EU Sanctions on Russian Oligarchs: Austria’s Reluctant Implementation

In a move to isolate Russian oligarchs following tensions with Russia, the European Union has imposed sanctions on nearly 2,400 individuals and institutions. However, the enforcement of these sanctions in Austria seems sluggish, with local authorities maintaining a tight-lipped posture, citing data protection as their reason for not disclosing more information.

Frozen Assets in Austria

Recent research by STANDARD and the Organized Crime and Corruption Reporting Project (OCCRP) has uncovered that only nine properties out of the many suspected to be owned by sanctioned individuals have been frozen in Austria. These assets, including a penthouse on Lake Wörthersee and several luxury villas in Kitzbühel, represent just a fraction of the total.

Some properties, like those owned by Andrei Gorokhov and Boris Rotenberg, are partially or entirely linked to Russian oligarchs. Rotenberg’s property in Ramsau am Dachstein and Gorokhov’s residences in Vienna-Döbling have seen some action, with the latter being partially auctioned. However, the true extent of the assets remains shrouded in mystery.

Austria’s Timid Approach to Sanctions

Austria stands out for its cautious approach to implementing sanctions compared to other EU member states. While Latvia publicly lists all frozen assets upon request, Austria’s authorities are reluctant to reveal any specific details about sanctioned assets.

The Directorate for State Security and Intelligence (DSN) in Austria maintains that providing detailed information is restricted by data protection laws. However, there are strong indications that more properties connected to sanctioned individuals remain unfrozen, highlighting gaps in Austria’s enforcement.

Circumventing Sanctions: The Rotenberg Files

The OCCRP’s “Rotenberg Files” provide insights into how Russian oligarchs have managed to evade sanctions. These documents detail a complex network of shell companies, frontmen, and financial intermediaries used to obscure the ownership of assets.

For example, a chalet in Kitzbühel was purchased using a Cypriot shell company, complicating the Austrian authorities’ efforts to trace the real owners. Another property on Lake Fuschl, ostensibly owned by an oligarch’s daughter, remains unfrozen despite links to Russian sanctions targets.

Financial Implications of Frozen Assets

Across the EU, around 24.9 billion euros in private assets belonging to Russian oligarchs have been frozen. An additional 210 billion euros from the Russian Central Bank have been locked down. The interest generated from these frozen assets has significant monetary value, which the EU has begun to redirect for the reconstruction of Ukraine.

In Austria, roughly 1.6 billion euros of assets connected to sanctioned individuals are frozen. However, the identities of the people involved remain unknown, highlighting the need for better transparency and investigative efforts.

Political Calls for Reform

The slow and opaque enforcement of sanctions has sparked political debate in Austria. The Neos party has called for a specialized task force to investigate and dismantle complex ownership structures. The Greens advocate for an independent supervisory authority for money laundering in the real estate sector.

The Social Democratic Party (SPÖ) also proposes a disclosure obligation for trust structures to identify anonymous owners. The EU Commission further emphasizes the need to freeze assets not directly but de facto controlled by sanctioned individuals, including those transferred to relatives or gifted.

Conclusion: The Future of Sanctions in Austria

While Austria has taken steps to freeze the assets of Russian oligarchs, the overall picture remains unclear. Compared to other EU countries, Austria’s implementation of sanctions is notably slow and lacking in transparency.

Complex mailbox structures and extensive networks of shell companies make it difficult for authorities to trace the true ownership of potentially frozen assets. The question remains: Will Austria adopt stricter measures in line with European standards, or will the country continue to serve as a relatively safe haven for Russian oligarchs and their assets?

OCCRP