Guests huddled beneath a leaden Moscow sky as the opening chimes of Tchaikovsky’s Dance of the Sugar Plum Fairy rang out across a car park. On cue, a fleet of JCBs rumbled into life to begin their favourite party trick: the dancing diggers.
It was October 2016 and JCB, one of the UK’s biggest privately owned companies, was celebrating the opening of a 2bn rouble (£25m) factory on the outskirts of the capital. The factory would assemble and service JCBs but had been paid for by its Russian dealer, Lonmadi.
Guest of honour was the Queen’s cousin, Prince Michael of Kent, who expressed hope for “fruitful cooperation between the two countries”. JCB’s chief executive, Graeme Macdonald, also spoke, as did Vadim Khromov, a Moscow city official, noting how the investment had been attracted “despite the sanctions”.
Those sanctions from the EU and US were in retaliation for Russia’s invasion of Ukraine’s Crimea region in 2014, leading to its increasing isolation on the global stage.
The Moscow factory was a gamble by JCB’s biggest distributor, a chain of more than 20 outlets across Russia that trade as Lonmadi and Kwintmadi. They are owned by an obscure dealership group called JVM, which is in turn 51%-owned by a reclusive Briton called Max Milne-Skillman. Skillman, who attended the opening with his family, was betting that the post-Soviet construction boom would continue even as relations between the west and Vladimir Putin’s Kremlin crumbled.
Skillman, now 67, his business partner Lina Sokolova, 52, and her sister Tatiana Sokolova, have made multimillion-pound fortunes selling JCBs and other construction gear to the Russian market. Many of those vehicles have been exported to Russia from Staffordshire, the home of Lord (Anthony) Bamford’s digger empire.
Yet even further severe western sanctions, imposed following Russia’s invasion of Ukraine, do not appear to have deterred Skillman’s company.
JCB stopped exporting to Russia in early March, saying it would “pause” operations in the country. But an Observer investigation reveals how Lonmadi and Kwintmadi have continued to sell JCBs, even offering customers credit from Gazprombank Autoleasing, an arm of Russian bank Gazprombank, to buy them. State-backed Gazprombank has been designated for sanctions by the UK, including an asset freeze, as have its subsidiaries. The finance deal was offered by Lonmadi on 14 April, three weeks after the bank was blacklisted by the UK, and ran until the end of June.
Lonmadi’s Russian accounts on Instagram and Telegram celebrated Russia’s Victory Day on 9 May and have promoted 10% discounts on JCB diggers. The webpage advertising the deal with Gazprombank was taken down after the Observer approached Skillman and Lonmadi for comment.
(November 10, 1991) Lonmadi is born
Russian Victor Sokolov forms Lonmadi.
(November 10, 1998) JVM is born
Max Skillman and a partner found JVM Equipment in the UK.
(December 10, 2001) Merger
JVM buys 51% of Lonmadi for a nominal sum.
(January 10, 2012) Flying high
JVM turnover peaks at £461m, making £47.2m in profits.
(January 1, 2013) Move to Jersey
JVM transfers ownership of all of its subsidiaries to a holding company in Jersey. JVM pays a dividend of £27.5m to its shareholders, Skillman and Lina and Tatiana Sokolova.
(February 10, 2014) Crimea invasion
Russia invades Ukraine, eventually annexing Crimea. Lonmadi starts building a new Moscow facility.
(January 10, 2015) Production in Moscow
The first JCBs are built in Moscow.
(January 1, 2016) The opening
Prince Michael of Kent attends the opening ceremony for Moscow facility.
(February 24, 2022) UK ownership transfer
Ownership of JVM passes to UK holding company. Russia invades Ukraine.
(March 2, 2022) Sanctions regime
JCB says it has “paused all operations, including the export of machines and spare parts” in Russia.
(March 24, 2022) Action against Gazprombank
UK designates Gazprombank for sanctions, including an asset freeze.
(April 14, 2022) Autoleasing deal
Lonmadi announces deal to provide finance with Gazprombank Autoleasing.
The revelations raise questions about whether Skillman, with his controlling stake in the Russian dealership chain, has broken western sanctions. His lawyers said he had not broken them, and that he has had no involvement in the day-to-day operations of Lonmadi or its sales for some time. In particular, they said he was completely unaware of the fact that the company had made sales to customers financed by Gazprombank Autoleasing. They said Lonmadi was no longer entering into such arrangements.
