(Bloomberg) -- Maire Tecnimont SpA and two of its lenders could be on the hook for €212 million ($190 million) as a company linked to a sanctioned billionaire, Andrey Melnichenko, pushes for compensation over a giant construction project on hold since Russia invaded Ukraine.
EuroChem Group AG sued Societe Generale SA and ING Groep NV in London after the banks refused to pay a so-called performance bond provided as a guarantee by the Italian engineering group, according to court documents. The banks claim that they couldn’t make the payment because of European Union sanctions targeting Melnichenko and his wife, a shareholder via a trust that took over from the financier after the February invasion.
On Thursday, a separate case brought by EuroChem against Maire over the same issue is being privately heard in London.
Spokespeople for EuroChem, Maire and ING declined to comment. SocGen didn’t respond to a request for comment.
Maire had been working to complete a urea and ammonia plant in Kingisepp, northwest Russia when the war broke out. The value of the guarantee is equal to about 20% of Maire’s industrial order, according to the company’s latest financial report. Maire shares extended losses to fall as much as 5.6% after Bloomberg reported the lawsuits. They are trading 5.2% lower at 2:35 p.m. in Milan -- the biggest fall in two months.
Sanctioned Russians are increasingly turning to British courts to try and find a way through strict embargo regimes that even prevent most lawyers from representing them in court.
Melnichenko, who started the company in the early 2000s, resigned from Swiss-registered EuroChem’s board in March. The Russian fertilizer tycoon also withdrew as a beneficiary of of the trust that holds his roughly $17 billion stake in EuroChem and thermal coal supplier Suek AG on the day he and others were sanctioned.
Melnichenko has repeatedly pushed back against the sanctions, saying he had “no political affiliations” and that there was “no justification” for the EU’s move. He’s filed a court challenge against the measures in Luxembourg, calling the decision “unjust.” He’s also featured on UK and US sanction lists.
Shortly after Melnichenko was added to the sanction list, Italy seized his €530 million yacht -- one of the world’s biggest -- in the port of Trieste.
EuroChem filed the London lawsuit after ING and SocGen rejected demands to pay the bonds in early August. It was provided as a guarantee by Maire to EuroChem, and backed by the two lenders.
In a series of Swift messages disclosed in a legal filing, the banks said that any payments would constitute a breach of sanctions.
“For your information, Mrs. Melnichenko has also been sanctioned by the French government, which considers her as controlling - aside with Mr. Melnichenko - Eurochem Group,” SocGen wrote.
EuroChem responded in its own Swift message, saying that it was not sanctioned and any such measures wouldn’t prohibit payments to its bank accounts at Gazprombank.
The company said in June that it was never under sanctions and is now controlled by “EU trustees of a trust, whose beneficiary as no majority ownership of, nor influence over, EuroChem.”
On Tuesday, the Italian Finance Ministry ordered to freeze assets of EuroChem’s domestic unit called EuroChem Agro SpA, according to a filing in the Milan corporate register.
(Updates with share move in 5th paragraph)
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