On April 8 the EU added Saodat Narzieva, a sister of Russian oligarch Alisher Usmanov, to the personal sanctions list following an investigation by Organised Crime and Corruption Reporting Project (OCCRP) that claimed she was the beneficial owner and had control over 27 Swiss corporate bank accounts, one of which that held over $2bn.

Narzieva works as a gynaecologist and obstetrician in Tashkent, the capital of Uzbekistan, Usmanov’s country of birth. A bne IntelliNews investigation found her brief shareholding in her brother’s empire ended after only one year in 2014, and eight years before the Ukraine war started or sanctions were placed on Usmanov personally.

She was included in the business as an ultimate beneficial owner (UBO) in 2013 as part of a scheme the billionaire announced in 2012 to transfer his fortune to his business partners and family. However, she had no control over the bank accounts or companies at any time and Usmanov changed the scheme, buying back her shares a year later in 2014, since when she has played no role in his business empire whatsoever.

Following the release of the OCCRP report and parallel reports in The Guardian and BuzzFeed, among other media partnerships, the EU decided to include Narzieva in the sanctions list based on the information in the report.

“Soadat Narzieva is the sister of Alisher Usmanov, a pro-Kremlin oligarch who has close ties to the Russian President Vladimir Putin and is listed under Decision 2014/ 145/CFSP. Alisher Usmanov has transferred considerable assets to his sister Soadat Narzieva, including a single payment or gift of $3mn. She also held 27 Swiss bank accounts, holding hundreds of millions of dollars, which can be linked to her brother Alisher Usmanov. She has also been linked to six offshore companies whose activities can be linked to Usmanov. Soadat Narzieva is therefore associated with Alisher Usmanov, who actively supported materially or financially Russian decision makers responsible for the annexation of Crimea and the destabilisation of Ukraine and actively supported the Russian government’s policies of destabilisation of Ukraine,” the EU said in the official release announcing her inclusion in the sanctions list.

Narzieva disputes the implication that she was acting on behalf of her brother to hide his money from the Western authorities or sanctions and her representatives say the sanctions imposed on her by the EU are completely unfair and unfounded. They told bne IntelliNews that she intends to dispute the sanctions in court and demand they be withdrawn in the nearest future. 

Personal sanctions slapped on Usmanov

Alisher Usmanov is one of the wealthiest men in Russia, having made several fortunes from finance, manufacturing telecoms and metallurgy, but having made the largest part of his fortune from a legendary deal where he and his partners bought a 10% stake in tech giant Facebook for just under $1bn in 2009, well ahead of the company’s eventual IPO in May 2012, earning him a multiple return on his investment.

He has also been accused of being close to Russian President Vladimir Putin and various members of the Kremlin elite. He has been accused of using his ownership of the famous Kommersant newspaper to shackle the paper’s reporting on the Kremlin’s behalf. In one notorious incident Usmanov sacked the magazine’s long-standing editor after it ran a story on vote rigging in the controversial September general election won by the ruling United Russia Party. Part of the reporting included a picture of spoiled ballots with obscenities scrawled on them.

Usmanov didn't go into details of his decision to sack the editors, saying only: “These materials border on petty hooliganism,” via a spokesperson. However, the sacked editor, a well-known Russian journalist, was soon invited back and continued to work in the newspaper until he died from lung cancer in 2019.      

As a result of these allegations and as part of a wider campaign to sanction Russia’s richest men, Usmanov was personally sanctioned by the UK government at the start of March as well as by the European Union, US and Switzerland as western governments rushed to freeze Russian oligarchs' assets amid the war in Ukraine.

While Usmanov has been personally sanctioned, none of his companies have been hit and indeed, the US government explicitly exempted his companies where he controlled more than 50% of the shares – the trigger for sanctions – as they are too important for entities like the international metal markets to interfere with. Somewhat contradictory to what the EU has concluded, the US Treasury Department was quoted as saying that it was “concerned about harming” Kommersant as one of Russia’s “most independent remaining publishing companies”.   

