How an Ex-Goldman Banker Fought US Sanctions Over Russia — and Won

(Bloomberg) -- Elena Titova held top jobs in Moscow for Goldman Sachs, Morgan Stanley and UBS in her almost three decades as an investment banker, then stuck with the Russian market even as the big US and European banks cut back..Eight days after Vladimir Putin’s forces invaded Ukraine last year, she resigned from the state-run lender where she was a board member. Born to a Russian-Ukrainian family and educated partly in the US, she cut professional ties to the country where she’d made her career..That didn’t stop the US from sanctioning her. She was put on the US list of “Specially Designated Nationals,” a roster of people subject to the strictest ostracism from the American-dominated financial system. The reason? She was “linked” to Bank Otkritie, which the US blacklisted right after the invasion, even though she’d quit the board. Foreign banks cut off access to her accounts, and she had trouble paying living expenses. .“It’s changed my life forever, for someone who worked for international banks and was trusted in the system,” she said..Titova’s yearlong odyssey to clear her name is an example of the collateral damage from the explosion in the use of sanctions by the US and its allies in recent years as Russia has kept up its brutal war effort..“Considering how many sanctions have been placed on Russia and Russian individuals and entities in response to their invasion of Ukraine, I think we can in the coming years definitely see a lot more people trying to get off these lists,”said Kim Donovan, a former US Treasury official and director of the Economic Statecraft Initiative at the Atlantic Council in Washington. “Sometimes through petitioning you can get off, but a lot of times you have to take legal action.”.Treasury said the State Department handles removal petitions for those like Titova sanctioned under its authority. A State Department spokesperson said it adjudicates petitions on a case-by-case basis and doesn’t comment on specific ones..Hundreds of wealthy and powerful Russians have been sanctioned by the US and its allies since the invasion, seeing their properties, yachts and other assets frozen. Many have filed legal challenges, arguing their influence over Putin and the war is greatly exaggerated. A few have succeeded. In July, the UK lifted sanctions on onetime billionaire Oleg Tinkov, the only major Russian tycoon to publicly denounce the invasion..Titova, 56, and several other former Otkritie directors who were also sanctioned for ties to the bank fall into a middle ground, not Kremlin insiders or super-rich tycoons but with more official ties than average Russians..In her lawsuit, Titova, who now lives in Dubai, argues that she and other board members at the bank were targeted because they were listed in the last public disclosure of the lender’s board roster. That was issued before the invasion, however, and never updated because Russia stopped releasing data that could be used to identify potential sanctions targets..‘Opaque’ Process.The State Department’s press release announcing Otkritie’s designation said she and the other board members were included for their roles at the bank..Treasury keeps its sanctions list updated on a website, warning of the risks of doing business with those on it. A page for people asking to be removed provides an email address for appeals..Titova’s lawyers filed her petition on May 10, 2022, including proof she’d left the board more than a month before the US imposed the sanctions. .Treasury’s response a week later said she’d been added to the list by the State Department and referred her to a State Department email for further updates. The process “can be lengthy,” it warned..Thus began months of slow-motion back-and-forth in which the State Department asked for more information on topics from her decision to join the Otkritie board in 2017 to her personal finances. Titova’s lawyers methodically responded. .The sanctions process is “very opaque and it’s very difficult to have quick recourse,” said Nicholas Mulder, a Cornell University professor who’s written a book on sanctions..Titova, who holds Russian and UK citizenship, said the sanctions designation made her effectively radioactive for any potential employer that wasn’t also sanctioned, according to her lawsuit. She was “effectively locked out of the world economy,” it said..Another sanctioned Otkritie board member, Andrey Golikov, was forced to return to Russia for cancer treatment, unable to access funds to pay for it in Europe, according the lawsuit he filed later. He didn’t respond to an emailed request for comment..“You don’t often see cases with facts like this where the person has actually stopped the behavior that they got listed for,” said Sam Amir Toossi, a lawyer who represented both Titova and Golikov. .Suing Blinken.The appeals process accelerated only after yet another former Otkritie board member, Russian tech investor Anatoly Karachinsky, filed suit against Secretary of State Antony Blinken, among others, to get off the sanctions list. .In May of this year, three days before a court-imposed deadline to respond in that case, Karachinsky became the first of the Otkritie directors to be removed from the list. Treasury gave no explanation. Karachinsky declined to comment for this article..After another request for information from the State Department, Titova and her lawyers filed the lawsuit. A month later, she was removed from the list..“Some may see a delisting as an acknowledgment of a mistake,” said Toossi, the lawyer. “It really isn’t. The mistake is taking a really long time to do it, because it can undermine the very policy the US government is seeking to achieve.”.For Titova and the others removed from the list, restoring the damage is likely to take even more time..The bank she uses in the UK is still refusing her calls. “They not only switched me off, they cut me off from any communications whatsoever,” she said..Erich Ferrari, a lawyer who represented Karachinsky in his challenge, said the process is likely to be a long one. “We have clients who were removed five, six, seven years ago who are still having problems getting accounts or finding counterparties to do business with them,” he said. .More stories like this are available on bloomberg.com.©2023 Bloomberg L.P.

How an Ex-Goldman Banker Fought US Sanctions Over Russia — and Won

Treasury said the State Department handles removal petitions for those like Titova sanctioned under its authority.

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How an Ex-Goldman Banker Fought US Sanctions Over Russia — and Won

Treasury said the State Department handles removal petitions for those like Titova sanctioned under its authority.

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