RT’s UK Bank Woes: Not Politically Motivated; More Likely a Banking Compliance Issue

RT has interpreted NatWest’s decision to close its UK accounts as a political move to target Russian freedom of expression, with Editor-in-Chief Margarita Simonyan tweeting that ‘they have closed all our accounts in Britain … Long live freedom of speech!’ A dramatic press release from the Russian Embassy in London claimed that ‘this openly political decision follows many similar acts of harassment and intimidation against Russian news outlets in UK [sic]’.

The state-funded TV network, formerly known as Russia Today, has speculated that this may be part of a broader political strategy. Simonyan told Russian news outlet gazeta.ru that she thought this action could be linked to possible new, but as yet unannounced, sanctions that the UK intends to place on Russia.

Russia’s media has also noted that NatWest is owned by RBS, a controlling stake of which has been held by the UK government since the 2007–08 financial crisis. This has made Russia sceptical that NatWest is making independent decisions.

And, naturally, the allegation that a British bank’s decision was either politically sanctioned or motivated also provides a useful pretext for Russia to threaten the UK’s media presence in Russia.

But is this political? As Russians see it, the timing of the NatWest move is suspicious, given that the EU summit this week discussed relations with Russia. At the summit, Britain as well as Germany and France were vocal in supporting further sanctions on Russia over Syria. However, these diplomatic moves seem to have little to do with RT. If any new EU sanctions were to be put in place, companies and banks would not be forewarned, and if RT accounts were being placed under sanction, they would be frozen, not closed.

Instead, what is more likely is that NatWest’s actions stem from a banking compliance issue. In line with UK legislation and regulations, banks are told to take a ‘risk-sensitive’ approach when examining new and existing relationships with customers, based on the customers’ profile, ownership and activities. It is likely that something – possibly an event or information emerging from a review of RT’s operations – has made NatWest less comfortable about continuing the relationship with the UK arm of RT. That is not to say malpractice has taken place. Still, examining the company in question could provide some speculative theories.

There seems to be some confusion as to the entity that NatWest is allegedly seeking to prevent from continuing to use the bank’s services. Following RT’s announcement, NatWest has said that the account closure concerned an RT supplier rather than the network itself. The supplier, media reports say, is a local production company that handles RT staff salaries in the UK, among other things. The NatWest letter that RT published online, informing the customer that it would ‘no longer provide’ the banking arrangements, was addressed to ‘The Officers of Russia Today TV UK Ltd’.

RT has disputed NatWest’s claim that this is a supplier, saying ‘in reality … it is misleading to refer to Russia Today TV UK Ltd as one of RT’s suppliers, as RT is the brand name of a global network’. RT says this entity has been providing all RT services in the UK. The broadcast licences which RT holds from Ofcom, the UK’s communications regulator, are held by a non-profit entity registered in Russia. But the company filings for Russia Today TV UK Ltd do not indicate any connection with a Russia-based entity.

According to Companies House, the UK’s corporate registry, the director and sole owner of Russia Today TV UK Ltd is a British individual, who has one other corporate interest related to news and media which, in turn, has a representative office in Moscow. Therefore, he seems a logical partner for RT to work with to set up shop in the UK.

 RT has said itself that it receives state funds from Moscow. There is a separate wholly state-owned entity based in Russia called Rossiya Segodnya, which translates in English to ‘Russia Today’, and is the Moscow-based state-owned international news agency.

When Rossiya Segodnya was created in 2013 RT said that it ‘will not be in any way related’ with the international RT channels based abroad, despite the similarity in name. However, Simonyan is the editor-in-chief of both Rossiya Segodnya and RT. The fact that RT is thought to be state-funded but has no evidence of an institutional link to Russia, in addition to this seemingly confusing corporate structure, may have raised questions about the company’s source of wealth and ultimate beneficial ownership for a bank.

There is also a risk of dealing with a politically exposed entity, if this British individual who is apparently the sole owner of Russia Today TV UK Ltd is in any way linked to Russian state funding.

The filings of Russia Today TV UK Ltd also indicate that its operations appear to have changed or expanded at the time that RT announced it would launch a UK-dedicated channel in 2014. Russia Today TV UK Ltd was registered in, and apparently operated from, 2005; but some changes took place between 2014 and 2015.

In August 2014, the director’s service address changed to Millbank Tower, where RT UK has its studios. There was also an increase by almost £3 million in the amount held at the bank on the balance sheets between the 2014 and 2015 accounts filed at Companies House. This may indicate, therefore, that rather than a supplier – as NatWest believed – Russia Today TV UK Ltd has a more significant operational role on behalf of RT. This would also appear to be confirmed by Simonyan’s comments.

Regardless of the reason that led NatWest to decide it would close Russia Today TV UK Ltd’s accounts, there is a lesson in this for the UK, particularly in relation to the new People with Significant Control (PSC) requirements. This measure was introduced in the UK in April 2016, and it requires an individual who holds more than 25% of the shares, voting rights, or who exercises significant influence or control to be included in Companies House filings. Its stated aim is to ‘increase transparency over who owns and controls UK companies’.

In the case of Russia Today TV UK Ltd, the stated PSC (and person in control as per the UK government’s definition) of an entity allegedly providing all the services in the UK of a Russian state-run media company is a British national.

As with the government’s proposed registry of beneficial ownership for foreign companies owning property in the UK, this case study shows that enhanced transparency gives only a partial picture without accompanying investigative verification.

Moreover, it is naive to assume that a registered shareholder of a certain amount – over 25% in the case of the government threshold – is always the person that controls and influences a company. The person exercising influence and control may not be registered as a shareholder, particularly if the objective is to cover this up.

After the RT episode, UK media reported that NatWest said it would review the decision to close RT’s accounts, so the current status of this move remains unclear. Still, RT may suffer as a result of this, regardless of how it ends. For, by publishing the letter that NatWest sent, it is letting the broader UK banking sector know that one bank found cause to halt servicing its company – not the sort of stuff corporate customers usually advertise.

As for safeguarding freedom of speech in the UK, there is always room for improvement. And there is, no doubt, plenty of room for improvement on that score in Russia.