Exclusive: Alberta government seizes Calgary condos for Russian company sanctioned over Ukraine war

Between 2009 and 2020, Moscow businessman Andrei Ovsyankin snapped up $3.7 million worth of real estate in Calgary, including a unit in a glassy downtown condo tower and a suite in the East Village.

But now he is deeply in debt, and the money earned from the sale of his Alberta properties is poised to fall into the hands of a Russian bank sanctioned by Canada over its alleged role in the Ukraine war.

The province seized the 10 properties, and the Alberta court ordered they be sold to enforce a judgment requiring Ovsyankin to pay millions to a company allegedly controlled by Russia’s Gazprombank.

Gazprombank is the financial arm of Russia’s state energy giant, Gazprom. Gazprombank and its officers and affiliates, accused of supporting Russia’s bid to annex Ukraine, have been placed on Canada’s sanctions list.

Despite the sanctions, there is no indication that the governments of Canada or Alberta have acted to stop Gazprombank from collecting the proceeds of the Calgary property sales, or that they are even aware of the matter.

The first test of Canadian measures to isolate President Vladimir Putin over his disastrous invasion of Ukraine, the case highlights the complexity of enforcing the sanctions, according to experts.

Global Affairs Canada said the government is “actively pursuing targets” of sanctions, and that “due diligence” is needed to seize assets, but did not respond to questions about the Calgary properties.

The Alberta government did not respond to questions from Global News about whether it would prevent the Russian company from collecting the millions expected to be made from the sale of the properties.

The lawyer representing Angophora Holdings Ltd. represented, the company trying to collect from Ovsyankin declined to comment, as did Ovsyankin’s attorney. Gazprombank did not respond to an email seeking comment.

“To be honest, we’re doing what we’ve always done on sanctions, which is we’re very good with press releases announcing the designation of people, which looks good – and we’ve got a long way to go in terms of the ability to monitor and enforce them and ensure compliance with them,” said University of Calgary Law Prof. Michael Nesbitt.

The Ukrainian Canadian Congress said the case shows the gulf between the sweeping sanctions announced by Prime Minister Justin Trudeau’s government and their implementation.

“I mean, we’ve implemented quite a lot of sanctions and we’re more than happy to see them,” Orest Zakydalsky, a senior policy adviser to Congress, said in an interview in Toronto.

“But the second part of it is that, once it’s implemented, it needs to be enforced. And this case seems to highlight that that side of it is not in focus right now.”

He said the government had a duty to implement the sanctions it had imposed. “And Gazprom is one of the biggest Russian companies. It is known worldwide as a funder of the Russian war machine.”

“Gazprom should certainly be one of the top focuses in terms of both its scale and its impact, and the fact that it provides an enormous amount of revenue to the Russian state, which is then used to bomb and kill Ukrainians.”

Established to meet Gazprom’s financial needs, Gazprombank is Russia’s third largest bank. Its website said it “provides services to key sectors of the Russian economy,” including oil, gas and nuclear power.

Its board members include Alexey Miller, the head of Gazprom and a Putin loyalist. Miller is also on Canada’s sanctions list, along with Gazprombank CEO Andrei Akimov and vice-chairmen Alexander Sobol and Aleksei Bellous.

Ukrainian President Volodymyr Zelensky claimed that Gazprombank “finances Russia’s anti-European policy”. NBC reported the company processes salaries and combat bonuses for Russian troops in Ukraine, and is linked to purchases of military equipment.

“Gazprombank is an extremely important component of Russia’s kleptocracy used by the Russian government to process payments for Gazprom’s gas exports to Europe,” said Marcus Kolga, a senior fellow at the Macdonald-Laurier Institute.

“In the context of the Russian invasion of Ukraine, the Kremlin issues payment for its soldiers through Gazprombank. Gazprombank is just one of many Russian organizations that facilitate Vladimir Putin’s ability to make war.”

Russian kleptocrats and pro-Putin oligarchs have parked billions in Canada, Kolga said, and the government needs to expand its sanctions and enforcement regimes to step up pressure on Putin.

Prof. Andrea Charron, University of Manitoba, said while Canada has sanctioned at “unprecedented rates,” its legislation lacks clarity, which has created uncertainty.

“You can’t call Global Affairs Canada and say, ‘Can you please help me navigate this, because again, that’s considered legal advice and they said they won’t provide it.

The international relations professor said the government should provide advice and guidance to lawyers on how to interpret sanctions legislation so that it can be applied as intended.

Since 2011, Ovsyankin has operated the Alberta-registered company Nov Management and Supply Ltd.

Two years ago, the London Court of International Arbitration ordered him to pay $59.5 million to Angophora Holdings Ltd. to pay due to alleged “corporate violations”, according to court documents.

When Angophora went after Ovsyankin’s Alberta assets, he argued in court that allowing the Russian company to collect the proceeds from the condo sales would violate Canada’s sanctions.

Angophora is a subsidiary of MIR Capital, an investment fund registered in Luxembourg as a joint venture owned by Gazprombank and the Italian bank Intesa Sanpaolo.

The Canadian sanctions, imposed on the grounds that Gazprombank is facilitating the war against Ukraine, make it illegal to “trade any property” owned or controlled by the company.

On October 25, Justice Barbara Romaine of the Court of King’s Bench of Alberta ruled that Ovsyankin had “established a strong prima facie case” that Angophora is controlled by Gazprombank.

But she said “the Russian sanctions were not intended to allow debtors to hold back their creditors.”

“While it is certainly true that it is in the public interest for the Russian sanctions to be enforced, it would be contrary to the public interest to allow them to be used by a judgment debtor without any further recourse to a sale in execution to slow down properly. authorized by a recognition and enforcement order,” the judge wrote.

The sale of the properties would not violate the Russia sanctions, the judge wrote.

“However, prior to the distribution of the proceeds, persons in Canada can satisfy themselves that they are not violating the Russian sanctions by further action. It is of course their decision.”

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Canadian companies can apply to Global Affairs Canada’s Sanctions Policy and Operations Coordination Division for permits and certificates that allow them to conduct transactions that may violate Canada’s sanctions.

It remains unclear whether this happened in this case.

The RCMP said it has “effectively frozen” $121 million in assets and blocked $290 million in financial transactions under the Russian sanctions program since the start of the raid on February 24.

Legislation introduced by the Liberal government, which allows the courts to order the forfeiture of those assets to compensate Ukrainian war victims, has not yet been put into effect.

Prof. Nesbitt, an expert on national security law, said the case was the first to interpret the meaning of “control” in the context of sanctions. The term is not defined in Canada’s legislation.

“And so what happened in this case is that the judge found a prima facie violation, that is, a prima facie case of control, where the ownership was at 50% and the implied company was involved in some of the management and operations of the company,” he said.

“So it was a great opportunity for the courts to finally make it clear. And while it won’t be binding going forward, it does provide some clarity in that regard, I think, for the lawyers and businesses involved.”

Stewart.Bell@globalnews.ca