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U.S. Sanctions Spread Through Billionaires' Business Empires

Published: March 25, 2014 (Issue # 1802)



  • Visa and Mastercard suspended service for SMP Bank last week when its billionaire co-owners, Arkady and Boris Rotenberg, were blacklisted by the U.S.
    Photo: Maxim Stulov / Vedomosti

The latest U.S. sanctions against Russia have even hurt companies that Washington did not formally blacklist.

Although the sanctions officially target only Bank Rossia, a number of other banks also saw disruptions to their services by international payment systems Visa and MasterCard.

And there is a reason why: These lenders, such as SMP Bank, list among their co-owners the brothers Boris and Arkady Rotenberg — two of the individuals that the U.S. hit with fresh punitive measures Thursday.

Visa and MasterCard resumed services for the customers of SMP Bank and other banks that were initially suspended, saying they had received assurances from the U.S. government that they could carry on, Vedomosti reported Sunday. But the confusion throws into the spotlight the question of how U.S. businesses should interpret the sanctions in dealing with their Russian counterparts.

U.S. law prescribes that any businesses where sanctioned individuals own at least 50 percent come under the restrictions as well, a spokesperson for the the Office of Foreign Assets Control of the U.S. Department of the Treasury. The U.S. government also advises caution in dealing with companies in which sanctioned individuals own smaller stakes.

Yury Botiuk, an international trade lawyer at London-based Pinsent Masons, said that many U.S. and European Union companies and financial institutions would try to limit any exposure to counterparts affected by the sanctions.

"Whether this could lead to contractual breaches depends on individual circumstances," he said. "This is when the financial bite of the sanctions regime can start to get very real very fast."

The Rotenbergs own 38 percent each in SMP Bank.

Visa said in a statement Friday that it cut service to two more lenders, Sobinbank, a subsidiary of Bank Rossia; and Investkapitalbank, co-owned by the Rotenbergs.

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ALL ABOUT TOWN

Tuesday, Oct. 21


The Environment, Health and Safety Committee of AmCham convenes this morning at 9 a.m. in the organization’s office.


Take the opportunity to pick the brains of Dmitry V. Krivenok, the deputy director of the Economic Development Agency of the Leningrad region, and Mikhail D. Sergeev, the head of the Investment Projects Department, during the meeting with them this morning hosted by SPIBA. RSVP for the event by emailing office@spiba.ru before Oct. 17 if you wish to attend.


Improve your English at Interactive English, the British Book Center’s series of lessons on vocabulary and grammar in an informal atmosphere. Starting at 6 p.m., each month draws attention to different topics in English, with the topic for this month’s lessons being “visual arts.”



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