The revelations also risk embarrassment for JCB and Bamford, 76, one of the Conservatives’ biggest donors and a close ally of Boris Johnson. Bamford accompanied Johnson on his trip to India in April, where the prime minister opened JCB’s latest factory, in Gujarat. JCB’s expansion in Russia over several decades, principally via dealers such as Lonmadi, has boosted Bamford’s wealth, reported by the Sunday Times to be £4.3bn.
The findings also highlight the risks western companies and shareholders face in countries run by autocratic regimes such as Russia, and the difficulties of disentangling themselves when things go wrong. Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the thinktank Rusi, said: “This is a good example of the complexity of sanctions exposure for UK companies and underlines that the only way to be sure to avoid Russia-related sanctions exposure is to divest significantly or completely of ownership and control of Russian assets. Staying involved will, inevitably attract scrutiny and risks reputation damage at best, and enforcement action at worst.”
A partner specialising in sanctions at a London law firm said Lonmadi’s Gazprombank Autoleasing offer meant that, as a UK national, Skillman risked falling foul of sanctions. They said there was a “high likelihood of the UK national to be found to be at risk of being at breach” if a Russian subsidiary controlled by the UK national was found to have transacted with a company or its majority-owned subsidiaries designated for sanctions.
A lawyer for Skillman said his client was “appalled by the events in Ukraine and the tragedy of human suffering which has resulted”. Skillman’s lawyer denied any suggestion that as the indirect owner of Lonmadi he might be at risk of breaching sanctions through his company’s dealings with the Gazprombank subsidiary.
Lawyers for JCB said it operated independently of JVM and Lonmadi and did not have knowledge or control of its Russian distributors’ actions once they had taken possession of its kit. They said any JCB machinery the dealer may have sold since March2022 was stock it already had in its possession before JCB announced it had “paused” exports to Russia on 2 March.
When the world woke up on 24 February to news that Russian missiles were raining down on Ukraine, the shockwaves were felt 1,600 miles away in Uttoxeter. Bamford’s JCB empire, which has its HQ in the Staffordshire town but has been owned by a Swiss holding company since 2020, has made the Russian market a priority in recent decades. Sales have been handled largely via its network of independent dealers, of which JVM is the largest.
JCB sold its first piece of kit in Russia – a backhoe loader – in 1979 as part of the buildup to the Moscow Olympics. In 2013 it described Russia as one of the “jewels in the crown” of its operation. It does not detail how much of its £3.1bn turnover comes from Russia, although its sales in “Europe” plunged 28% to £853m in 2020 from a year earlier. JCB declined to say whether Russian revenues were included in its reported figures for Europe, adding that as a private company it was not obliged to provide such information.
Bamford’s business has traded with Lonmadi for about three decades. Lonmadi’s website repeatedly applauds JCB’s progress, from Bamford’s peerage in 2013 to a press release last October featured him and a grinning Johnson promoting JCB’s plans to launch hydrogen-powered diggers. Putin’s war threatens a big source of business for Bamford, who with his family has donated £8.7m to the Tories since 2002.
JCB has not been sanctioned, nor is it banned from selling to Russia. Lawyers for JCB said it had complied with all sanctions, and that it fully supported the UK government’s position on Russia.
The company said: “JCB voluntarily paused exporting machines and spare parts to Russia on 2 March 2022 in the wake of the conflict in Ukraine, a position that remains unchanged.”
As outrage at the war grew, Bamford did his bit in solidarity with Ukraine. In May he gave a job to a teacher who had fled Ukraine and donated company properties to house 70 refugee families. It was “the very least” the firm could do, he said. “I think British people are very moved by it and certainly I and my family as well feel [this]. I mean, it is so utterly shocking.”
That stance is a marked change in tone from several years ago. Weeks after the EU tightened its sanctions against Russia in 2014, after it was identified as being behind the downing of Malaysia Airlines flight MH17 over eastern Ukraine, Bamford labelled the restrictions as “absurd” in an article in the Daily Telegraph.
“Russia is a very important market for JCB and has been for more than 30 years,” he said.
“We ship both machines and spare parts to Russia and are the market leader for construction equipment in the country. If sanctions restrict sales of machines and spare parts, there will be obviously be a major impact on JCB, which could put hundreds of British jobs at risk.
“It seems absurd that a leading UK exporter, successfully selling machinery to construction companies and farmers in Russia, could be affected so dramatically by EU sanctions coming out of Brussels.”
A yellow-and-black sign for JVM at the end of a tree-lined lane in West Sussex gives a clue to Skillman’s multimillion-pound Russian construction fortune. The sign points to a sprawling country pile, complete with swimming pool and tennis court, that doubles up as his home and office.
