The UK’s Financial Conduct Authority (FCA) has been asked to investigate the listing of Belarusian sovereign bonds on the London Stock Exchange, openDemocracy reports today.
In a letter written by the Belarusian Coordinating Council and seen by openDemocracy, the opposition movement called on the FCA to investigate the banks that have subscribed to the listing of $ 1.25 billion of Belarusian government bonds in London. in 2020. The transaction was underwritten by Citi, Raiffeisen, Société Générale and Renaissance Capital, and the FCA is the regulator of the London Stock Exchange.
The letter is the latest installment in a wave of criticism of the UK’s financial ties with Belarus. British MPs have called on Boris Johnson’s government to investigate London’s role in funding autocratic regimes after Belarusian authorities forced a Ryanair airliner carrying a dissident to land in Minsk in May.
“These latest revelations about Belarusian Eurobonds floating in the London market are shocking and demand a response from the FCA and the Treasury,” Labor MP Tony Lloyd told openDemocracy. “The UK should not be the back door for arms sales and it should not be the back door to support the Lukashenko regime.”
The letter, dated June 9, raised concerns that while the bonds were intended to refinance Belarus’ external debt, the proceeds from the bonds were actually funding Alexander Lukashenko’s regime – and could have been used to support the lifestyle of the president and “the purchase of equipment and weapons for the interior ministry”. As openDemocracy previously reported, there is little oversight or control over the end use of funds raised through sovereign debt.
The Coordinating Council is waging a divestment campaign against investment banks that hold Belarusian sovereign debt and claims that the bond prospectus did not mention the crackdown on independent presidential candidates ahead of the elections. While the bonds were inscribed on June 25, 2020, the board’s letter notes that two independent Belarusian presidential candidates – popular blogger Siarhei Tsikhanoski and banker Viktar Babarika – had already been arrested and police brutally dispersed protesters who supported independent candidates.
“No event of this magnitude has occurred in previous election cycles,” the letter said. “Comparing the trends with previous elections, it should have been obvious at the time that, as a result, further economic sanctions will be imposed on the issuer.”
The FCA did not respond to a request for comment.
As part of a campaign to attract international capital, in June 2020 the Belarusian finance ministry listed two sovereign Eurobonds on the London Stock Exchange, signaling an apparent commitment to long-term financing in the West.
“It is doubly honorable that [our] the securities were listed on the world’s main stock exchange platform, ”Belarusian Finance Minister Yuri Seliverstau said at the time. “We hope that cooperation between our country and the London Stock Exchange will continue.”
The City of London has hosted a series of investor promotion events for Belarus in the run-up to the prestigious listing. During a visit to London in June 2019, former Belarusian Prime Minister Siarhei Rumas was received both by the Mayor of the City of London, Peter Estlin, and during a “Belarusian Market Day. capital ”on the London Stock Exchange. It was there that Rumas met the managing director of the stock exchange, Nikhil Rathi, now the managing director of FCA, and Alan Duncan, former minister of state of the British Foreign Office for Europe and the Americas.
“London is the place where Belarus can raise the capital it needs to develop its economy,” Duncan said at the event. “Our governments are ready to continue cooperation, our companies will also interact. We believe that the London Stock Exchange will facilitate your economic endeavors.
The UK’s financial ties to Belarus have become relevant since Belarusian police violently cracked down on post-election protests in the country last year and authorities forced a Ryanair airliner carrying a dissident to land in Minsk in May 2021. In response, the European Union sanctioned future bond issues by Belarus, and Belarus’ perception of “ESG risk” – risks associated with environmental, social and governance factors – would have deteriorated.
Under increasing pressure to make ethical investments, investment banks must make choices about which sovereign bonds to trade – albeit like the Financial Times reports, there is a view that this is unfair to an industry that is ultimately about financial returns.