Hundreds of millions of pounds in UK taxpayers’ money is being handed to companies that are continuing to operate in Russia, The Independent can reveal.
The government has even signed multimillion-pound deals with these firms during the course of the war in Ukraine, it has emerged.
Britain has active contracts worth at least £294,803,502 with 15 multinationals that are still doing business in Russia, according to an analysis carried out by The Independent. Ministers have been urged to sever ties with these companies and cancel all recently signed contracts.
More than 600 companies have withdrawn from Russia since the beginning of the war, but 214 have maintained an economic presence in the country, according to research by Yale University.
“These companies are blunting the effect of sanctions measures and undermining the west’s unified response to the war,” said John Lough, an associate fellow of the Russia and Eurasia programme at Chatham House, adding that it was “bizarre” that some multinationals were continuing to conduct business in the country.
Lesia Vasylenko, a Ukrainian MP, warned the actions of the 15 companies still operating in Russia and receiving British money were indirectly funding Vladimir Putin’s war machine.
“The government is continuing to fund these companies, which are paying into the Kremlin’s budget, which then uses that money to kill Ukrainians,” she said. “It just doesn’t make sense.
“Every single penny paid into the Russian budget, be it in taxes, investments, or any other form, is a penny spent on bullets that are killing Ukrainian people. They are using the money not to improve the welfare of the Russian people, but to destroy the welfare of Ukrainians.”
Earlier this month, the Ukrainian parliament drafted legislation that aims to impose higher tax rates on residents and companies linked to Russia, as well as employees of those firms still conducting business in the country.
Ms Vasylenko said similar legislation should be adopted in the UK. “The British government should be imposing a heavier tax burden on those companies which have yet not left the Russian markets,” she said.
Bill Browder, a British-American financier and the largest foreign investor in Russia until 2005, who has been subject to repeated attacks by the Kremlin, said the UK “should not be doing any government business with companies that have refused to pull out of Russia”.
He added: “Anybody who is doing business in Russia is indirectly funding the murder of Ukrainian civilians.”
The 15 British-funded companies that are continuing to operate in Russia are: Amgen, Bureau Veritas, Cipla, Cloudfare, EDF, Engie, Gideon Richter, HiPP, Legrand, Lenovo, Orano, Pilkington, Signify, ThyssenKrupp, and Veolia.
Contracts have been awarded to these companies, which span a variety of sectors, via a combination of Whitehall departments, local government entities, public and civic bodies and NHS trusts.
Services provided by the companies include engineering inspections, building installation work, repair and maintenance of medical equipment, servicing and reconditioning of lifts, hazardous materials training, the supply of glazed windows, monitoring and measuring local air quality, and the delivery of electricity and gas.
In the case of Amgen, HiPP, Gideon Richter, Cipla and Signify, their contracts have been awarded by the government via multi-awardee deals in which it is not specified how much each company is paid.
It has not been possible, therefore, to count the value of their UK contracts towards the overall expenditure, meaning that the figure of £294,803,502 is likely to be an underestimate.
The government has also handed out contracts worth at least £17,348,911 to Veolia, EDF, Engie and Bureau Veritas during the course of the war.
In the most lucrative deal struck following the invasion of Ukraine, the Ministry of Defence awarded EDF, the French gas and electricity provider, a contract worth £7,881,620 on 23 March. The contract, for tradeable emission allowances, ended six days later.
Last year, EDF signed an agreement with Rosatom, a state-owned Russian nuclear energy company, to jointly promote clean hydrogen projects in Russia and Europe. EDF also has contractual links with Russia relating to fuels, construction, and the operation of nuclear reactors.
Currently, the UK has 12 active contracts in place with EDF, which are collectively worth £4,862,796.
Engie, another energy provider, has long-term deals with Gazprom, and is continuing to fulfil its contracts with the Kremlin-owned gas company in order “to prioritise the security of energy supply to its clients”.
The French multinational has 14 active contracts with the UK, collectively worth £201,033,496, one of which was awarded by Lancashire County Council on 28 March.
Layla Moran MP, the Liberal Democrat spokesperson for foreign affairs and international development, urged ministers to “sever ties with firms still doing business in Russia, so we can drain Putin’s coffers until he stops his invasion”.
“We need to send a message that it is no longer business as usual,” she said. “It is outrageous that while Putin’s war machine continues to level Ukrainian cities, the UK government is still conducting business with Russian-linked companies, all funded by the taxpayer.”
Ms Vasylenko said that, unless companies operating in Russia were involved in the “upkeep of the bare necessities of life for small children and newborn babies”, there was no reason for their continued presence in the country.
The revelations about the UK’s links to businesses operating in Russia have come as European officials are preparing plans for a phased ban on Russian oil products.
Britain and the US have already started phasing out Russian oil, hoping to cut off a significant source of revenue for Moscow. The decision to follow suit has proved harder for Europe’s economy because of the extent of the continent’s dependence on Russian energy, and could result in prices that are already high being pushed even higher.
On Thursday, Ukraine’s president, Volodymyr Zelensky, accused European countries that continue to buy Russian oil of “earning their money in other people’s blood”.
Albrecht Ritschl, a professor of economic history at the London School of Economics, said: “Russian money is everywhere, driven by its vast exports of oil, gas, metals and what have you. We’ve grown addicted to that; it was the mainstay of Russia’s soft power. Will we wean ourselves off it? Time will tell. It would be nice to do so but it will also be expensive.”
A UK government spokesperson said: “We have been clear from the outset that public money should not fund Putin’s war machine.
“Firms should think very carefully about their investments in Russia and how they may aid the Putin regime. There is no case for new investments in Russia.”
The Independent approached all 15 companies for comment. By the time of publication, only five had responded.
Signify
“We have suspended all new business in Russia while we continuously review the situation and implications of evolving sanctions and logistics challenges. At the same time, we have legal obligations to honour certain customer contracts in Russia, and Signify is committed to fulfilling these obligations in compliance with the applicable sanction regulations.”
Legrand
“The Legrand Group specifies that its business in Russia represents less than 2 per cent of its global sales. Moreover, from the start of the conflict, the group immediately stopped all new investments in Russia, as well as activity not strictly compliant with applicable sanctions and embargoes.”
Cloudfare
“Cloudflare has minimal sales and commercial activity in Russia – we’ve never had a corporate entity, an office, or employees there – and we’ve taken steps to ensure that we’re not paying taxes or fees to the Russian government. The services that we continue to provide to average citizens in Russia, and around the world, help ordinary people securely browse the global internet.”
Thyssenkrupp
“Thyssenkrupp will ensure compliance within the company with all the sanctions and trade restrictions imposed on Russia. Thyssenkrupp’s business with Russian customers is negligible ... Almost all segments have already stopped the acquisition of new business in Russia.”
Orano
“Orano has no businesses units or uranium mines operating in Russia. Our usual business with Russia is very minimal ... Since the end of February 2022, Orano has suspended all new transport of nuclear material, whether from or to Russia, for its own account, and confirms that no transport is planned in the coming weeks on behalf of Orano.”
Veolia
“While we utterly condemn war and violence in Ukraine, we have a responsibility to our employees and the communities we serve to continue our vital public service operations in Russia. In these difficult times, we continue to stand by our employees and the populations we serve ... We provide absolutely no new funding for our operations in Russia.”
