Russian-Israeli billionaire Mikhail Friedman has lost his High Court appeal against the UK sanctions agency for refusing to allow maintenance payments for a London mansion housing a £44m art collection.
The Ukrainian-born businessman took legal action after the Treasury's Office for Financial Sanctions Enforcement (Ofsi) refused permission for monthly payments of £30,000 to cover the running costs of Athlone House, a multi-million pound Victorian property in Highgate, north London.
Ofsi also rejected Mr Fridman's requests to be able to pay £1,850 a month to run a comprehensive lighting, heating and communications system and fund the salaries of “non-security” staff.
Mr Fridman's lawyers argued the decisions were illegal, saying the 168-year-old property he bought in 2016 faced “risks of neglect”.
Ofsi said it rejected spending requests that would have allowed Fridman to enjoy his pre-sanctions “lifestyle” and rejected payments to Athlone House Limited (AHL), a company that maintains the property, because its sole director, Nigina Zairova, is also subject. in sanctions.
In a written ruling issued on Thursday, Judge Saini dismissed Mr Fridman's legal challenge, ruling that Ofsi had acted lawfully, rationally and not in a “procedurally unfair manner”.
The judge said the purpose of the sanctions regime would be “undermined” if payments were allowed to be made to a company controlled by a sanctioned person.
He noted that Mr Fridman was seeking “relatively modest” sums compared with sums already approved by Ofsi “which run into several millions”.
The sanctioning office has authorized total annual future payments in relation to maintenance and ‘basic needs' of around £760,000, and has also granted arrears and one-off payments in the past of around £1.38 million and €29,000.
The judge said Athlone House, which was built in 1855, had five acres of landscaped garden designed “to imitate the palace at Versailles”.
After buying the dilapidated 33,173 sq ft house, Mr Fridman renovated it “at considerable expense”, with it containing a collection of “culturally significant” art.
Mr Justice Saini said Freedman no longer contested the rejection of Offsi's request to pay for a driver, who his lawyers said was “able to travel by public transport”, because he had left the UK Kingdom.
During a hearing earlier this month, the billionaire had left the UK for Israel and then traveled to Russia, the judge said.
His lawyers told the court he intended to return to the UK, but the judge said that was not possible because he was an “excluded person” under immigration law.
Mr Fridman had frozen financial assets in March last year after Russia launched its invasion of Ukraine, initially based on alleged links to President Vladimir Putin.
However, the court was told that the businessman denies being an oligarch, says he has no ties to Mr Putin, is not “pro-Kremlin” and does not support Russia's war effort.
In September, Mr Fridman's “designation” under the sanctions regime removed claims he was “pro-Kremlin”.
His lawyer Rachel Barnes KC said in written arguments that Mr Fridman remains on the sanctions list based on his “former government positions relating to Russia's Alfa Bank”.
Ms Barnes argued Ofsi should have allowed “reasonable fees” to be paid to a company that provided the “complex exercise” of the “ordinary occupation and maintenance” of the property.
He said: “The utility costs at Athlone House exceed those of many properties, but it is a unique property with unique needs for communications, IT, lighting, heating and security, not least in light of its art collection.”
Ms Barnes previously said Friedman, who regularly features on the Sunday Times rich list and is believed to be worth £8.2bn, needed a staff guide for “security reasons”.
Ofsi had previously granted payment of £18,500 for TV, audio and telephone services and “recognised the need for security services”, it said, adding that there had been a “security incident” on September 1.
Malcolm Birdling, for Ofsi, said in written arguments that it had previously allowed monthly payments of £1,974.43 for CCTV and £24,083 monthly payments in respect of seven security staff.
He said the Ofsi had “reasonably” concluded that “a manager/property manager, six domestic care assistants, two handymen and one person providing ad hoc services” were not necessary to maintain the home.
He added that Mr Fridman has “a strained and unrealistic interpretation” of what counts as “basic needs” under the sanctions regime.
The lawyer also said Mr Fridman had not provided “sufficient information as to which charges were for entertainment and which were for security” in relation to payments linked to the upkeep of the home.
Mr Fridman made his fortune in Russia through banking, retail, oil and telecommunications, through companies Alfa Group and Letter One, before moving to London in 2015.
In July, he was given the go-ahead to appeal to the High Court over the National Crime Agency raid on Athlone House in December last year.
The hearing is expected to take place on November 14.