A reclusive millionaire, who has previously described his interests as hunting and motorcycling, Skillman is said to own a collection of some of the world’s most exclusive and expensive cars, including a
McLaren P1, a LaFerrari by Ferrari and a Porsche 918, known as the “holy trinity” of supercars. His wife rides and owns dressage horses.
Only a few photos of him exist on the internet, including one of him posing in front of a JCB with Bamford and his partner at JVM, Lina Sokolova.
Skillman’s son, Oliver, appears to have worked at JCB for several years, and his most recent role there was a business data analyst, according to LinkedIn. He is also a director of a JVM holding company in Jersey. JCB did not respond to questions about Oliver’s role, and his LinkedIn page was deleted after the Observer contacted him. Skillman’s lawyers did not comment on his son’s job and JCB said JVM was a “wholly unconnected third party”.
Skillman was not always so publicity-shy. In 2011, as JVM headed for its busiest year, the former crane salesman gave an interview to a trade publication explaining how he had conqueredsuch a tough market. “Unlike their image in some of the media, the Russians are pretty reasonable people and if you play by the rules you’ll be fine,” he said. Skillman was on course to sell 3,500 JCBs in Russia that year and had grown to employ 650 staff.
In April 2013 Skillman appeared in the Sunday Times Rich List, debuting as Britain’s 766th richest person, with a £103m fortune, thanks to his 51% stake in JVM. But the following February Russia invaded Crimea. Sanctions swiftly followed, although, crucially, exports of construction equipment, such as JCBs and parts, were not banned.
JVM and its subsidiaries have not been sanctioned, but under UK laws all UK nationals, and people and companies operating in the UK, are forbidden to “deal with the frozen funds or economic resources” of any entities designated for sanctions, unless there is a licence allowing that transaction.
The UK Treasury’s Office of Financial Sanctions Implementation (OFSI), which polices sanctions, did not say whether any licences applied, saying it did not comment on individual cases. The London sanctions lawyer said UK authorities could impose criminal or civil penalties for sanctions breaches: “Ignorance of the law (or of relevant facts) is no defence to a breach here, but there will only be criminal liability if the breach was committed with knowledge or reasonable cause to suspect that the activity in question is prohibited.”
Skillman’s lawyer said: “The suggestion that our client, a UK national, might be found to be in breach of UK sanctions merely by virtue of the fact that he owns a UK company which indirectly owns a majority interest in the Russian company Lonmadi is incorrect. We have carefully considered this issue with our client, and are satisfied that any suggestion of sanctions breaches is completely without foundation.”
Lonmadi’s roots stretch back to the collapse of the USSR. According to its website, it was formed in 1991 by a Russian called Victor Sokolov as a joint venture between the British company Lonrho and Moscow Automobile and Road Construction State Technical University. When Sokolov died in 2004 his daughter Lina took over. She continues to be its chief executive, according to an interview with Russian TV, and with her sister Tatiana owns 49% of JVM.
Skillman co-founded JVM Equipment in West Sussex in 1998, buying 51% of Lonmadi for a nominal sum in 2000 and increasing that to 100% by 2005. Growth was rapid but fraught with complexity. In 2007, company filings warned of “grave concerns about the present political conflict between the UK and Russian government” and the likelihood of “severe impact” on its business. In response, JVM set up a new subsidiary in Dublin that year to handle trading in Russia, and said it was considering moving the whole group to Switzerland, a “politically neutral country … to safeguard the group’s trading capabilities”.
By 2012, JVM Equipment was earning profits of £47.2m on turnover of £461.m, but in December 2013 JVM moved all of its subsidiaries to a new holding company, JVM Ltd, based in the tax haven of Jersey, leaving JVM Equipment as a shell. That shell paid out a combined £32.5m of dividends for 2013 and 2014, entitling Skillman to £16.6m. The group’s ownership was transferred back to a UK company, JVM Group Holdings Limited, on 23 February 2022, the eve of the invasion.
Through his lawyer, Skillman denied moving the domicile of his business in an effort to reduce scrutiny or the risk of sanctions. Skillman’s lawyer said Skillman “no longer plays any part” in managing Lonmadi, but said he had been in contact with Lonmadi’s management “as a majority shareholder”.
Since the war, Lonmadi has continued to trade, but acknowledged difficulties in getting products. On 16 March it posted on social media about “worries about the lack of vehicles”, and said there was a “shortage” of mobile generators of the type made by JCB.
Satellite imagery of its factory showed vehicles that appear to include JCBs in its yard. It has reassured customers that its prices are the same. “Everything is in stock,” the company wrote on social media.
Prince Michael was contacted but declined to comment.
