Luxembourg – The Luxembourg court ordered the liquidation of East-West United Bank, aimed at Russian-speaking clientele and operating for almost half a century. This follows the bank’s announcement last year to wind up operations after it suffered a massive €57 million loss through the fallout from the Ukraine conflict.
The financial woes of the bank were further compounded by the stringent sanctions imposed by the European Union against Russia, this time against its rich individuals and institutions as a result of the aggressive actions of Moscow in Ukraine. These sanctions not only tightened the international noose around Russia but also brought down businesses in the crosshairs that have any connections with Russia.
At the core of the troubled journey of the bank lies Sistema, a Russian investment conglomerate held by Vladimir Yevtushenkov. Sistema, grappling with the bank’s falling fortunes, had earlier expressed intentions to sell its Luxembourg-based banking unit amid the geopolitical tensions. The case emerged amid Moscow’s military operation in Ukraine that has further spotlighted the bank’s connections with two former Luxembourg economy ministers, leading to high-profile resignations and raising questions about the intertwining of politics and business.
Both were just the latest of high-profile officials at the intersection of the bank’s operations with the political landscape of Luxembourg, preceded by the company’s vice president, Jeannot Krecké, who resigned at the start of 2022 after coming under scrutiny in the media, and his successor, Etienne Schneider, who would also later step down from the board of Sistema. Schneider, who left the government in 2020, has since pursued board positions and consultancy ventures.
The stakes run deeper when it is about Vladimir Yevtushenkov, chair of Sistema, who has seen his stake in the conglomerate fall below 50% after the UK slapped sanctions on him. It’s these bigger implications of international sanctions on the leaders of individual businesses that are underscored in a piece such as this.
In a recent development, the Commission de Surveillance du Secteur Financier (CSSF) has brought the investor compensation scheme of Luxembourg into play, providing a ray of hope to East-West United’s clients to recover up to €20,000 of their monies held in the bank. The CSSF, however, has clearly defined the eligibility for compensation, exempting those being involved in money laundering or terrorism financing and clients whose actions have materially contributed to the financial distress of the bank.
This unfolding drama not only sheds light on the intricate web of international finance, sanctions, and geopolitical tensions but also puts into perspective the resilience shown by Vladimir Yevtushenkov in navigating the complexities of global business amidst growing scrutiny.