When Russia’s richest person was sanctioned in the aftermath of the country’s invasion of Ukraine, both JPMorgan Chase & Co. and Goldman Sachs Group Inc. had to decide whether to stop managing money for the UK charity set up by Vladimir Potanin before the war.
(Bloomberg) — When Russia’s richest person was sanctioned in the aftermath of the country’s invasion of Ukraine, both JPMorgan Chase & Co. and Goldman Sachs Group Inc. had to decide whether to stop managing money for the UK charity set up by Vladimir Potanin before the war.
The Wall Street firms took different paths. JPMorgan ended up cutting ties with the Potanin Foundation having advised on its investments for about a decade, according to a registry filing uploaded this week. Goldman is still providing the London-based charity with banking and investment management services.
The divergence underlines how sanctions continue to draw varying responses on Wall Street months after they were imposed and even with firms exercising huge caution over any possible connections to Moscow’s ruling elite.
“Where banks or others continue to provide services they will have likely carried out significant diligence,” said Michelle Linderman, a sanctions lawyer at law firm Crowell & Moring in London. “Decisions will have been made at a very high level to ensure they are happy to proceed.”
A Goldman Sachs spokesperson said the firm “has taken steps to confirm that its relationship with the charity is in compliance with applicable sanctions.” The charity operates in line with a license from the UK’s Office of Financial Sanctions Implementation and “is subject to independent management by an Interim Manager appointed by the UK Charity Commission.”
Spokespeople for JPMorgan and Potanin declined to comment.
Nickel Billions
Potanin, 62, has a $30 billion fortune through the world’s largest producer of high-grade nickel MMC Norilsk Nickel PJSC, according to the Bloomberg Billionaires Index. He provided $100 million to fund the UK foundation bearing his name since its inception almost two decades ago through 2021, filings show. It works in tandem with the Russian billionaire’s Moscow-based charity, the main vehicle for his philanthropy whose website highlights a variety of educational and cultural initiatives.
He has increasingly become a sanctions target with Canada and Australia designating him in April, the UK in the summer and the US last month.
While some professional service providers stepped back from the Potanin Foundation around the same time as Canada and Australia’s sanctions, JPMorgan International Bank gave notice to terminate their engagement after the UK took similar action in June, the British charity said in its 2021 results filing. The bank liquidated the investment portfolio it managed for the charity and paid over the proceeds to the independent manager of the foundation.
Goldman, after reviewing the situation with outside counsel, chose to stay in place, a person familiar with the matter said, who asked not to be identified discussing private deliberations. It has been an investment adviser for the charity for about a decade.
Potanin’s UK foundation had $134 million in total funds at the end of 2021, including holdings in equities, alternative assets and fixed income. The Potanin Foundation paid between about $600,000 and $800,000 a year in investment management fees between 2015 and 2021 when the US banks were solely listed as its money managers, according to data compiled by Bloomberg.
The foundation itself is no longer subject to UK sanctions after the Charity Commission suspended Potanin’s powers in July to oversee the foundation’s trustees and appointed an insolvency executive at accounting firm Mazars as the interim manager through a special license. Potanin has sought to challenge the actions against the charity, which isn’t releasing any funds while the dispute is pending.
A representative for the Charity Commission declined to comment because its investigation into the Potanin Foundation is ongoing.
(Adds further Goldman comment in fifth paragraph)
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