Usmanov’s spokesperson denies he has any special relation with Putin and says Usmanov has for several years almost entirely devoted himself to philanthropy and sports, spending little time in Russia because of his duties as the President of the International Fencing Federation. Usmanov supports various charities, including one for blind children, and says he has never made any money through using contacts with the state.

Usmanov’s legacy scheme

Usmanov first started talking about giving away his $13.1bn fortune, according to Forbes, to his partners and family in 2012, when he vowed to leave business after he hit 63 years old in 2016 – the age that the Prophet died, as Usmanov is a devote Muslim – but he started to prepare for his eventual exit earlier in 2006 when he began to set up trusts to own some of his assets. Usmanov has no children.

Between 2010 and 2011 he suffered from serious health problems that affected his eyes and threatened his life, according to Usmanov’s spokesperson speaking exclusively to bne IntelliNews.

Usmanov began reorganising his group nine years ago, and part of this process was to roll the ownership of all his various companies into a single holding, USM Holding, that was later transferred to Russia as part of the “de-offshorisation” process required by its government.   

He announced he would split his shares in USM between his family and top managers and followed through with more details in a famous Financial Times interview over lunch in January 2020. “Many people have helped me, so I want to help my family and my management by giving them my shares”, he told the FT.

It has been reported that many of his assets are held in “irrevocable trusts” and suggested this was a way to dodge sanctions. However, Usmanov started setting up these trusts 16 years ago, which took over the ownership of much of his property, as well as his $600mn super-yacht Dilbar in 2017 and his personal jet.

Usmanov’s yacht, named after his mother, was seized by Germany in April, and is owned by a trust, where his sister Gulbakhor Ismailova was the beneficiary. As for Usmanov himself, he voluntarily exited the trust that owns the yacht in 2017, as part of his plan to transfer part of this wealth to his family and that happened long before any sanctions were imposed on him.

“The arrangement of the trusts was absolutely transparent. In the beginning, Usmanov was one of the trusts’ beneficiaries, but later resigned to the benefit of his family,” Usmanov’s spokesperson said. “This is yet another clear sign he never intended to conceal his property,” he added. “Usmanov set up these trusts upon his own decision and transferred his assets there, which were acquired with his honestly earned money and after paying all taxes”.  

ABU Group

In 2013 Usmanov put aside 10% of shares in ABU Group for his partners and family. ABU Group was incorporated in August 2013 as part of the group restructuring that started a year earlier, and was established by the now defunct Mossak Fonseca law firm that was at the heart of the Panama Papers leak.

ABU Group was Usmanov’s personal holding company, which by that time owned 60% of USM Holdings that was the main vehicle to own all the group’s assets together with his two main partners. (The three letters are the first letters of the surnames of the three main partners of that time: Alisher Usmanov, Vladimir Skoch and Farhad Moshiri.)

ABU Group was owned by ABU Holding, a BVI company, that was the principal shareholder of USM Holding and USM Group, so it should have been USM Group, which the 27 corporate accounts mentioned in the OCCRP report, belonged to.

OCCRP confirmed to bne IntelliNews that the leak it based its investigation on had few details on the names of the corporate entitles that the accounts serviced, nor were they aware of the names on the accounts serviced, according to one person who didn't want to be named as they were not authorized to speak publicly. The lack of this information was something that was also explicitly mentioned in the report: the leak OCCRP based its investigation on had few details on names of the corporate entities that the accounts serviced, nor did it contain the names of the other owners of the accounts. The fact that Usmanov himself was named as one of the UBOs in all the accounts was also not included in the leaked information, but was in the banking documents detailing the accounts seen by bne IntelliNews. The OCCRP report itself was very cautious, given the limited information available, encapsulated in the title of the report: “Sanctioning an Oligarch Is Not So Easy: Why the Money Trail of Alisher Usmanov, One of Russia’s Wealthiest Men, Is Difficult to Follow.”  

