The Treasury and one of Britain’s leading law firms are under fire for enabling Kremlin-backed Russian bank VTB – which was sanctioned ten days ago – to pursue a claim against one of Africa’s poorest nations.
Legal experts at Freshfields Bruckhaus Deringer said the bank has secured a special licence from the Treasury to fund its $670million (£505million) claim, which began in 2019, against Mozambique in the London courts.
VTB was officially sanctioned as a result of the Russian invasion of Ukraine. The sanctions do not prohibit Freshfields from providing legal advice to VTB, but City sources say the reputational risks are clear.
Special licence: VTB was officially sanctioned as a result of the Russian invasion of Ukraine
Over the past week, a flood of City lawyers have sought to distance themselves from clients linked to the Putin regime. But at a court hearing last week, Freshfields defended advising VTB as a ‘matter of professional obligation’.
In a statement to the judge, Freshfields’ barrister David Railton QC said the Government issued a year-long ‘general licence’ for VTB on the eve of the hearing.
The MoS has obtained a copy of the licence, which was issued on March 1. It allows VTB – which is majority owned by the Russian government – to continue paying ‘reasonable’ fees to its lawyers.
The firm’s legal fees for the case – which individuals close to the matter have said may never be paid – are not yet known.
But court documents seen by the MoS show that a senior Freshfields litigation partner charged a rate of £1,050 an hour last year while representing the Bank of Georgia.
Labour MP Chris Bryant, who sits on the Foreign Affairs Committee, described VTB’s Treasury-endorsed licence arrangement as ‘bizarre’. He added that it is ‘extraordinary that British lawyers and companies would still want to work for the Russian state’.
Britain imposed asset freezes on funds held by the bank – Russia’s second largest – and within the UK’s jurisdiction, so no money can be moved without permission from the Treasury. However, the Government then granted a month-long exemption on the freeze.
Freshfields is working for VTB as part of a fraud claim against Mozambique, relating to the ‘Tuna Bonds’ scandal. It concerns $1.3billion of loans arranged by Credit Suisse for projects including a tuna fishery.
Freshfields said: ‘We owe professional obligations – including duties to the Court – and it was in light of those that it was necessary for us to appear at the long-scheduled hearing [last week]. The firm has no intention of profiting from this.’
