The Russian oligarchs who own property in Scotland

IN the aftermath of the invasion of Ukraine, we are asking what property is owned by Russians in Scotland. This raises wider questions of transparency and availability of information.

Owning property in a stable democracy such as the UK provides significant security for ill-gotten gains. The UK has been happy to welcome unexplained wealth from Russia and beyond under its

Tier 1 investor visa which had until its hasty abolition last month attracted more than 200 Russian millionaires to the UK. Transparency International estimated that Russians accused of corruption or with links to the Kremlin have bought about £1.5 billion of UK property since 2016.

Financial sanctions are being implemented against Russian oligarchs and there has been speculation that this might yet involve the confiscation of property. But how do we know what property is owned by such individuals?

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In theory this is not a problem, since all property in Scotland has to be registered in the Register of Sasines (established in 1617) or the Land Register (established in 1979), in order for land to be owned in law.

A problem arises, however, because wealthy individuals often want to hide their identity and most frequently do so by registering the ownership of property with an overseas company or in a UK company that is, in turn, owned by an overseas entity.

So who are the Russian oligarchs who own property in Scotland? They include Boris Mints and Vladimir Lisin (both of whom were included in the “Putin List” published by the US Treasury Department in 2018). Others include Vladimir Strzhalkovsky and Yuri Shefler.

Mints is understood to have previously been a Putin ally, but has criticised the war and said that Putin is turning into a modern-day Hitler. His country house, Tower of Lethendy in Perthshire, is owned by MFT Braveheart Ltd, a company registered in the Cayman Islands. He is in dispute with Russia’s Central Bank which bailed out his private bank, Otkritie, for $50bn when it collapsed in 2017.

Vladimir Lisin has brought property in Scotland

Vladimir Lisin (pictured above) is the majority shareholder and chair of Novolipetsk Steel and has an estimated net worth of $26bn. His 1340-hectare Aberuchill Estate in Perthshire which he bought in 2005 for £6.8 million, is owned by Forestborne Ltd, a company registered in the British Virgin islands.

Evgeny Strzhalkovskiy is the son of a KGB Colonel, Vladimir Strzhalkovskiy, who served alongside Putin and went on to become chief executive of Norilsk Nickel. In 2017, Evgeny acquired Knockdow House and 100 hectares of land in Argyll. Unusually, the title is in Evgeny’s own name, care of an address in Monaco.

Yuri Shefler is the owner of SPI group, a global alcoholic drinks company whose brands include Stolichnaya vodka. He is worth an estimated $2.4bn and is the alleged owner of the 22,000-acre Tulchan Estate on the banks of the River Spey – for which he paid a reported £25m in 2017.

I say alleged owner, because Shefler never bought Tulchan Estate. It remains in the ownership of Tulchan Sporting Estates Ltd (a Scottish company with its registered office in Edinburgh) which owned it previously. Instead, Shefler bought the shares of the company. Tulchan Sporting Estates Ltd is now owned by SF Scottish Properties Ltd, a company registered in Guernsey which, in turn, is owned by the Tulchan Trust, a trust registered in Guernsey.

On April 1, a new Register of Persons Holding a Controlled Interest in Land comes into force. Under the new rules, any person who controls the affairs of an owner of land must declare their association with it. UK-registered companies are exempt from the regulations, but land owned by overseas businesses will have to declare who controls the company.

When the Register of Persons Holding a Controlled Interest in Land comes into force, Mints and Lisin will have to declare if they are the controlling interest in their respective companies.

Strzhalkovskiy has nothing to declare as he owns the property in his own name. Shefler won’t have to declare anything because his estate is owned by a Scottish company and they are exempt from the regulations (even though the company is in turn owned by offshore entities).

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One of the weaknesses of the new system is that although there are criminal offences and a maximum fine of £5000, there is no# verification of the declaration – so it is impossible to know if the beneficial owner is in fact the person identified or not.

This week, the UK has introduced the Economic Crime (Transparency and Enforcement) Bill which includes a UK-wide register of beneficial ownership. Foreign owners of UK property will be required to declare and (unlike the Scottish regulations) to verify their identities. Sanctions are tougher with prison sentences for failure to comply, ranging from 12 months to five years.

Of course, it would be far simpler if the Scottish Parliament simply made it illegal to register a title in a secrecy jurisdiction and avoided the need for complex regulations, but until ownership is made more transparent from the outset, the new UK and Scottish regulations look to provide a much needed (if belated) recognition that transparency matters.