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Posted by: Ian (D. Withers)

Putin’s bailiffs’: the Russian agency bankrupting dissidents using UK courts

Alexei Navalny’s friend Bill Browder says sanctions against the Deposit Insurance Agency ‘long overdue’

The Deposit Insurance Agency remains unsanctioned in the UK despite clear links to the Russian state

By Richard Holmes – Senior Reporter

February 20, 2024

A Russian-state owned agency dubbed “Putin’s personal bailiff” that is pursuing dissidents in Britain’s courts must face sanctions, MPs and activists have told i.

 The arm of the Russian government, known as the Deposit Insurance Agency (DIA), has been accused of bankrupting Putin critics and pursuing them through litigation in UK courts to retrieve money.

 MPs and activists are concerned that the money recovered goes back to the Kremlin and ultimately contributes to its ongoing war in Ukraine, as its ultimate owner is Russia’s central bank.

 According to internal emails seen by i, the Foreign Office discussed imposing sanctions on the DIA in December but has not done so since.

 The death of Russian opposition leader Alexei Navalny last week has sparked renewed calls from politicians and activists who are urging the Government to halt the activities of the DIA which they claim is a “loophole” for political persecution.

 It has continued to operate in Britain since Russia’s invasion of Ukraine nearly two years ago and has worked with private investigators to find the assets and home addresses of Russian dissidents, before pursuing them through the UK courts.

 The DIA was established in 2004 as the Russian state liquidator to provide compensation to depositors if Moscow’s banks should fail. Acting as a bankruptcy administrator, the DIA can bring claims in courts around the globe against those it deems played a part in a bank’s demise, seeking compensation for the clients they represent.

 As well as retrieving funds, it is also able to strip foreigners of their ownership of companies inside Russia.

 The DIA’s role in helping renumerate everyday Russian people when a bank collapses has so far protected it from becoming sanctioned in the UK.

 However, critics of the Russian liquidator claim the process is being used as a tool to intimidate and pressure Russian dissidents, who claim to have had their banks, or the banks they were shareholders in, unlawfully closed or forcefully nationalised in Russia.

 The DIA is accused of leading Kremlin-directed efforts to nationalise the assets of privately owned businesses to now-sanctioned Russian state banks. Many of the businesses that the DIA targets on behalf of the Central Bank of Russia are owned by shareholders and oligarchs who have been blacklisted as political targets of the Russian state.

 Tory chair of the Foreign Affairs Committee, Alicia Kearns, said the DIA is acting as “Putin’s personal bailiffs”, saying it “has been captured” by the Kremlin and “no longer serves the Russian people”.

 “Like any other organ of Putin’s kleptocracy it should be sanctioned,” she told i. “What we need now, however, is a G20 agreement on the seizing of Russian Central Bank assets and a special tribunal on the crime of aggression.”

 In April 2022, Tory MP Kevin Hollinrake wrote a letter to then-Chancellor Rishi Sunak saying the DIA’s unsanctioned status creates a “loophole” for Russia.

 Mr Hollinrake, who is now a minister, said the DIA’s ultimate ownership by Russia’s central bank creates a “high possibility” that the proceeds from cases brought by the DIA would “accrue to sanctioned entities within the Russian State and, by extension, contribute to their ongoing war effort”.

 Bill Browder, a British-American businessman and friend of Alexei Navalny, said sanctions against the DIA were “long overdue”.

 “They’ve been at the centre of nastiness in Russia for a long while,” he told i. “I would hope that they are just one name on a long list of targets after this political murder.”

 It comes as the UK and US are thought to be considering a fresh wave of sanctions against Russia this week following the death of the Russian opposition leader.

 Mr Navalny died in a remote penal colony in the Artic Circle after being jailed in 2021. Foreign Secretary David Cameron has said that Russian President Putin should be held accountable for his death.

 Ms Kearns pressed the Government on the issue of the DIA in the Commons asking Leo Docherty, the parliamentary undersecretary for the Foreign Office, if the Government will now consider sanctioning the agency.

 Mr Docherty said Ms Kearns raised a “good point” about the Russian state corporation and insisted the government was “focused in a laser like way on the economic impact of our sanctions in the round”.

 The UK has sanctioned over 1,700 individuals and entities since Russia’s full-scale invasion of Ukraine, but the death of Putin’s fiercest critic may push the Government to introduce a new wave of sanctions against Russian entities, including the DIA – something that some politicians in Westminster have been calling for for years.

 In May 2022, Conservative MP Dan Kawczynski asked Liz Truss when she was foreign secretary why the DIA has yet to be sanctioned. Months later when Ms Truss imposed fresh restrictions prohibiting Russia’s use of UK professional services companies, she stopped short of including legal services, keeping the UK’s door open to the DIA.

 Similar pleas have been made in the US where Democrat Steve Cohen and Republican John Curtis wrote a joint letter to US President Joe Biden suggesting that while the DIA’s role in pursuing settlements from collapsed Russian banks “seems innocuous enough,” the agency’s role could be “more nefarious”.

 Citing a case against the Russian dissident Anatoly Motylev, MP Mr Hollinrake, in his letter to Mr Sunak, accused the DIA of undermining the UK’s efforts to “restrict the Kremlin’s access to funds”.

 The DIA is currently attempting to recover £800m from Mr Motylev, after a Russian court found him responsible for more than £2bn in debts following the collapse of his Rossisky Kredit Bank. He fled to the UK shortly afterwards.

 In a 2020 judgment on the case between Mr Motylev and Anastasia Koldyreva, the beneficial owner of several Russian banks, the judge highlighted that evidence submitted by Ms Koldyreva had been provided by the DIA and warned that it “may have been obtained illegally”.

 The Foreign Office and the Deposit Insurance Agency declined to comment.

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