Putin Pals Panic As Washington Readies "Official Oligarch" List

"If you're a Russian oligarch, you don't want to be on [this list]," warned Alan Kartashkin, a Debevoise partner in Moscow.

The 'list' that Kartashian refers to is derived from the U.S. law, which Trump grudgingly signed on Aug. 2 after it passed Congress with a veto-proof margin, instructs the Treasury, together with the State Department and intelligence agencies, to identify officials and oligarchs as determined by “their closeness to the Russian regime and their net worth.”

The report, due within 180 days of the law’s signing, must include “indices of corruption with respect to those individuals” and any foreign assets they may have.

And that deadline is looming - January 29th.

 

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US lawmakers expect the list to provide a basis for future punitive actions against Russia.

“Because of the nervousness that the Russian business community is facing, a number of oligarchs are already beginning to wind back businesses, treating them as if they are already designated, to stay ahead of it,” said Daniel Tannebaum, head of Pricewaterhousecoopers LLP’s global financial sanctions unit. He advises a handful of wealthy Russian individuals and some businesses who he declined to identify.

The list has also become a headache within Treasury, where some officials are concerned it will be conflated with sanctions, a person familiar with the matter said. Treasury officials are considering keeping some portions of the report classified -- which the law allows -- and issuing it in the form of a letter from a senior official, Sigal Mandelker, instead of releasing it through the Office of Foreign Assets Control, which issues sanctions. That would help distinguish it from separate lists of Russians subject to U.S. economic penalties, said the person, who spoke on condition of anonymity.

“You’re going to have people getting shamed. It’s a step below a sanction because it doesn’t actually block any assets, but has the same optics as sanctions -- you’re on a list of people who are engaged in doing bad things,” said Erich Ferrari, who founded Ferrari & Associates in Washington and has helped people get removed from the sanctions designation list.

As Bloomberg concludes, the list’s impact will depend on how it’s released, said Adam Smith, a former senior adviser in Treasury’s sanctions unit and now a partner at Gibson, Dunn & Crutcher LLP in Washington.

The law is “written in a way that it allows mischief if the administration wanted to go a different way,” Smith said . “If the president wanted to provide little or a lot and be very selective, he has the ability to do that.”

While the U.S. may be succeeding in making life difficult for some of Putin’s closest allies, Bloomberg reports that’s not turning into pressure on him to change course, according to Olga Kryshtanovskaya, a sociologist who studies the ruling elite at the Russian Academy of Sciences.

“You can’t be here and have a conflict with him,” Kryshtanovskaya said.

“So if the West thinks they can topple Putin with this, they won’t.”

Among business tycoons, concern about the new sanctions list is showing up only as timid reluctance among some to be seen prominently at Kremlin events, said one, insisting on anonymity.