Control Risks’ provided debt repayment support to a European mining corporation by identifying and assessing the ownership of a Russian third party.

A European mining corporation had a long-term credit line with a major Russian bank, which was sanctioned following Russia's invasion of Ukraine in February 2022. The client withheld payments on the loan, resulting in the bank declaring the client in default and selling the loan to a third party without the client's consent. The third party subsequently repackaged the loan into a bond offering on the Russian financial market.

The client approached Control Risks to help determine whether the third party – a non-public company not obliged to disclose its shareholders – was owned or controlled by sanctioned individuals. The client also asked Control Risks to establish whether the third-party enabled sanctions evasion through selling the bond offering to a sanctioned bank or by other means. Finally, the client was interested in the attitudes of US, EU, and UK authorities regarding actions undertaken by the sanctioned bank.

Initial research and enquiries

Control Risks began by conducting public record research. Our experts reviewed and analysed data from Russian corporate records and media aggregators, seeking information on the third party and its possible owners. We then spoke to knowledgeable sources in the Russian banking and investment industries as well as those close to Russian financial regulators to identify the ownership of the third party and to ascertain whether any sanctioned banks participated in the specific area of the bond market in which the third party operated.

Our findings confirmed that the third party was the subsidiary of a major investment and brokerage company operating independently of sanctioned Russian banks. Our enquiries with individuals operating in the Russian financial industries as well as sources close to Russian authorities found that sanctioned banks were unlikely to have bought the bonds due to complications created both by the sanctions themselves as well as by strict Russian Central Bank regulations.

Confidential enquires with decision-makers

Next, our experts used their extensive networks to conducted confidential enquiries with sources close to US, EU, and UK decision-makers to ascertain their attitudes to the third party’s practices. Through these enquiries, we were able to provide the client with insight into the attitude of these decision-makers towards the transfer of companies’ loans from sanctioned institutions to other entities.

Control Risks’ enquiries helped the client obtain a complete and accurate assessment of the risks associated with the third party. In the end, our client made a confident decision to proceed with their debt repayment to the company.   

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