Luxembourg’s Financial Sector Supervisory Commission (CSSF) announced in a  that it had imposed an administrative penalty of €45,000 on the entity Gazprom Capital LLC, a unit of the Russian energy giant Gazprom. The penalty was imposed on 11 May 2023.

The CSSF’s press release noted that the penalty was imposed for non-compliance with the notification requirements of the . This directive aims to coordinate national provisions on access to the activity of credit institutions and the supervision of credit institutions and investment firms. It covers, amongst other topics, the acquisition of qualifying holdings and the powers of member states’ supervisory authorities.

More specifically, the CSSF’s penalty on Gazprom Capital LLC was imposed for non-compliance with article 22, paragraph 1 of the directive, which covers the notification and assessment of proposed acquisitions.

This part of the directive states that member states shall require “any natural or legal person” who has decided to acquire or increase a “qualifying holding” in a credit institution--which would result in the proportion of voting rights or capital held to reach or exceed 20%, 30% or 50%, or so that the credit institution would become a subsidiary of the proposed acquirer--to notify the competent authorities of the credit institution.

The proposed acquirer is required to write to the competent authorities in advance of the acquisition and provide information such as the size of the intended holding.

As noted in the CSSF’s communiqué, the €45,000 penalty was imposed on Gazprom Capital LLC for not complying with this part of the EU directive.

Gazprom has been contacted by Delano for comment.

What is Gazprom Capital LLC?

PJSC Gazprom is an energy corporation that is majority owned by the Russian state and has several hundred subsidiaries or affiliated companies around the world. Four Luxembourg-registered Gazprom Group entities listed on the country’s companies register (Registre de Commerce et des Sociétés) are: Gazprom Neft International S. A., Bank GPB International S. A., Gaz Capital S.A. and GazAsia Capital S.A.

A issued by Gaz Capital S.A. (located, at the time, at 2 boulevard Konrad Adenauer, and now registered at 106 route d’Esch) for financing a loan to Open Joint Stock Company Gazprom, named “Gazprom capital LLC” as its subsidiary. It noted that Gazprom Capital LLC had issued a series of bonds, for which Gazprom had provided a guarantee.

On 31 October 2022, the on Gaz Capital S.A. for publishing its annual financial report as of 31 December 2021 late.

Its annual accounts for the year ended 2022, submitted on 30 May 2023 and available on the website of Luxembourg’s companies registry, notes that Gaz Capital S.A. was incorporated on 23 July 2003. The company issues notes and other debt securities to finance loans to Public Joint Stock Company Gazprom (PJSC Gazprom), which is registered in Moscow, Russia.

The annual accounts include a note referring to the CSSF’s €10,000 late-filing fine in October 2022 as “other operating expenses.”

As part of its annual accounts, Gaz Capital S.A. has made two notes that refer to Russia’s war in Ukraine. The first--note 2 in the annex--states that “the Sole Director has considered the impact of the Conflict in Ukraine” and that “as at 31 December 2022, there is no impact in the valuation of the assets of the Company.”

Note 20, on the other hand, specifically refers to the sanctions that countries such as the United States, the United Kingdom or the European Union have brought “against the Russian Federation as a consequence of the war in Ukraine,” and uses the word ‘war.’ It states that “although no sanctions have been brought toward the Company directly, the sanctions are affecting the market and business the entity is connecting with facing an increased level of economic uncertainty.”

The auditors of the accounts--Ecovis--drew attention to these two notes in Gaz Capital’s annual accounts, in that “possible future governmental actions and/or controls (sanctions) may negatively impact the ability of the company to be engaged in its business operations.” It also highlighted a “key audit matter” concerning “credit risk towards affiliated undertakings.”

According to , an American firm that provides commercial data, analytics and insights for businesses, Gazprom Capital LLC is a company with an address in Saint Petersburg, Russia, and whose key principal is Vsevolod Stanislavovich Vorobev. Dun & Bradstreet lists the industries that the company is active in as securities and commodity exchanges, finance and insurance.

Vorobev is also named as a director of the Moscow-based Gazkon OAO, which, according to , is a Russia-based company involved in the finance and investment sector.