The OCCRP investigation concluded Narzieva was named as an “ultimate beneficial owner” by the bank, but subsequent reports, and the EU, assumed that she alone actually controlled the accounts and was acting on behalf of her brother as some sort of proxy. It is also implied, although not stated explicitly either in the investigation or press reports, that she remains in control of these accounts, which are some sort of scheme to put Usmanov’s wealth out of the reach of sanctions.

The main evidence connecting Narzieva to Usmanov unearthed by OCCRP is that one of the bank numbers associated with the 27 Swiss accounts also appeared in the Panama Papers leak of data by the now infamous Panamanian law firm Mossack Fonseca that linked her to the Usmanov’ company Gallagher.

Group structure

Unlike the OCCRP, bne IntelliNews had access to extensive bank and incorporation documents for all of the ABU Group over a period from 2006 to 2014, before Usmanov moved his assets to Russia in the de-offshorisation process. There are in total actually 35 corporate entities that were grouped together into the USM Holding, not just 27, according to the bank documents seen by bne IntelliNews.

“According to documents in the Suisse secrets data, the 27 accounts at Credit Suisse that listed Narzieva as the beneficial owner were opened between 2004 and 2014, and 16 listed Usmanov’s metals, mining and telecoms holding company, USM, as a contact,” the OCCRP reported.

The companies in the ABU Group were all named in the documents seen by bne IntelliNews and represented most of the main assets under Usmanov’s control. Those included: USM Steel & Mining group that controls Metalloinvest, his main metallurgical asset that made him his first billion dollars; USM Internet Holding, that held telecom and tech assets for which he arguably is most famous; and USM Telecom Holding that held his stake in Megaphone among other telecom assets.  

ABU Group and the subsidiary companies under its control were financial holdings at the top of the corporate structure tree. For example, Metalloinvest owns many metallurgical mines, factories and other assets, all of which were incorporated as legal entities with their own operation accounts. USM Steel & Mining Group was the top tier financial holding where the income and investment capital could be consolidated.

Indeed, USM Steel & Mining group is the account that was identified in the OCCRP report as Gallagher and contained the reported CHF1.9bn. The name Gallagher came up in the OCCRP investigation as it was included in the Panama Papers leak and connected to Narzieva, as Usmanov used the now discredited Panamanian Mossack Fonseca to set the company up.  

“Gallagher was one of the oldest companies in the group and was set up when Usmanov was starting to invest into metallurgy in the noughties,” the Usmanov spokesperson told bne IntelliNews. “It has since been renamed USM Steel & Mining Holding and with a company of Metalloinvest’s size it is not unusual that it could have $2bn in its account.”     

In 2016 a US bank filed a suspicious activity report, which was included in the Fincen Files leak. One of the accounts mentioned in the Suspicious Activity Report was the Credit Suisse account 83508194193, which The Guardian journalist identified as attributed to Gallagher Holdings Limited from information in the Panama Papers, which "appears to be maintained" by it.

The same Suspicious Activity Report raised concerns about the “complex web of shell companies” being used by Usmanov and his associates to make wire transfers worth $1.6bn between 2003 and 2015. Narzieva was referred to be one of the beneficial owners of corporate account 83508194193, which investigators took as confirmation that some of the accounts for which they assumed she was a signatory were used by companies linked to Usmanov's business empire.

“Mrs Narzieva was never a beneficial owner of these accounts, and this assumption is a misinterpretation of the technical display of Credit Suisse’s accounts information,” USM Holdings said. “She never had access to the accounts of these companies, nor did she have any signatory rights over any of them.”

Metalloinvest is Russia's largest iron ore producer. As bne IntelliNews reported, it announced at the end of last year that it had become the largest company in terms of JORC 2012 standard iron ore reserves in the world, with 15.4bn tonnes. It is also the largest iron ore and pellet producer in Russia and its reserve base to be the second-largest in the world with an estimated life of around 136 years. This is not a small company.

Moreover, it has become extremely profitable. In the post-coronavirus (COVID-19) pandemic boom commodity prices have soared and iron prices in particular are decade-long highs. Metalloinvest is one of the companies explicitly exempted from sanctions by the US Treasury Department.

