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Researches 13 September 2023

"Hellish sanctions" for Ukrainian companies: List of 919 legal entities in YouControl

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"Hellish sanctions" for Ukrainian companies: List of 919 legal entities in YouControl

YouControl R&D Centre analysts have analysed the sanctions lists (Ukraine, the US, the EU, the UK, Canada, Australia and Japan) for 16 months of the full-scale war and identified the main sectors of the economy and the geographic distribution of the sanctioned companies in Ukraine. They also established links between the sanctioned companies, financial-industrial groups (FIGs), and Russian oligarchs.

 

Key findings:

  • For the period from 23.02.2022 to 23.06.2023, 1895 records of sanctions against 919 Ukrainian companies were added to the YouControl analytical system. 

  • Over the past year, 29 Ukrainian companies have been directly affected by sanctions imposed by Ukraine (NSDC) and the United States.

  • The most sanctioned companies are registered in Kyiv, Crimea, Donetska, Luhanska and Zaporizka oblasts.

  • The majority of the sanctioned companies (145) have a registered type of economic activity as "Other service activities" (activities of public and political organisations, trade unions) and operate in wholesale and retail trade (139). 

  • 303 companies that were notified of sanctions are part of 63 FIGs. In particular, the Viktor Medvedchuk Group, the Lebedev Family Group and the Boguslaev Family Group. They also belong to the following financial-industrial groups: Kozak Brothers Group, VS Energy, Proton Energy Group and HMS Group.

 

Sanctions lists and verification features

 

During Russia's full-scale invasion of Ukraine, 1895 sanctions records were added to YouControl for 919 companies in Ukraine.

 

From 23.02.2022 to 23.06.2023, 29 Ukrainian companies were directly affected by the sanctions imposed by Ukraine and the United States (other countries did not include Ukrainian organisations in their sanctions lists during the period under review). 

 

Such a difference (at least 30 times!) in the number of companies with sanctions notifications in the analytical system and Ukrainian firms on the sanctions lists is due to the specifics of their verification. YouControl analysts check the direct sanctions imposed on a company and the connections of Ukrainian companies with sanctioned entities and individuals.

 

Given this approach to processing sanctions lists, one company may contain several entries: direct sanctions from different countries and indirect sanctions through participants, shareholders and officials.

 

Source assessment and chronology of restrictions

 

In the analysis, the starting date was February 23, 2022 (until 23.06.2023 inclusive), as the first international sanctions against Russia were imposed the day before the full-scale invasion. For example, Australia and Japan joined the sanctions against Russia on February 23 after Canada, the EU, the UK, and the US announced a similar decision.

 

In preparing the study, we reviewed the sanctions lists of the National Security and Defense Council, the US, the EU, the UK, Canada, Australia and Japan.

 

Sanctions puzzle by region and industry

 

Almost 26% of the companies in the surveyed sample are registered in Kyiv, 18.5% in Crimea, just over 17% in Donetska oblast, and 11.1% in Luhanska oblast. Zaporizka oblast is the fifth largest region by the number of sanctioned companies, with about 6.5% of companies registered there. 

 

The most significant number of companies (145) with records of sanctions restrictions operate in the field of "Other service activities". In particular, this includes the activities of public and political organisations and trade unions. A little over 15% are engaged in wholesale and retail trade as well as repair of cars and light motor vehicles. 

 

The real estate and construction sectors account for 8.8% and 5.7% of companies, respectively. Another 8% are involved in the manufacturing industry, and 6.9% in "Information and communication". In addition, about 7% are engaged in professional, scientific and technical activities. 

 

 

About 4% of companies are involved in financial and insurance activities. Among them are 2 banks with Russian co-owners: JSC SENSE BANK, which until September 2022 was under the Alfa-Bank brand and whose co-owners include Russian oligarch Mikhail Fridman. 

 

 

Russian Evgeniy Giner is a beneficiary of FIRST INVESTMENT BANK JSC, sanctioned by the National Security and Defense Council in October 2022. In 2023, the High Anti-Corruption Court seized the controlling stake in the bank owned by Russian businessman Giner.

