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Sensemaker: The Lebedevs and sanctions

Sensemaker: The Lebedevs and sanctions

What just happened

Long stories short

  • Sri Lanka’s parliament voted six-time prime minister Ranil Wickremesinghe as president to replace Gotabaya Rajapaksa who fled the crisis-hit country last week.
  • British wages less inflation fell at their fastest rate since records began in 2001.
  • Rishi Sunak emerged as the frontrunner, with Penny Mordaunt and Liz Truss competing for the second spot in the final round in the Conservative Party leadership race.

Key stat: 23.8 – million euros was the price of 120 armoured vehicles quoted to Saif Gaddafi’s fixer during the First Libyan Civil War that toppled his father Muammar’s dictatorship. It is one of the findings of a collaboration between Tortoise and the Guardian based on previously unseen emails exchanged between Saif, who is standing in Libya’s first ever presidential elections, and his inner circle. The material provides a rare glimpse into life at the heart of Gaddafi’s regime – with some surprising results (more below).

The Lebedevs and sanctions

After Tortoise reported that Boris Johnson had given Evgeny Lebedev a seat in the House of Lords despite objections from the security services, MPs questioned the chair of the Lords appointments commission, Lord Bew. He responded that it was “a case of particular complexity with many wrinkles that are so obvious to everybody: how much is somebody responsible for their father, etcetera”.

Alexander Lebedev, Evgeny’s father, worked for the KGB and its successor agency, the FSB, leaving with the same rank as Vladimir Putin: Lieutenant Colonel. Alexander became rich thanks to his links to other former KGB officers. He is the source of his son’s wealth, which paved a path to the heart of Britain’s establishment and made Evgeny attractive to Johnson. 

Evgeny is now known, thanks to Johnson, as: Baron Lebedev, of Hampton in the London Borough of Richmond upon Thames and of Siberia in the Russian Federation. He has disputed that his financial interests are connected to his father’s businesses, which include large hotels and resorts in Russian-occupied Crimea. 

But a leak of corporate filings and internal memos seen by Tortoise reveals that the interests of father and son in the Ukrainian region overlapped – at times, in breach of European Union sanctions, which from December 2014 prohibited EU citizens and companies from providing tourism services in Crimea.

  • Evgeny Lebedev was, in 2016, the ultimate beneficial owner of Herschel Consultants (Overseas) Limited. This shell company was registered in Cyprus, an offshore haven in the EU that is popular with Russian oligarchs. It owned another company – Almond Grove – in Crimea.
  • Almond Grove lends its name to the large hotel complex on the Alustha coast that Alexander bought and then expanded. It includes a water park, restaurants, baths, a large children’s entertainment centre, different hotels, seaside apartments, and villas. Almond Grove’s expansion continued after Russia annexed Crimea.
  • In response to the annexation, the EU prohibited its companies and citizens from providing tourism services in Crimea. This meant that the Cypriot company, as an EU entity, was in breach of the sanctions – as its then owner Evgeny appears to have been. He became a British citizen in 2010, and, by extension, he was also an EU citizen from that point until Brexit took effect a decade later, his period of ultimate ownership of Almond Grove, through his ownership of the Cypriot company, appears to have put him personally in breach of EU sanctions.
  • The EU allowed member states to set their own penalties for sanction breaches. In the case of the UK, the penalties for breaches included potentially unlimited fines, as well as up to two years in prison. The UK’s own sanctions prohibiting the provision of tourism services in Crimea came into force in December 2020.

A spokesperson for Evgeny says: “Lord Lebedev has never invested into or benefited financially from the aforementioned companies and no EU sanctions have been breached at any time.”

In any case, Alexander’s lawyers in Cyprus, Vassiliades & Co., noticed the problem before any authorities did. They transferred ownership from Evgeny back to Alexander, who as a non-EU citizen, was not subject to the sanctions. Still, the Cypriot company itself – Herschel Consultants (Overseas) Limited – remained in breach of the sanctions. The Cypriot finance ministry didn’t seem to care. Neither did Alexander.

“The sanctions do not bother me,” Alexander said in May 2017. “I have a thousand people working in Crimea. It would be strange if I fired everyone and listened to the sanctions stories.”

But a source with knowledge of the company’s affairs says that by last year all Alexander’s assets in Crimea had been decoupled from companies in Cyprus. They are now owned by his holding company, the National Reserve Corporation, in Moscow, where he resides.