UBOs

In a report linked to the OCCRP investigation, The Guardian suggested that Narzieva was in control of these bank accounts with the implication that she was acting as some sort of proxy for her brother, although the phrasing in both the article and the report was cautious.

“Usmanov’s 56-year-old sister, Saodat Narzieva, appears to have been the one-time beneficial owner of at least 27 secret corporate accounts at Credit Suisse, including one that held nearly 1.9bn Swiss francs (GBP1.6bn).” the Guardian reported, using qualifiers like “appears” and “attached to” when linking her to the accounts. “

“The disclosures highlight the potential challenges western governments face when sanctioning or freezing the assets of oligarchs,” The Guardian continued, again qualifying its allegations with the word “potential.”

The Credit Suisse documents seen by bne IntelliNews do indeed name Narzieva as a UBO of a number of Usmanov’s companies. But a confusion has crept in over the difference between being a shareholder that enjoys economic benefit from owning shares and owning enough shares of a certain type to actually be in control of a company. The assumption is she is the sole owner, as the OCCRP had no information of any other UBOs. For example, The Guardian names Narzieva as “the” beneficial owner, not “one of” those owners.

“All the changes to the UBO lists are reflected in the Establishment of the Beneficial Owner’s Identity forms (Form A) of these companies, which do not contain her name before and after the mentioned period of 2013-2014. For the same technical reasons, such forms usually mention all the minority owners of any company, even if these persons have no voting rights, no control over accounts, and no sway over the Holding’s business activities,” USM Holdings said in a statement.

The Credit Suisse documents seen by bne IntelliNews list Narzieva as one of about ten shareholders in only some of the entities; Usmanov’s business partners and other family members are also listed as UBOs in each of them. In total, bne IntelliNews counted 13 companies from the 35 companies in the ABU Group bearing her name as a UBO. And she was named as a UBO by Credit Suisse for only less than a year between September 2013 and August 2014, after which her name is no longer listed as beneficial owner. The Establishment of the Beneficial Owner’s Identity, a bank’s document that lists all UBOs, carries a disclaimer in each case that “the beneficial owner does not necessarily have to be granted a bank power of attorney or signatory authority for the business relationship”.  

ABU Group shares

While both the report and article are cautious not to specifically accuse Narzieva of wrongdoing, the framing of both are clearly highly suggestive.

The OCCRP included a section in its report entitled “The World’s Wealthiest Gynaecologist?” detailing her luxurious holidays and included pictures of her in elegant surroundings.

“Obviously, Narzieva is no ordinary gynaecologist,” the OCCRP opined at one point in the report, before going on to explicitly accuse her of acting on her billionaire brother’s behalf through the vehicle of the Swiss bank accounts. “Her lifestyle is an example of the kind of luxury accessible to oligarchs’ relatives. But her riches – and those Swiss bank accounts in particular – are also evidence of how even highly-respected Western banks can help obscure the connections between oligarchs and their money.” But this is qualified with: “It’s not clear why Narzieva would be listed as a beneficial owner of these accounts.”

ABU Group had a total of 1,800 shares of which 1,000 are “A” shares with voting rights that conferred control over the company and its bank accounts. The remaining 800 “B” shares were only economic shares, which entitled the owner to dividend payments, but did not confer any voting rights at board meetings, nor any executive power over the company or its bank accounts.  

According to the documents seen by bne IntelliNews and dating back to 2013 and 2014, Usmanov personally held a majority in all the companies and was listed as a UBO in all of them, which gave him complete control over all the companies in the group and their respective bank accounts in Switzerland.

Usmanov also owned a majority of the B shares that had no voting rights. At the same time, 10% of the B shares were distributed amongst a dozen names listed as UBO’s on the Credit Suisse documents. Narzieva held a total of eight B shares in ABU Group from the total of 1,800 and no A shares at all, equivalent to a 0.26% in the whole USM Holding.

