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Corporations Aiding Oligarchs: Undermining The Western Stance on Ukraine



It has recently come to light that Allen & Overy (a British law firm) and Morgan Stanley (an American investment bank) played a part in Russian oligarch Sergei Kolesnikov’s attempt to acquire an oilfield in southern Russia. Kolesnikov is nothing short of controversial. His company, TechnoNicol, has supplied building materials for construction projects in annexed Crimea and occupied territories in eastern Ukraine. Both Allen & Overy and Morgan Stanley have been aiding an oligarch whilst he clearly profits from the ongoing Russo-Ukrainian conflict. TechnoNicol’s profit has, reportedly, increased greatly since Russia’s invasion in 2022. Presently, only Ukraine and Poland have imposed sanctions against Kolesnikov, who is a Maltese citizen under its ‘golden passport’ scheme. Kolesnikov owns the Cyprus-based firm, Inflection Management, as well as 50% of TechnoNicol. 


This news has exposed the hypocrisy of firms like Allen & Overy and Morgan Stanley. Allen & Overy publically withdrew from Russia at the beginning of the war, expressing, as they should, their outrage at Russian aggression. They criticised “the illegal and senseless invasion of Ukraine”, labelling it their reason for leaving. Morgan Stanley also announced in 2022 they would not be entering any new business onshore in Russia,” in response to the Kremlin’s actions in Ukraine. It is interesting, then, that both of these companies have no issue cooperating with Kolesnikov, whose business interests in Ukraine leave him at best morally complicit. 


Whilst Allen & Overy and Morgan Stanley have done nothing illegal, the controversy here relates to values rather than laws. Their cooperation with Kolesnikov suggests that their withdrawal from Russia and condemnation of the war was performative, merely doing what was expected of them at the time, rather than reflecting their genuine stance. Indeed, no UK or US company has been prohibited from working with Kolesnikov because, as aforementioned, he is only facing limited sanctions. However, one would think that Allen & Overy and Morgan Stanley would feel far more uncomfortable working with a man whose products are used in Russian reconstruction projects in areas of Ukraine destroyed by Russia itself. Allen & Overy, who so strongly condemned the invasion earlier in 2022, come across as particularly insincere. 


As we approach the two-year anniversary of Russia’s full-scale invasion of Ukraine, it is interesting to consider this drastic difference in Allen & Overy’s and Morgan Stanley’s attitudes towards cooperating with wealthy Russian clients. Their narrative aligned with the standard stance in the West concerning Russia at a time when all western companies were in the limelight and being scrutinised for their response to the invasion. Nevertheless, their outrage has evidently weakened since. The apparent erosion of their moral values over time has allowed them to turn a blind eye to TechnoNicol’s problematic contribution to Russia’s invasion. 


I also want to consider the previously mentioned Maltese ‘golden passport’ scheme, under which Kolesnikov obtained his Maltese citizenship and which explains why he is facing limited sanctions. Malta allows high-net-worth individuals to invest in their country in exchange for becoming naturalised Maltese – and, importantly, EU – citizens. This ‘golden passport’ scheme began in 2014, the same year that Russia annexed Crimea and the first major international sanctions relating to Russia’s foreign policy in Ukraine were imposed. Naturally, Malta became a haven for Russian oligarchs looking to avoid these sanctions. Thus, because of the timing, the link between this scheme, sanctions and oligarchs is obvious. Although Malta stopped selling their passports to wealthy Russian and Belarusian citizens in 2022 because of the invasion, many oligarchs had already acquired Maltese citizenship in the eight years that they were able to purchase the passport. 


However, ‘golden passport’ schemes do not only serve the interests of Russian oligarchs, but also those of western firms which have to comply with the sanctions imposed on these wealthy individuals and their businesses. The ‘golden passport’ scheme further solidifies the idea that, for some companies, pulling out of Russia was advantageous because it allowed them to maintain an image of moral purity. ‘Golden passports’ are a useful technicality which allows western firms to continue to cooperate with beneficiaries of the war in Ukraine. Therefore, for the likes of Allen & Overy and Morgan Stanley, working with those who benefit from the conflict is okay, so long as they do not hold a Russian or Belarusian passport. 


I would like to end this article by reiterating that many continue to live with the consequences of the war in Ukraine. More than 10,000 civilians have been killed in Ukraine and many towns and villages have been destroyed. Both Ukrainians and Russians are suffering as a result of the conflict. And yet, amidst all of this, certain companies continue to cooperate with Russian oligarchs, exposing their own hypocrisy and thereby undermining their public condemnations of Russia’s invasion of Ukraine.



Image: Getty Images/via CNBC

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