 

In addition, on June 16 this year, President of Ukraine Volodymyr Zelenskyy signed the Law “On Amendments to Certain Legislative Acts of Ukraine Regarding the Specifics of the Financial Sector’s Operation Due to the Introduction of Martial Law in Ukraine”, which allows for the nationalisation of banks owned by sanctioned persons. 

 

The former president of Motor Sich, Vyacheslav Boguslaev, a Zaporizhzhia-based MOTOR BANK JSC shareholder, was also sanctioned by the NSDC and the EU in 2023. 

 

"Star FIGs": Groups of Medvedchuk, Kozak, Lebedev and other Russian oligarchs

 

303 companies notified of sanctions during the year of full-scale war are part of 63 FIGs. This list has been added to the YouControl system. Some companies are members of several groups at the same time.

 

The most significant number of companies (39) that are part of FIGs and have been added to the sanctions list belong to the Lebedev Family Group, whose key persons are the former Minister of Defence of Ukraine Pavlo Lebedev and his daughter Aliona Lebedeva. She founded Aurum Group, a diversified industrial and investment group. Its main areas of activity include machine building, freight rail transport, industrial pump building, chemicals, real estate and agricultural investments.

 

Viktor Medvedchuk Group comprises 29 companies. Restrictive measures were imposed on legal entities from this group due to the inclusion of Oksana Marchenko, Viktor Medvedchuk's wife, the former MP and leader of the banned OPFL party in Ukraine, on the sanctions lists of the National Security and Defence Council and the UK. In fact, the UK is the only foreign country to add Oksana Marchenko to the sanctions list.

 

Another 27 companies are part of Proton Energy Group, which owns the Glusco petrol station chain in Ukraine. The group's owner is Nisan Moiseev, who is associated by the media with Viktor Medvedchuk.

 

30 companies of the analysed sample are linked to the Kozak Brothers Group, owned by former Ukrainian MP Taras Kozak, who was added to Australia's sanctions list in May 2022.

 

21 companies with sanctions records for the period of Russia's full-scale invasion of Ukraine are part of the Russian engineering holding company HMS Group, controlled by German Tsoi and Vladimir Lukyanenko. The latter's father was added to the NSDC sanctions list in May 2023.

 

17 companies that were added to the restrictive measures list are part of the Boguslayev Family Group, with Vyacheslav Boguslayev, mentioned above, as the key person and 17 companies belong to Fedcominvest, owned by Russian-born businessman Alexei Fedorichev, specialising in stevedoring services.

 

15 companies belong to the VS Energy Group, which the media associate with Russian oligarchs Alexander Babakov, Mikhail Voevodin and Evgeniy Giner. VS Energy Group includes 11 companies among the Top 1000 largest in Ukraine by revenue. Also, 9 companies of this financial-industrial group operate in the energy sector. In addition, VS Energy includes two companies in the gambling market that hold licences from the CRGL. YouControl reported this in its exposé “Ukrainian gambling business. An extensive analysis of companies”.

 

During the period under review, Ukrainian companies that are part of Russian FIGs were also sanctioned. In particular, Sberbank of Russia, Rosatom, Vladimir Yevtushenkov's Sistema JSFC and Mikhail Shelkov Group. The Ukrainian assets of both businessmen were seized in favour of Ukraine in September 2022 and January 2023.

 

Head of the Legal Department at YouControl, Nadiia Chalenko, notes that cooperation with sanctioned persons carries significant risks for any business: “First of all, it is the risk of restriction or complete prohibition of banking transactions with such entities. In addition, under certain conditions, cooperation with sanctioned entities and individuals may attract the attention of law enforcement agencies, which in turn may lead to investigations, searches and lawsuits. Such events will not only slow down the company's operations but also negatively affect its development and reputation. In this regard, we advise you to constantly check and monitor potential and current counterparties for sanctions, which is conveniently done using the monitoring function in the YouControl system”. 

 

We would like to remind you that the YouControl blog contains materials on sanctions compliance and why always checking them is important. You can also learn about potential risks when a counterparty is subject to restrictions. You can also review the algorithm for independent verification of sanctions against legal entities and individuals.

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