Financial Times investigation: Four Russian bankers suspected of bypassing EU sanctions and profiting more than €9 million

Four senior executives at Gazprombank Luxembourg, one of the major Russian banks that continued operating in Europe, used their personal accounts to carry out transactions that capitalized on circumstances created by the sanctions the European Union imposed on Russia in 2022.

Documents analyzed by the Financial Times show that these financial operations may have secured the four bankers a combined profit of more than €9 million.

After Russia’s invasion of Ukraine and the West’s punitive measures, a large number of foreign-currency bonds issued by Russian state-owned company Gazprom were frozen in Europe. Their value fell sharply, and some traded at around half their original price.

To assist Russian investors, President Vladimir Putin approved a decree allowing European bonds to be exchanged for new securities in Russia, recognizing their full face value.

Gazprombank executives in Luxembourg saw the scheme as a profit-making opportunity. They secured personal loans worth millions of euros and bought Gazprom bonds that were selling at much lower prices on the European market. They then exchanged them in Russia for securities at their full value.

According to the documentation, the four executives carried out more than 50 transactions. Calculations show that the potential profit they generated exceeded €9 million.

The operations raised serious concerns about compliance with EU sanctions, as well as the possible use of inside information. Legal and financial experts, together with several European officials, suspected that the bankers may have known in advance which bonds would be included in the exchange program.

The way they operated suggested coordination among the four executives. In some cases, they bought identical amounts of the same bonds on the same day, before Gazprom officially announced the possibility of exchanging them.

Gazprom usually allowed only a short period, approximately two weeks, to complete these exchanges. For this reason, some officials suspected that the purchases could not have been made with such precision without advance information.

A European official familiar with the matter described it as a case that appeared to involve sanctions evasion. According to the official, authorities in Luxembourg should launch a criminal investigation.

Gazprombank Luxembourg rejected the allegations of wrongdoing. The bank said it had acted in compliance with European Union and Luxembourg legislation and regulations, denying that it had breached the sanctions regime.

Dmitry Derkach, the bank’s former director and the person who initiated these transactions, also denied taking any illegal actions.

During 2022, Gazprom bonds issued in foreign currencies suffered a sharp decline in value. Restrictions imposed on Russia’s financial system made it difficult to pay interest to creditors, while many of these securities remained effectively frozen.

In response to the situation, the Kremlin gave investors the right to exchange European bonds for new securities in Russia. The latter could be traded in rubles and were recognized at their face value.

The large gap between the low price in Europe and the value of the bonds after their exchange in Russia created extraordinary profit-making opportunities. Experts in the Western financial system warned that such a situation could encourage abuse and unfair gains by people who had more information than other market participants.

In June 2022, Dmitry Derkach traveled to Moscow. After returning to Luxembourg, he opened a personal account at Gazprombank, even though the institution’s internal policy did not allow employees to have personal accounts of this kind.

Derkach also secured a personal loan from Gazprombank’s headquarters in Moscow. On July 5, 2022, Putin signed the decree that created the bond-exchange program, and just nine days later Derkach began buying Gazprom securities.

His first purchase took place in 2024. For a bond with a face value of €150,000, he paid approximately €65,000. After the bond was exchanged in Russia in December, Derkach could have secured a profit of around €85,000 if he had sold it at its full value.

At the time of the purchase, Gazprom had not yet disclosed that the bond would be included in the exchange program. The relevant announcement was published several months later.

Sergei Alekseenko, a former deputy governor of Russia’s Central Bank, said such a purchase carried a very high risk. According to him, the timing of the transaction could indicate that Derkach had advance information or connections with executives in Moscow.

Derkach rejected this interpretation. He referred to the findings of an investigation by Luxembourg authorities, which had not identified any significant violations.

In September, purchases of undervalued bonds were also begun by three other Gazprombank Luxembourg executives: Sergei Nekrasov, Sergei Belousov and Pavel Bolshakov.

All four bankers appear to have actively sought bonds that could be included in the exchange program. They bought four specific bonds, and each one was exchanged by the end of the year.

In one case, toward the end of September, the four executives began buying a dollar-denominated bond. Gazprom officially announced the exchange on October 7, while the deadline for exchanging it was October 24.

On the European market, the bond was quoted at around 50% of its value. The new security issued in Russia recovered its full price and later reached as much as 120% of that value.

A source cited by the Financial Times said that, without advance information, it would have been extremely difficult to identify and buy these bonds within such a limited timeframe.

From July to November, the four executives received transfers worth more than €17 million after conversion from rubles. The funds were used for dozens of purchases, while their combined potential profit was estimated at more than €9 million.

Other Gazprombank Luxembourg executives were also aware of these transactions. Dmitry Galkin, head of private banking, wrote in an email that the four executives had taken out personal loans and bought various Gazprom Eurobonds.

Some employees of the institution expressed concern that trading using inside information might have taken place. Other employees defended the operations, arguing that all clients faced the same conditions and risks and that neither the use of inside information nor market manipulation had been established.

After conducting an internal investigation at the end of 2022, the bank decided to end the activity. It remains unclear whether the executives continued carrying out similar transactions through other financial institutions.

Luxembourg’s financial regulator, the CSSF, inspected the bank in March 2023 after a complaint was filed. The inspection found that Gazprombank Luxembourg had breached its own internal rules, as employees should not have been allowed to open personal accounts.

The investigation also found that the four executives had not undergone mandatory checks, even though they were classified as high-risk clients. Despite these findings, the CSSF identified no other illegal violations and imposed no fines.

Gazprombank said it had fully cooperated with the authorities and provided them with all the information requested.

Another key aspect of the case concerns the National Settlement Depository, or NSD, an important institution in Russia’s financial infrastructure that handles bond transactions and had been placed under EU sanctions.

The European sanctions regime prohibits individuals and entities within the European Union from carrying out operations that could, directly or indirectly, result in payments to the NSD. Gazprom’s notices indicated that the NSD was part of the settlement process for the bond exchanges.

This involvement led legal experts to question whether the four bankers’ operations could be considered violations of sanctions. A lawyer specializing in the field said the more cautious interpretation would be that a transaction involving a security in Russia could result in funds being made available to the NSD.

All four executives have now left Gazprombank. Derkach continues to live in Luxembourg, while Belousov and Bolshakov run an investment company there. Nekrasov has returned to Russia and manages the Spartak Moscow football team.