Page 44 - bne magazine September 2020 russia melting

44 I Eastern Europe bne September 2020
Sanctioned Russian billionaires Arkady and Boris Rotenberg reportedly dodging sanctions with multimillion-dollar art deals
bne IntelliNews
Sanctioned Russian billionaires Arkady and Boris Rotenberg reportedly dodged sanctions by using multimillion-dollar art deals to move money out of the US.
The two stoligarchs, or “state sponsored oligarchs,” are members of Russian President Vladimir Putin’s tight inner circle, who he uses to build massive state-funded infrastructure projects such as the Power of Siberia gas pipeline to China and the Kerch bridge that
links Russia’s mainland to the Crimea peninsula, making the nominally private businessmen into billionaires.
Having been friends with Putin since his KGB days, both men were included in the US Treasury Department (USTD) sanctions list, which bans them from doing business with US companies or individuals. Except there is a loophole: the art world is not regulated and has also been highly secretive to boot, making it the ideal vehicle for the Rotenbergs to move money in and out of the US.
And they have a lot of money to move: Forbes estimates their combined wealth at $4.1bn, making them among the richest men in Russia. Vedomosti dubbed them the “Kings of the state contracts”
a few years ago as development companies scooped up the lion’s share of the most lucrative state investment project contracts.
Now it appears they have been using art world deals to move tens of millions of dollars in out and out of the US, according to a report presented at
the end of July by members of the permanent subcommittee on the Investigations of the US Senate Committee on Homeland Security
www.bne.eu
and State Affairs, as reported by the RusLetter blog.
The committee has been investigating the brothers' businesses for two years and concluded that the US art market is not regulated by the rules of anti-money laundering legislation, so deals can be carried out in the interests of people included in the sanctions list without penalties.
The report names Moscow art dealer and US citizen Grigory Baltser as instrumental in the deals: between May to November 2014 shortly after the brothers were included in the sanctions list, Balzer allegedly purchased works of art worth a total of $18mn with money from companies associated
with businessmen, according to the report, including a painting by René Magritte La Poitrine worth $7.5mn.
All in all, the report says that the Rotenbergs concluded a total of $91mn worth of art deals in the US after they had been sanctioned. In addition, almost $122mn was withdrawn from accounts and sent to Russia between March 16, 2014, when US President Barack Obama announced the imposition of sanctions, and on March 20, when the Rotenbergs were added to the sanctions list, the report said.
And it appears that most of the most famous art auction houses have been caught up in the scheme. The report names Christies, Sotheby’s as well as
The sanctioned stoligarch Rotenberg brothers have allegedly been dodging sanctions through multi-million dollar art deals, including the purchase of the painting by René Magritte La Poitrine worth $7.5mn