MI6 raises concern at oligarch’s £1bn City flotation

Con Coughlin, Steven Swinford

Jillian Ambrose

MI6 has raised concerns after a Russian oligarch with links to military hardware production was able to use the London Stock Exchange to raise an estimated £1 billion.

Security sources have raised questions over how EN+, an energy company, came to be floated in London last November without the intelligence services being properly consulted.

EN+ is controlled by Oleg Deripaska, one of Russia’s wealthiest men who is closely linked to Vladimir Putin.

The company also owns half of Rusal, a giant Russian aluminium company which until recently said on its website that a fine metal powder it produced was used “in the production of military equipment”. Mr Deripaska is president of Rusal.

The Daily Telegraph understands that the same type of powder was used in the production of a Russian-built Buk missile that Dutch investigators said downed Flight MH17 over Ukraine in 2014, killing 298 people.

A senior British intelligence official familiar with the issue described the decision to allow the flotation to proceed as a “scandal”.

Sir Mike Penning, a former defence minister, has tabled a series of questions about the flotation of EN+ in the Commons, including whether Russian companies listed on the London Stock Exchange that supply aluminium to Russia “represent a threat to the UK’S national interests and security”.

EN+ is also part-owned by VTB, a Russian state-owned bank subject to EU and US sanctions. The bank lent the firm £697 million to help fund the flota- tion. Although the sanctions prevent VTB from directly raising money in Europe, they do not apply to EN+.

Last night a source told The Telegraph that neither MI6 nor the National Security Council had been consulted about the flotation. The source said: “Serious concerns have been raised about the apparent failure to make proper checks about the likely implications for Britain’s security of allowing the EN+ sale to take place in the City.

“There are concerns that the funds raised in the City could be used to circumvent sanctions, as well as providing a boost to Russia’s militaryindustrial base at a time when the Russian military is posing an increasing threat to Britain’s security interests.”

The UK Listing Authority, which assesses the suitability of companies to float on the exchange, said that the decision to allow the flotation was approved by the Treasury.

A spokesman for the Financial Conduct Authority, which oversees the UK Listing Authority, said that the Treasury had been consulted on whether the deal breached sanctions. The spokesman said: “HM Treasury, through its Office of Financial Sanctions Implementation (OFSI), is the UK authority charged with the implementation and enforcement of the European sanc- tions legislation. In this particular case, we consulted OFSI. We are not aware of any concern that the deal breached sanctions legislation as EN+ and other principal entities involved in the deal are not sanctioned entities.”

A Treasury spokesman said: “The OFSI is responsible for ensuring that

financial sanctions are understood, implemented and enforced … OFSI has no role in authorising IPOS.” The London Stock Exchange declined to comment.

An EN+ spokesman declined to comment on Rusal’s links to building military hard ware but said the company had not breached sanctions: “One of the primary goals of our IPO was deleveraging to support the group’s development and dividend payout for the benefit of all shareholders.

“The intended use of proceeds by EN+ did not breach any US and EU sanctions. Furthermore, the IPO was fully compliant with all relevant UKLA and FCA regulations and listing rules.”

Sir Mike has tabled questions to both the chancellor and the defence secretary. He said: “Questions have to be raised about how a company led by a Russian oligarch with close ties to Putin has been allowed to register on the London Stock Exchange. It is linked to military hardware and missiles that are being pointed at Nato and the West.

“Russia is an enemy. As a former defence minister it was me that got called early in the morning because there were Russian Bears [planes] flying over. The sanctions were put in place for a reason.”