Family of sanctioned Russian spent thousands on car and school fees, court told

The family of a former Russian government minister breached sanctions by spending tens of thousands of pounds on a Mercedes and private school fees in the UK, a trial has heard.

Dmitrii Ovsiannikov, 48, the former mayor of Sevastopol in occupied Crimea, is facing seven counts of circumventing sanctions between February 2023 and January 2024.

Ovsiannikov is said to have deliberately avoided sanctions by opening a Halifax Bank of Scotland (HBOS) account on or before February 2023 and having tens of thousands of pounds transferred to it by his wife Ekaterina Ovsiannikova, 47.

He is further accused of having criminal property made up of £76,000, and spending £1,514.77 of it.

Ovsiannikova appeared in the dock at Southwark Crown Court on Tuesday facing four counts of breaching sanctions by assisting with the payments.

Ovsiannikov’s brother Alexei Owsjanikow, 47, has denied circumventing sanctions to buy a Mercedes Benz worth £54,500 for Ovsiannikov, as well as spending £41,027 on fees at the Royal Russell School in Surrey for his sibling’s children.

All three defendants, who deny the charges, are Russian nationals and hold Russian passports, while Ovsiannikov and Owsjanikow also hold British passports by virtue of their Bradford-born father.

Owsjanikow moved to England “some years ago” and the two eldest children of Ovsiannikov and Ovsiannikova later came to the UK to study at university, the court heard.

The prosecution said in a “high-profile political appointment”, Vladimir Putin appointed Ovsiannikov as the Governor of Sevastopol in Crimea on July 28 2016.

Prosecutor Paul Jarvis 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 November 21 2017, the EU made Ovsiannikov a designated person under its sanctions legislation – meaning 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 July 11 2019 and returned to work as the Russian deputy minister for industry and trade.

On August 4 2022, Ovsiannikov made an online application from Turkey for a UK passport, having travelled from Russia to Turkey three days earlier, the court heard.

Ovsiannikova was granted entry clearance for the UK on August 7 2022 on the basis she was the parent of a child studying in the UK.

Jurors were told she first entered the UK on August 13 2022 with her two youngest children and moved into the same address where Owsjanikow was living in Englewood Road, Clapham, south London.

On October 26 2022, the Court of Justice of the European Union ordered that Ovsiannikov’s designation should be annulled, 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 January 27 2023, Ovsiannikov was issued with a British passport and he arrived in the UK on February 1 2023 – five days before his name was formally removed from the EU sanctions list.

Mr Jarvis said there was “ample evidence” to show Ovsiannikov was aware of his status as a designated person from the moment of his arrival and it was “inconceivable” that this information would have been unknown to his wife and brother.

Ovsiannikov applied to Halifax for a bank account on February 6 2023, with the prosecution stating some of the information he entered was “clearly inaccurate”, including his claim to be single and being “in his previous employment for 100 years”.

Opening the prosecution, Mr Jarvis said: “The prosecution’s case is that by setting up this account in his own name, Dmitrii was seeking to circumvent the financial restrictions that he was under by virtue of being a designated person under the Russia Regulations by creating a facility that would allow other people to transfer money to him.”

The court heard that on February 7 2023, Dmitrii emailed the Foreign, Commonwealth and Development Offence 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”.

Mr Jarvis added: “If Dmitrii knew he was designated under UK law then his wife and brother must have known too, because no doubt he would have told them.”

Between February 8 2023 and February 24 2023, Ovsiannikov received into his HBOS account a total of £76,000 that had been transferred to him by his wife, the court heard.

The prosecution said it was “an example of husband and wife working together to provide finance to him in breach of the prohibitions in the Russia Regulations”.

Mr Jarvis added: “When the funds appeared in his bank account, that was an example of money laundering.”

The court was told that Ovsiannikov had decided to buy a Mercedes Benz GLC 300 worth £54,500 on February 22 2023, on the same day Ovsiannikova transferred £25,000 into her husband’s HBOS account.

The prosecution said the bank’s initial failure to stop the payments “emboldened Ekaterina to make much greater transfers to her husband”.

On February 24 2023, HBOS froze Ovsiannikov’s account after they discovered that he was on the UK Sanctions List.

The court heard that Owsjanikow completed the purchase of the Mercedes on March 7 2023 for his brother after Ovsiannikov could not access his frozen funds.

Mr Jarvis said: “Alexei knew perfectly well that Dmitrii was a designated person and yet he proceeded to purchase a car that he intended to make available to his brother – as subsequent events would show – with the result that the money he used to buy the car was really for the benefit of his brother more than for himself.”

He added: “It would undermine the entire purpose of the regime if a third party like Alexei was permitted to provide his brother with a bank card to enable Dmitrii to spend Alexei’s money with impunity on goods and services that benefit Dmitrii.”

Owsjanikow, who faces five counts, is accused of buying Ovsiannikov a car, arranging his motor insurance and making a second bank account available to him, and is further accused of paying school fees.

The trial continues.