Sanctions board accused of wrongly fining firm over Russian billionaire’s yacht

A Russian billionaire with close links to Vladimir Putin could have used a strawman so as to avoid scrutiny in Malta due to Crimea-related sanctions he was under.

Arkady Rotenberg, a close friend and judo sparring partner of the Russian president, was placed under sanctions in 2014 after the Russian invasion of Crimea as owner of PSJC Mosotrest, a company that built the Kerch Bridge between Russia and Crimea, which Russia has used to help claim sovereignty over the region that it invaded in 2014.

But in 2016, he won a case in the EU’s General Court to have the sanctions lifted after the European Commission failed to demonstrate his association with people responsible for undermining Ukraine’s territorial integrity.

The sanctions against Rotenberg were subsequently reinstated through a European Council regulation implemented on 13 March 2017.

Malta’s Sanctions Monitoring Board claims Rotenberg’s vessel, the M/Y Rahil, was registered in Malta in 2016.

But the lawyers who registered the boat are contending that documentation they received for due diligence on the Rahil showed no links to Rotenberg, pointing out that the vessel was owned by a certain Aleksander Kozlov, apart from being registered in 2016 when Rotenberg was not under sanctions.

The lawyers, Cedric and Malcolm Mifsud, are challenging an €800 fine by the SMB for the yacht registration.

As registered agents, the lawyers are limited to representing the vessel for the purpose of filing documentation with Transport Malta, which in itself is not a relevant activity for the purposes of due diligence.

The lawyers’ client was not the sanctioned person, and in court they criticised the SMB for issuing a fine on the basis of correspondence the lawyers had not received, and without first disclosing any intelligence possibly contradicting their documents. The original SMB letter had been sent without checking whether Rotenberg was still under sanctions.

The SMB insists there is a “publicly available” link between Medexlite Ltd’s sole director Dismak Services, that company’s sole director Eleni Andronikou, and company structures belonging to Rotenberg.

A judge has now agreed with the plaintiffs that they have the right to request judicial review of the SMB’s decision in court.

The plaintiffs accused the SMB of sending correspondence about its investigation to the wrong company, and of failing to inform them of the investigation before declaring them in breach and imposing the fine.

A spokesperson for the lawyers told MaltaToday the case has serious implications for Malta’s shipping industry and that their contention is not about the paltry fine. “We are fighting for the entire industry, as they have done the same thing to other practitioners, who chose to pay the relatively small fine and carry on. We pride ourselves in our correctness.”