“Mr Usmanov’s decision to transfer a small shareholding in his business to his sister as a gift was an example of the largesse he has often showed to friends and family over the years – it significantly pre-dated sanctions and had nothing to do with them,” USM Holding said in a statement commenting on OCCRP report.

Usmanov is listed by Credit Suisse as an UBO in all of the companies in the group for the whole period covered by the documents from 2006 to 2014, including in the years that relate to Narzieva’s being a UBO.  

Narzieva's non-executive role was confirmed by a complete set of Credit Suisse signature samples for the bank accounts for all the companies in ABU Group for the period. Those signatures included Usmanov’s managers’ signatures, while Narzieva’s name and signature appeared on none of the Credit Suisse signature sample documents.

The report also mentions that Narzieva was in control of six offshore companies, but gives no details. According to her representative she doesn't currently own any offshore companies. The relevant company that was under Narzieva’s direct control was Optimum that was established with the sole function of owning her eight shares in ABU Group and was wound up after the last of her payments for the buy-back was transferred to her in 2017.

Sold out in 2014

While neither the report nor the articles say explicitly that Narzieva is still a beneficial owner of either the companies or the bank accounts, the fact that the EU has sanctioned her suggests that she is considered to currently be acting on her brother’s account. Indeed, the only dates mentioned in the reports say explicitly the leaked information is valid only until 2014. No date after that is mentioned.

The bank documents seen by bne IntelliNews explicitly names Narzieva as being a UBO only between the dates of September 30, 2013 and August 7, 2014. In the subsequent declaration of beneficial owners provided by Credit Suisse her name no longer appears as a UBO after August 2014. (See a sample of the Ultimate Beneficiary Owner and Signature sample documents here.) The reports that Narzieva was a UBO does not give any dates or time period for her ownership.

The Guardian reported, “While a handful of the accounts were closed by 2016, about 18 are believed to have still been active in recent years. All of the assets were held in business accounts, some of which are believed to be linked to offshore companies.”   

Most of the companies and accounts for the ABU Group, including ABU Group itself, have already ceased to exist, according to USM Holding, but in the investigated period they were the accounts for the main assets in the USM Holding and the core of Usmanov’s business empire.  

What the leaked documents used in the OCCRP investigation do not show is that Narzieva exited the ABU Group in 2014 and the legal vehicle she used to hold her eight shares in the group, Optimum, was wound up in 2018 after the last of her payments were made. Since then she has had no involvement in the group in the last eight years – just after the first sanctions were imposed on Russia following the annexation of Crimea and years before there was even any talk of sanctioning her brother.

“Any speculation about Mrs Narzieva’s business dealings on behalf of her brother or on behalf of USM Holding is simply incorrect. Optimum Group was originally set up to allocate a stake to Mrs. Narzieva from Mr. Usmanov as a gift”, USM Holding said in a statement. “Optimum Group was the holder of this personal interest of Mrs. Narzieva during the short period of 2013 and 2014. It was liquidated in 2018 after all dividends were paid to Ms. Narzieva and, other than for the stated purposes, had no connection or business relationship with USM. Thus the allegation that Mrs Soadat Narzieva would have “held 27”, or any at all, “Swiss bank accounts linked to her brother” is completely false and is clearly refuted.”  

The whole scheme was set up in 2013 as a way for Usmanov to transfer some of his wealth to his partners and members of his family. But in 2014 he changed his mind, according to his spokesperson. Instead of giving those near and dear to him exposure to the businesses, he decided that it would be better to give them control of his physical assets such as his extensive property holdings, the yacht and the plane.

The reward for Usmanov’s partners, on the other hand, was shares in his businesses. In the late summer of 2014 Usmanov bought the 10% of B shares back from those in the ABU Group scheme for a total of $90mn, which were then sold to “six investors”, according to Usmanov’s spokesperson, all of whom were his partners or managers and who got a deep discount for the shares. Usmanov paid for these shares over the period August 2014 and April 2016. At the end of this deal Usmanov’s overall share in the group, and the shares of other shareholders, were unaffected as these deals just saw a redistribution of the 10% of B shares that were transferred from the family to business partners and managers.

