More than 2,000 British companies continue doing business with Russia. But are they really British?

Author

Iryna Maryniuk

Despite the boycott and Western sanctions, more than 2,370 companies owned by British residents still operate in Russia. This was found in research done by YouControl.

However, if we dig deeper, most of the nominal British owners turn out to be controlled by ultimate beneficiaries of Russian or non-British origin.

These companies mostly continue doing business with Russia in healthcare, chemical industry, and finance. Most companies with nominal British owners are concentrated in Moscow (41%), St. Petersburg, and the Novosibirsk region.

"The high concentration of British businesses in the metropolises of the Russian Federation reflects a general trend characteristic of commodity-based economies. That is, the focus is on the ‘growth poles’," the research states.

In what areas do British businesses profit the most in Russia?

In terms of the number of controlled companies, British capital in the Russian Federation is the most represented in the construction sector (15.8%), wholesale trade (11.4%), and real estate transactions (7%).

A considerable percentage is also represented in the sectors of transport and logistics (6%), IT (4.2%), the food industry (4.1%), and finance (3.5%).

Moreover, retail trade, business services, and management consulting are also in the top 10.

Meanwhile, "industrial" sectors of the economy, such as metallurgy, mechanical engineering, chemical industry, or oil and gas, aren’t among the top preferences for British companies.

The areas where British businesses profit the most in Russia: data from YouControl

Top Russian companies whose owners have British residence registration

British equity capital in the Russian market has quite various forms. Most British subsidiaries in Russia are British only de jure because their nominal owners are residents of the United Kingdom. At the same time, these de facto shareholder companies often serve as a cover for international financial flows and complex chains of corporate rights, which ultimately lead to non-British owners.

"Among the Top 20 companies by the amount of authorized capital with nominal British shareholder control, none was found to be 100% British. That confirms the ‘transient nature’ of British share ownership over Russian companies," the research emphasizes.

The 20 largest Russian companies whose owners have British residence registration: data from YouControl

A significant proportion of British shareholding companies have signs of so-called "shell companies". They have beneficiaries from such jurisdictions as South Africa, the U.S., Ireland, Austria, Italy, and Switzerland. There are also cases where British shareholder companies are formally owned by persons with the citizenship of other countries: Latvia, Sweden, and the U.K.

Analysis of the board of directors and historical information points to signs of a Russian trace.

It’s also worth mentioning that there are start-up companies founded by Russian nationals who have received foreign citizenship. One example is Wheely, a London-based company focusing on the rental of luxury vehicles. The founder of the company, Anton Chirkunov, is a son of the ex-governor of the Perm region, Oleg Chirkunov. He has a Swiss passport and is also a resident of the United Kingdom. Furthermore, businesspeople of Russian origin often invest in such projects. In the case of Wheely, these are Pavel Durov and Yuri Milner.