Consultants seek legal route through sanctions to liquidate Moscow-linked entities – The Irish Times
Consultancy firms have lobbied the Government for legal clearance from sanction rules so they can wind down Russian-linked companies.
Consultancy and legal firms stand to earn lucrative fees from liquidating companies linked to sanctioned Russian parties, but fear falling foul of the sanctions themselves.
They have sought clarity on the legality of doing so, or on whether exemptions can be granted to enable this work.
Teneo Restructuring, a division of the global consultancy services firm founded by Irish businessman Declan Kelly, contacted the Department of Enterprise earlier this year on the issue, regulatory filings show. It is understood a host of other service providers and legal firms are poised to take advantage if the way is cleared.
Shell companies linked to larger, overseas corporate entities – so-called special purpose vehicles (SPVs) – are a feature of the Irish financial services landscape, with Russian-linked firms having raised tens of billions of euro here.
In March, Central Bank governor Gabriel Makhlouf said about half of the 33 existing SPVs that had been used by Russian banks and companies for fundraising purposes had connections to individuals or entities that were subject to European Union sanctions.
Well-placed sources said that since the introduction of sanctions, directors of many such firms had resigned and there was now a need to roll them up. In the United Kingdom, consultancy and specialist restructuring firms were given special exemptions to do so.
Teneo contacted an aide to Tánaiste Leo Varadkar, seeking “to clarify whether the EU sanctions prohibit the liquidation of sanctioned entities”.
Earlier this month, the Official Journal of the European Union gave a temporary exception to rules prohibiting the provision of services to Russian firms if their services were deemed necessary for the termination of contracts not compliant with sanctions rules, which may clear the way for the work to be undertaken.
A spokesman for the Department of Enterprise said it had told the company that the sanctions “do not appear to expressly prohibit liquidators from acting”.
“However, liquidators must be aware of their own obligations arising under the sanctions as a breach of same is a criminal offence.” It was told to contact the Department of Finance or relevant regulators on “any specific concerns”.
A total of €1.67 billion had been frozen by Irish financial institutions under the sanctions regime up until June 10th, 2022. The Central Bank said it could not provide an update on the number of Irish firms linked to sanctioned entities.
Experts say if a sanction-linked entity were to be wound down it would raise questions over what would happen to any assets it controlled.
Prof Jim Stewart, TCD adjunct professor in finance, who has carried out research on Russian-linked firms in Ireland, said: “If the owner of the asset is sanctioned, the owner liquidates the firm, then the proceeds from that liquidation would also be frozen.” However, he said the assets themselves might not be easily obtainable due to their wider involvement in complex financing structures.
“You might liquidate in Ireland, but the assets might flow through a bank in London or Luxembourg.”
Teneo Restructuring Ireland declined to comment when contacted.