Sanctioned Russian oligarch held stake in Musk’s SpaceX through trust – media

Bloomberg reported the information.

According to sources familiar with the matter, this exposed gaps in control mechanisms aimed at limiting the influence of elites supporting the Kremlin's policies.

The outlet's sources, including two former senior U.S. national security officials, state that Kerimov held a stake in SpaceX through the Delaware-registered Heritage Trust since 2017. Initially, the trust owned about 1% of SpaceX shares.

The stake in SpaceX was reportedly acquired a year before the U.S. Treasury imposed sanctions on Kerimov and others in response to Russia’s "malign activity around the globe." The measures aimed to freeze his assets and prohibit business dealings with U.S. companies.

Citigroup Inc., which managed the trust, consulted the U.S. Treasury and concluded that it was not required to block the trust and its related entities. As a result, the trust remained operational.

In June 2022, the U.S. Treasury froze the $1 billion trust, stating it was established in 2017 to manage Kerimov's U.S. assets. Investigators uncovered a complex network of legal entities and proxies designed to conceal his interest in these assets.

“The events show the hurdles that tangled financial networks present to US attempts to uphold sanctions and the challenges closely held companies such as SpaceX, now valued at around $350 billion and an increasingly influential player in global defense and communications, must confront in order to determine the identity of investors. They also raise questions about due diligence at Citigroup, an international banking giant that is now under investigation by the Justice Department over its handling of Heritage Trust,” Bloomberg notes.

The outlet notes that private companies usually vet investors, but identifying the ultimate owner of shares can sometimes be challenging. Investors may acquire stakes through legal entities created for such transactions or by purchasing shares on the secondary market.

Who is Suleyman Kerimov?

Reports indicate that 58-year-old Suleyman Kerimov is ranked 17th among Russia's wealthiest individuals, according to the Bloomberg Billionaires Index, where he holds the 282nd position globally with an estimated net worth of $9.9 billion.

Kerimov built his fortune by acquiring stakes in Russian companies across the banking, energy, and mining sectors, often leveraging loans from state banks.

The U.S. imposed sanctions on Kerimov in April 2018, freezing his assets and banning transactions with him, as part of extensive measures by the Donald Trump administration aimed at holding Russian officials and oligarchs accountable for alleged profits from corruption and foreign aggression.

In May 2022, the Fijian authorities, at the request of the United States, confiscated Kerimov's yacht worth $300 million.

In 2022, the U.S. Department of the Treasury also imposed sanctions on several members of Kerimov's family, including his wife, two daughters, son, and two nephews, one of whom was described as a "primary financial intermediary" for Kerimov. The other nephew was identified as a beneficiary of the Heritage Trust, according to the Treasury.

In 2022, the European Union also imposed sanctions on Kerimov, describing him as part of the inner circle of oligarchs close to Putin.