For her part of this deal Narzieva was paid a total of $15mn, split into three tranches paid out through to 2017, and she was also entitled to dividend payments worth just over $2mn. After she received the last payment the Optimum Group Holdings Ltd. that used to own her eight B shares was wound up.

Gifts

All of the OCCRP report, the press articles and the official release by the EU mention the $3mn payment that Usmanov made to Narzieva that was identified in the bank transfer documents as a “gift,” according to a “Suspicious Activity Report” (SAR) filed by the bank that made the transfer in 2016, BuzzFeed and the International Consortium of Investigative Journalists reported. The bank said it “could not determine the purpose of some of the transactions,” in the report and also that the transfer “appeared to be made by someone close to Putin.”

SARs are part of any bank’s risk management system and have no legal consequences. Scrutiny of any transaction over $10,000 is mandatory for possible money laundering activity and any suspicion, even if unsubstantiated, must be reported to a bank’s compliance department.

Usmanov’s spokesman says this gift was simply just that: a gift made from his personal account to her personal account. It had nothing to do with the Swiss accounts or Usmanov’s businesses. “Mr Usmanov has always shared his wealth with his family. Such an amount, even if it is substantial in absolute terms, would represent just a tiny portion of it”, he added.

Narzieva’s spokesperson told the Guardian: “Saodat Narzieva is a gynaecologist and obstetrician based in Tashkent. Her life would be completely unremarkable except for the fact that her brother is Alisher Usmanov, who on any account is a very successful businessman. Mr Usmanov has been generous to his family members over the years, including to Mrs Narzieva.”

Questions were also raised and another SAR written up in 2017 when Narzieva then transferred Usmanov back $100,000 in two tranches.

“The payment details stated that the funds had been sent “to the brother for current expenses” – an amusing claim, considering that Narzieva’s brother is a world-famous multi-billionaire,” the OCCRP contemptuously said in its report.

USM’s spokesperson denies any alleged prejudice of such a transfer. “In any case, it would be a transfer from her private account to his. Nothing prejudicial or unlawful.”

More publically, another SAR was written up when Narzieva sent another $2.5mn from the gift on to a, “CEO of a steel mill in the Middle East,” Shokhrukh Nasirkhodjaev, the director of Hamriyah Steel FZE, which is based in the United Arab Emirates, according to The Guardian.

The bank said in the SAR that it “could not establish the purpose of the wire transfer” between Narzieva and the Middle Eastern businessman, since they “appear to be engaged in different lines of business as a doctor and managing director of a steel company, respectively”.

As it turns out, that businessman was the boss of a joint venture established by Usmanov’s Metalloinvest in 2010 in which USM Holdings owns a 49% stake and is also Narzieva’s son-in-law – a fact that OCCRP did belatedly mention after first mentioning the suspicious SAR. Again all these transfers went through personal accounts and not the corporate accounts in Switzerland.

“The transfers in question have nothing to do with USM’s or any other company’s activities, since they refer to Mrs Narzieva’s private account. She has every right to dispose of her funds at her own discretion. Mr Usmanov is Mrs Narzieva’s brother, while Mr Nasirkhodjaev is Mrs Narzieva’s son-in-law. In this case we are talking about money transfers to her direct relatives,” USM Holdings said.

“The allegations that were brought up by the investigative journalists against Mrs Narzieva is a clear example of a “manifest error”, Usmanov’s spokesman said. “From the very beginning we pointed out that the data allegedly supporting these baseless claims was incorrect and mistakenly interpreted, and that there was nothing untoward about the financial relations between Mr Usmanov and his sister. We were extremely clear that Mrs Narzieva did not have “possession or control of any accounts in Swiss banks on behalf of her brother and that her only guilt was that she is a sister of a very prominent person who was generous to her. Unfortunately, these erroneous conclusions were cited as the explanation for imposing sanctions on Mrs Narzieva, and continue to have very grave implications for her life and reputation as an honest and decent person. This is absolutely unfair and outrageous,” he added.