A former Russian government minister who was appointed as a governor in illegally annexed Crimea by Vladimir Putin has been found guilty of circumventing sanctions, in the first case of its kind.
Dmitrii Ovsiannikov, the former governor of Sevastopol, was accused of deliberately avoiding sanctions by opening a Halifax Bank of Scotland (HBOS) account and having tens of thousands of pounds transferred to it by his wife, Ekaterina Ovsiannikova.
He was found guilty at Southwark crown court on Wednesday of six out of seven counts of circumventing sanctions between February 2023 and January 2024.
The jury failed to reach a verdict on the final charge.
The 48-year-old, wearing a navy suit, did not visibly react as the verdicts were read out.
His brother, Alexei Owsjanikow, 47, was convicted of two counts of circumventing sanctions by paying school fees of £41,027 for his sibling’s children.
The case is the first prosecution in the UK regarding a breach of sanctions under the Russian Regulations 2019, according to the Crown Prosecution Service.
Under the original asset freeze, Ovsiannikov – who also served as the Russian Federation’s deputy minister for industry and trade before he was dismissed and expelled from the ruling United Russia party in 2020 – was not even allowed to buy groceries.
His wife was cleared of four counts of circumventing sanctions by assisting with payments totalling £76,000 to her husband in February 2023.
His brother was cleared of a further three counts of breaching sanctions, namely by buying a Mercedes-Benz worth £54,500 and arranging car insurance for Ovsiannikov, and by making a Barclays bank account available to him.
During the trial, it was largely accepted that the defendants engaged in the relevant activities, but their lawyers denied this amounted to the charges.
They claimed their clients either did not know Ovsiannikov was a designated person or were unaware he was barred from receiving the financial help.
All three defendants, who had denied the charges, are Russian nationals and hold Russian passports, while Ovsiannikov and Owsjanikow also hold British passports by virtue of their Bradford-born father.
Ovsiannikov was also convicted of possessing and using criminal property.
The trial heard that in a “high-profile political appointment”, Putin appointed Ovsiannikov as the governor of Sevastopol in Crimea on 28 July 2016, two years after Russia illegally annexed the region from Ukraine.
Prosecutor Paul Jarvis KC said it placed Ovsiannikov “in charge of a strategically significant city so far as the Russian annexation of Crimea was concerned”, meaning he was an “important political figure within the Russian Federation”.
Ovsiannikov was elected as governor of Sevastopol in an election organised by Russia in September 2017.
On 21 November 2017, the EU made Ovsiannikov a designated person under its sanctions legislation, saying that his work had compromised or threatened the territorial integrity, sovereignty and independence of Ukraine.
This restricted him from entering or accessing funds in member states.
At the time, this meant he was also a designated person in the UK as the country was still in the EU.
Ovsiannikov resigned as the governor of Sevastopol on 11 July 2019 and returned to work as the Russian deputy minister for industry and trade.
On 4 August 2022, Ovsiannikov made an online application from Turkey for a UK passport, having travelled from Russia to Turkey three days earlier, the court heard.
His wife was granted entry clearance for the UK on 7 August 2022 on the basis she was the parent of a child studying there.
Jurors were told she first entered the UK on 13 August 2022 with her two youngest children.
The court of justice of the European Union ordered that Ovsiannikov’s designation should be annulled on 26 October 2022, but that did not happen for some months.
However, Ovsiannikov remained subject to sanctions in the UK by virtue of being a designated person under the Russia Regulations.
On 27 January 2023, Ovsiannikov was issued with a British passport and he arrived in the UK on 1 February 2023 – five days before his name was formally removed from the EU sanctions list.
The trial heard that on 7 February 2023, he had emailed the Foreign, Commonwealth and Development Office requesting the revocation of his designation under UK law.
The prosecution said this was a “significant moment” as he “would not have applied to cancel his UK designation unless he knew that he was designated under UK law”.
On 24 February 2023, HBOS froze Ovsiannikov’s account after they discovered that he was on the UK sanctions list.
Jarvis told jurors there was “ample evidence” to show Ovsiannikov was aware of his status as a designated person from the moment of his arrival in the UK.
In a statement after the verdicts, Julius Capon, of the Crown Prosecution Service, said: “The sanctions regime was introduced against key individuals to encourage Russia to cease military action because it was hoped those with power will be hampered in their normal international business dealings.
“Dmitrii Ovsiannikov was a high-profile official who was appointed by President Vladimir Putin as the governor of Sevastopol after Crimea was illegally annexed by Russia.
“He knew he had been on the UK sanctions list since 2017 but chose to ignore this.
“Another member of his family sought deliberately to breach the sanctions to live their own lavish lifestyle and showed complete disregard for the law.
“We hope this sends a clear message that the CPS and NCA (National Crime Agency) investigators will work closely together to seek the convictions of sanction busters.”
The CPS will start criminal proceedings in order “to get back illegally obtained cash and assets”, they added.
Foreign Office minister Stephen Doughty said: “Mr Ovsiannikov thought he could hide from our sanctions. Today’s verdict proves otherwise.
“We are resolutely committed to increasing pressure on Putin, his cronies, and all those who aid his barbaric war in Ukraine.
“When this government came to office, we made clear we were committed to making sure sanctions were used most effectively – and crucially, robustly enforced.
“We have been working tirelessly with colleagues across government to ensure our sanctions enforcement regime is both effective and efficient, and to give the right tools to our law enforcement agencies to be able to take robust action when necessary.”
Graeme Biggar, director general of the NCA, said: “These convictions demonstrate not only that designated individuals are on our radar, but so are those who enable breaches of the regulations.”
Ovsiannikov and Owsjanikow will be sentenced at the same court at a later date.