Lobbyists seeking workarounds for China to circumvent sanctions on Russian energy companies

Russian Gazprombank has doubled down on minimizing the impact by the sanctions,  searching for ways to circumvent them.Gas buyers have opened accounts in Gazprombank JSC, to pay in rubles for Russian gas.

China looks like priority area, as it attempts to look neutral, but opposes unilateral restrictions, and has repeatedly expressed on ‘strategic’ relations with the Kremlin.

To persuade China and win it over, Gazprombank has got some Russian and foreign legal advisers to provide assessment for Western sanctions and identify exceptions for possible workarounds, making secondary sanctions formally impossible.

The fact of such cooperation, with Squire Patton Boggs, a global law firm, and Russian Ivanyan & Partners law firm, has been confirmed for now. Squire Patton Boggs first registered to lobby for Gazprombank in 2014 on “banking laws and regulations including applicable sanctions.”Former Senate Majority Leader Trent Lott and former Senator John Breaux were listed as lobbyists for a subsidiary of the bank, according to a filing in the Senate last week by Squire Patton Boggs, a law and lobbying firm. The disclosure form said Lott and Breaux would focus their efforts on banking laws and regulations, “including applicable sanctions.” The disclosure was first reported by the watchdog group Center for Public Integrity. Lott, a Republican from Mississippi, spent 34 years in Congress before retiring in 2007. Lott and Breaux, a Democrat from Louisiana, founded their own lobbying firm, Breaux Lott Leadership Group, which Patton Boggs acquired in 2010.

Khristofor Ivanyan, a partner of Ivanyan & Partners, has previously carried out the orders by Russian Foreign Ministry. He has represented the interests of Russian Foreign Ministry in the Permanent Court of Arbitration (PCA) from 2016, in a case initiated by Ukraine, based on the UN Convention on the Law of the Sea.

Russian Foreign Ministry, therefore, is highly likely to make efforts to minimize the impact by the sanctions on Russia, searching for lobbyists abroad to find the ways to evade sanctions.

The company’s partner, Maxim Rasputin, advised Gazprombank in 2016, and Sergey Kushnarenko worked with Gazprombank when the bank acquired a 19% stake in Megafon. That way, Ivanyan & Partners has already had business with Gazprombank.

The fact that Ivanyan & Partners was hired by Russia for the Yukos trial in Strasbourg points to its ties to Russian leaders. Ivanyan & Partners is known for having represented the interests of Gennady Timchenko, a co-owner of Swiss Gunvor (at least in 2013), and former colleague and friend of Vladimir Putin. In the beginning of 2010th Gunvor exported a third of Russian oil. As Gennady Timchenko, an oligarch in Putin’s entourage, provides for Ivanyan & Partners to take part in legal assessment of evading the sanctions on Russia, he might, as well, be its permanent client. 

Available data suggest the main conclusion by those firms is that EU / US sanctions on Gazprombank do not ‘block’and allow legal entities to take part in any unprohibited agreement.

Moreover, earlier exemptions from restrictions, particularly in trade finance, remain effective, as the sanctions by the US Treasury Department’s Foreign Assets Control on February 24 did not change the previous restrictions for the bank.

A limited number of top managers at leading Chinese financial institutions, in fact, receive financial constraint assessments, with the details of sanctions (people affected, types of financial transactions, exclusions, etc.), under the terms of non-disclosure.

With the information provided by the reports, namely legal details and gaps, Russian officials seek to persuade China to help them circumvent the restrictions.