Investigation: Offshore Loans and Sanctions

Published: 24 April 2026. The English Chronicle Desk. The English Chronicle Online.

When Russian tanks crossed into Ukraine during early 2022, the reaction across Britain was swift and decisive. Dockers at Ellesmere Port immediately pledged to reject any Russian oil destined for the major Stanlow refinery nearby. This massive hub provides essential fuel for one in every six vehicles and nine airports across the United Kingdom. Essar, the Indian conglomerate owning this critical facility, acted quickly to cease all imports of Russian fuel. However, new investigative analysis into company accounts suggests the flow of money may not have stopped entirely.

Investigations by the Guardian and SourceMaterial reveal that Essar navigated complex offshore arrangements in the months following the invasion. These structures appear to have allowed the group to continue dealing with a major Russian bank currently under Western sanctions. Essar shifted billions of dollars in loans, originally provided by the Kremlin-controlled lender VTB, from Cyprus to a subsidiary in Mauritius. Because Mauritius is outside the jurisdiction of Western sanctions, this move effectively bypassed the restrictions that would have applied elsewhere.

The transfer involved several entities, including subsidiaries of Essar’s own UK arm, known as Essar Energy. Essar maintains that it took advice from a leading law firm and ensured full compliance with all applicable sanctions laws. Nevertheless, prominent legal experts argue that this restructuring raises significant red flags concerning potential sanctions circumvention. Authorities in Cyprus, who originally approved the transfer, are now actively examining whether these actions violated established EU sanctions regulations.

This complex financial history highlights the long-standing, cordial ties maintained between India and Russia even as Western nations imposed strict penalties. In 2014, when Russian forces first seized Crimea, the Essar group borrowed one billion dollars from the state-owned VTB lender. By 2017, the Russian state oil company Rosneft invested thirteen billion dollars into the group’s broader refinery business. These connections continued to deepen as Essar utilized Russian credit lines to stabilize its financial position during difficult periods.

By 2020, the debt owed to VTB had risen to over two billion euros, with the loans secured in Cyprus and guaranteed by the UK-based Essar Energy. Following the full-scale invasion of Ukraine in 2022, VTB and its chief executive, Andrey Kostin, became specific targets of intense international sanctions. Typically, UK businesses with financial obligations to sanctioned entities must seek a special permit from the Office for Financial Sanctions Implementation. Essar never sought this specific blessing, choosing instead to secure approval from the government of Cyprus to move the loans.

This relocation moved the debt more than four thousand miles away to Mauritius, where Russian sanctions did not apply. Two subsidiaries of Essar’s UK arm signed the loan termination agreement, acting as agents on behalf of the company. Leading sanctions experts emphasize that this transfer warrants a thorough investigation by British authorities to ensure complete accountability. Michael Ruck, a partner at the law firm K&L Gates, noted that the restructuring was highly unusual and raised serious concerns.

Liam Byrne, who chairs the influential business select committee, has called upon the UK government to review the entire transaction immediately. He argued that VTB acts as an arm of the Russian state, specifically helping to finance a brutal war of aggression against Ukraine. Consequently, he believes that no British business should have any direct or indirect involvement with such a lender. The government must treat these allegations with the seriousness they deserve and launch a formal inquiry without any further delay.

Essar strongly rejects any suggestion of wrongdoing, stating its actions were proactive, responsible, and fully compliant with all legal requirements. The group emphasized that the arrangements were expressly approved by Cypriot authorities after receiving guidance from a leading firm of solicitors. Furthermore, they described any claims regarding red flags or the circumvention of rules as being entirely without foundation. Despite these firm denials, corporate filings suggest that the group may have actually deepened its dependency on Russian loans after moving them to Mauritius.

Independent forensic accountants reviewing the latest accounts identified new exposure to the rouble that they believe cannot be explained by accrued interest. Rachel Sexton, an independent accountant, stated that the files simply do not make sense without acknowledging new borrowing from the Russian state lender. Additionally, Essar has established a new corporate presence directly in Moscow, with offices located in the same skyscraper that houses the headquarters of VTB Capital. While Essar claims the office only exists to wind down the loans, an employee previously indicated his role included identifying new investment opportunities.

The government of Cyprus is now reviewing whether these ongoing transactions with VTB constitute a violation of EU sanctions regulations. Officials in Mauritius have also faced difficulties with the group, noting that a requested restructuring was delayed by years due to a failure to provide necessary documentation. Lloyd Hatton, a Member of Parliament, argued that the UK government must now apply the same critical scrutiny used by these other authorities. The potential for financial entanglement with a sanctioned Russian bank remains a deeply alarming prospect that demands an urgent and transparent investigation.

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