only when our European partners punish companies and their top management for insidious trading with Russia.

But this path could be a long one.

We will be satisfied only with the unequivocal cessation by European companies of any cooperation with Russia in terms of arms supplies, dual-use goods and other prohibited goods).

News from this front will be announced very soon.

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