Alexander is trying to sell his Crimean assets and, the source suggests, he is in negotiations with Alexander Udodov, a property developer whose father-in-law is the Russian Prime Minister Mikhail Mishustin, who was appointed by Putin two years ago.

For many years, Alexander claimed to be a Russian dissident. But Tortoise’s reporting has shown how he supported Putin’s annexation of Crimea, argued against sanctions on Russia, and enjoys Putin’s favour and friendship.

Under his dissident guise, Alexander once criticised the West’s “empire of offshore jurisdictions”. He described the people who exploit the shell companies and lawyers that it provides as “parasites”.


CAPITAL ECONOMY, BUSINESS AND FINANCE

Saif Gaddafi redux
Saif Gaddafi was the heir apparent of his father Muammar Gaddafi’s dictatorship of Libya. But during the First Libyan Civil War, rebels brutally executed Muammar and took Saif captive. He emerged a decade later, in November 2021, to register for the country’s first ever presidential elections, which were due to be held this summer but were delayed by disagreements between rival factions. A new cache of emails and documents seen by Tortoise and the Guardian sheds light on the would-be ruler’s approach to public life. You can read the piece here. There are some surprising findings. Saif once received an email that appears to be from Naomi Campbell in which the supermodel asks him to arrange a visa for her “great friend” who wanted to visit Libya “with her boat” for “Pleasure” – the friend was Ghislaine Maxwell.


TECHNOLOGY AI, SCIENCE AND NEW THINGS

Amazon vs Facebook admins
Amazon sued the administrators of 10,000 Facebook groups used to solicit fake product reviews. Sellers buy five-star product reviews from the Facebook group members, offering them free items or payment in exchange. The practice is categorically against Amazon’s rules (and Facebook’s too) but it’s worth it for sellers: the fake reviews improve the position of their goods in Amazon’s product listings and encourage people to buy – an abundance of good reviews makes customers more confident to hit ‘purchase’. Last year the UK Competition and Markets Authority launched an investigation looking at whether the company was doing enough to tackle bogus reviews on its site. With regulators looking on, Amazon certainly needs to be proactive in cracking down on fraudsters and this lawsuit seems to be part of that effort. But fake reviews are still a big problem for the company; as soon as one group of review cheats gets shut down, another one springs up. Remember: if it seems too good to be true, it probably is. Also, there are other retailers.


The 100-year life health, education AND GOVERNMENT

Black bear blood
Researchers at Hiroshima university injected human skeletal muscle with serum made from black bear blood in an attempt to slow muscle degradation. Unlike humans’ ‘use it or lose it’ muscle metabolism, hibernating animals like black bears have a ‘less use, less loss’ muscle makeup. The experiment showed tentative signs that the serum can slow protein degradation in human muscle. It may have applications to disabled people who are at risk of muscle atrophy. But it is a very early-stage experiment. The relevant hormones within the serum are yet to be pinpointed, so it is still unsafe for use on living animals.


Our planet CLIMATE AND geopolitics

Too hot to work
Temperatures across Europe have reached record highs over the past week. The UK’s temperature soared above 40 C for the first time ever yesterday. Portugal’s temperature rose to a staggering 47C. The heat has caused thousands of deaths, sparking concern from labour unions about the lack of temperature regulation in the workplace. The UK has no laws mandating minimum or maximum working temperatures. Health and safety guidance recommends that most workplace temperatures should not drop below 16C, but there is no upper limit. The Trade Union Congress proposed a maximum workplace temperature of 30 C. As of now, only a few European countries have regulations on maximum workplace temperatures. Things may have to change. 


CULTURE soCIETY, IDENTITY AND BELONGING

Love Island men
The domestic abuse charity Women’s Aid has spoken to ITV over the behaviour of some of the participants on television network’s show Love Island. Women’s Aid said it acted after being tagged by viewers in social media posts about the show. Instances include one male contestant accusing his female counterpart of being “fake”, and another suggesting their partner has been flirting with another man, despite her lack of interest in him. It follows another intervention from the charity last week when the return of 2018 controversial contestant Adam Collard was announced, prompting Women’s Aid to urge ITV to ensure there was proper support in place for contestants. The network said that they “cannot stress highly enough how seriously we treat the emotional well-being of all of our islanders”.


Thanks for reading. Please share this around and tell us what you think. Email: sensemaker@tortoisemedia.com.

Paul Caruana Galizia
@pcaruanagalizia

Additional reporting by James Wilson, Ella Hill, and Asha Mior.


Photographs Getty Images, ITV, Booking.com

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