Andrey Melnichenko speaks during an interview with The Associated Press at a hotel during the COP27 U.N. Climate Summit in Sharm el-Sheikh, Egypt, Wednesday, Nov. 16, 2022.

Image Credit: CANADIAN PRESS/AP-Thomas Hartwell

Russian billionaire Andrey Melnichenko and his wife Aleksandra want to be taken off Canada's sanctions list, claiming in Federal Court they've been wrongfully labelled as "elites and close associates" of the Russian regime.

The Melnichenkos filed two applications in the Federal Court of Canada in late March, seeking to quash a decision to place them under sanctions related to the war in Ukraine.

Court documents obtained by The Canadian Press reveal that the pair have been fighting their inclusion on Canada's list of "designated persons" under its Russian sanctions regime since October 2022.

Back in February, the Trudeau government announced amendments to the Special Economic Measures (Russia) Regulations, which included placing the Melnichenkos on a list of 122 sanctioned individuals tied to the government of Russian President Vladimir Putin.

The couple claim the Canadian government has failed to provide them with any evidence to justify their inclusion on the list.

The list includes Russian elites and policymakers thought to be "engaged in activities that directly or indirectly facilitate, support, provide funding for or contribute to a violation or attempted violation of the sovereignty or territorial integrity of Ukraine."

"Mr. Melnichenko does not have, and has not had, any association with the Government of Russia or President Putin," Andrey Melnichenko's application states. "He left Russia 20 years ago and has resided in Switzerland for the past 13 years. There is no reasonable basis for the Minister to believe otherwise."

His wife, a former model and Serbian pop singer, claims she's been wrongly targeted by Canadian sanctions, since she has no ties to Russia and doesn't have any involvement in companies founded by her husband.

The couple's Canadian lawyers, Scott Hutchison and Eleni Loutas with Henein Hutchison Robitaille LLP in Toronto, declined to comment on their cases.

Andrey Melnichenko's public relations director, Alexander Byrikhin, did not immediately respond to an emailed request for comment.

Global Affairs Canada said in an emailed statement that it "cannot release information on individuals or entities listed under the Special Economic Measures (Russia) or comment on individual cases."

"In response to Russia's illegal and unjustifiable invasion of Ukraine, Canada has imposed hard-hitting sanctions against the Russian regime and those who enable it," the statement said.

Aleksandra Melnichenko claims in her application that she's a European citizen with "no connections to Russia whatsoever."

She denies any involvement in two companies founded by her husband, fertilizer firm EuroChem, and SUEK, a coal company, both of which are owned by a trust administered in the European Union.

"She is merely a beneficiary of the discretionary trust managed by the independent trustee," her application claims. "The latter is the legal owner of the named companies."

In June 2022, EuroChem issued a "statement on ownership and control" following reports that Andrey Melnichenko had ceded ownership in the firm to his wife just before being sanctioned by the EU.

"EuroChem Group AG is not sanctioned, has never been sanctioned, and is free to continue with its important mission of supplying high-quality crop nutrients to world markets," the statement said. "EuroChem is majority-owned and controlled by EU trustees of a trust, whose beneficiary, Aleksandra Melnichenko, has no majority ownership of, nor influence over, EuroChem. Therefore, EuroChem is not controlled by any sanctioned person."

Aleksandra Melnichenko claims her "erroneous" inclusion on sanctions lists in the EU, Switzerland and Canada caused "difficulties for the companies' operations worldwide, increasing the ongoing food and energy crisis."

Andrey Melnichenko claims he's been falsely portrayed as an "oligarch" in control of the companies, causing production disruptions at facilities in Europe after he was sanctioned by the EU.

His court application warns of similar "unintended consequences" in Canada, where the Russian sanctions list now includes more than 1,300 individuals.

It states that he's not an oligarch but a "self-made businessman," quoting a Forbes report referring to his fortune being made independently and free of ties to the Russian government under both Putin and Boris Yeltsin.

Melnichenko sits at number 58 on Forbes' billionaires list with a net worth of more than $25 billion, which he amassed beginning in the early 1990s with a chain of currency exchange booths, before founding MDM Bank, and later EuroChem and SUEK.

"As has occurred in Europe, sanctioning Mr. Melnichenko could disrupt EuroChem and SUEK’s operations and detrimentally impact the global fertilizer supply which, in turn, has the potential to exacerbate the ongoing food shortage," he claims in Federal Court.

Julia Webster, a Toronto-based international trade lawyer and partner at Baker McKenzie, said Canada’s approach to Russia contrasts with other countries currently under sanctions.

Unlike sanctions on Haiti, Myanmar, Iran and Sri Lanka, Canada's sanctions on Russia represent a “true decoupling of economies," she said, given the economic entanglements between western nations and Russia before its invasion of Ukraine.

She said Canada’s sanctions list mirrors that of allied nations.

“The sanctions are being implemented in co-ordination with Canada's allies,” Webster said. “There is overlap on many of the prohibitions that are in place amongst the sanctions regimes between different countries and the people who are designated on those sanctions regimes, but there are also differences and Canada at this time seems to have actually one of the strictest regimes comparatively to its allies.”

In March 2022, the EU sanctioned Andrey Melnichenko, noting his attendance at a meeting held by Putin with Russian business leaders and oligarchs on the day of the invasion of Ukraine.

“The fact that he was invited to attend this meeting shows that he is a member of the closest circle of Vladimir Putin and that he is supporting or implementing actions or policies which undermine or threaten the territorial integrity, sovereignty and independence of Ukraine, as well as stability and security in Ukraine,” the EU said.

Shortly after Andrey Melnichenko was sanctioned in the EU, Italian authorities seized the couple's $600-million "Sailing Yacht A," but their other vessel, Motor Yacht A, valued at $300 million, avoided a similar fate by docking in the United Arab Emirates at the time.

In August 2022, the United Stated designated Melnichenko as a "Putin enabler," pointing to his past involvement in Russia's financial services sector.

"Listing carries serious social, economic and personal consequences," the couple claims.

This report by The Canadian Press was first published April 16, 2023.

News from © The Canadian Press, 2023