Four Russian bankers may have made millions off EU sanctions — FT

Four former top executives at Gazprombank Luxembourg—the only major Russian bank still operating in Europe—may have made more than €9 million in profits from transactions involving Gazprom’s foreign-currency bonds in 2022, according to the Financial Times (FT), citing documents it reviewed and its own calculations.

Gazprombank Luxembourg is the last major Russian bank still operating in Europe and serves as Gazprom’s primary payment channel to European countries. Gazprom itself was not subject to the sweeping EU sanctions imposed after the start of military operations against Ukraine in February 2022, but restrictions targeting key components of the Russian financial system have made it difficult for the company to make interest payments to its creditors. The value of Gazprom’s foreign-currency bonds plummeted—some were trading at half their original price—and, effectively due to the sanctions, the company’s foreign-currency bonds are now stuck in Europe.

A decree issued by Russian President Vladimir Putin on July 5, 2022, allowed such securities to be exchanged for new bonds in Russia denominated in rubles at their original cost.

According to the FT, four members of the board of Gazprombank Luxembourg—Dmitry Derkach, Sergey Nekrasov, Sergey Belousov, and Pavel Bolshakov— “took advantage of the market chaos” that ensued after the sanctions were imposed and began buying up Gazprom’s European-denominated bonds at a discount, which they then exchanged for their Russian equivalents at full value in rubles. Moreover, these purchases were financed through personal loans they obtained from Gazprombank entities, the FT reports. Thus, from July through November 2022, according to the newspaper’s estimates, more than €17 million—converted from rubles—was deposited into the accounts of Derkach, Nekrasov, Belousov, and Bolshakov; these funds were used for dozens of purchases, the publication claims. In total, the FT identified more than 50 transactions, the potential profit from which could have exceeded €9 million.

According to the newspaper, the bankers regularly coordinated their transactions: on the same day, they would purchase the same number of bonds from a single issue, often before announcements regarding the possibility of their replacement appeared on Gazprom’s website. They did not participate in all of the 2022 replacement rounds, but they purchased four issues, each of which was replaced with Russian securities by the end of the year, the FT found.

The newspaper’s sources noted that these securities were illiquid, and the deadline for submitting exchange requests was typically about two weeks. One of them suggested that without prior knowledge of which bonds would be included in the exchange program, it would have been impossible to carry out such transactions quickly. According to lawyers, financial experts, and EU representatives interviewed by the FT, the circumstances surrounding the transactions raise questions about the possible use of non-public information.

One EU official who reviewed the newspaper's report stated that the transactions appear to be an attempt to circumvent sanctions. However, the FT article does not contain an official conclusion that sanctions were violated.

The CSSF, Luxembourg’s financial regulator, conducted an inspection of the bank in March 2023, according to the FT. Based on a report reviewed by the newspaper, the regulator found that the bank had violated its own rules prohibiting employees from opening personal accounts. The CSSF did not identify any other violations, did not impose any fines, and limited itself to requiring the bank to update its internal staff guidelines.

In response to the FT article, Gazprombank Luxembourg stated that the bank had “strictly” complied with EU and Luxembourg law and had not participated in any sanctions violations. Derkach also rejects the allegations and points out that the regulator found no significant violations. The FT reached out to Belousov, Bolshakov, and Nekrasov for comment.

All four have left Gazprombank Luxembourg, the newspaper notes. Nekrasov has returned to Russia and heads Moscow’s Spartak. Belousov and Bolshakov run the Luxembourg-based investment firm B&B Capital Partners. Derkach, according to him, leads a private life in Luxembourg.

This article was AI-translated and verified by a human editor