Sanctioned billionaire brings High Court challenge over upkeep of London mansion

Mikhail Fridman is subject to UK Government sanctions put in place after the start of Russia’s invasion of Ukraine.

Sanctioned Russian-Israeli billionaire Mikhail Fridman is bringing a High Court challenge over decisions made by the Treasury’s Office of Financial Sanctions Implementation (Andrew Matthews/PA) (PA Archive)

A sanctioned Russian-Israeli billionaire is bringing a High Court challenge against the UK Government over a refusal to allow payments for the upkeep of a London mansion housing an art collection.

Mikhail Fridman took legal action after the Treasury’s Office of Financial Sanctions Implementation (Ofis) denied permission for £30,000 monthly payments to cover the running costs of Athlone House, a multimillion-pound Victorian property in Highgate, north London.

Ofis also rejected Mr Fridman’s requests to be able to pay £1,850 a month to run an integrated lighting, heating and communications system, and to fund the wages of “non-security” staff and his driver.

At a hearing in London on Tuesday, the billionaire’s lawyers argued that the decisions were unlawful and asked a judge to order the payments are authorised.

Ofis opposes the challenge and says it refused some payments because it would enable Mr Fridman “to enjoy his pre-designation lifestyle”.

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

Rachel Barnes KC, for Mikhail Fridman

Mr Fridman had financial assets frozen in March last year following the start of Russia’s invasion of Ukraine, originally on the basis of alleged links with President Vladimir Putin.

The Ukrainian-born businessman denies being an oligarch, says he is not associated with Mr Putin, nor is he “pro-Kremlin” and is not supporting Russia’s war efforts, the court was told.

Rachel Barnes KC, for Mr Fridman, said in written arguments that his “designation” under the sanctions regime no longer alleges links to Mr Putin, but appears to be based on “his former governance positions relating to Alfa Bank Russia”.

The barrister said asset-freezing measures “impose a draconian regime of financial prohibitions and restrictions” on individuals.

She argued that Ofsi should have allowed the payment of “reasonable fees” to a company providing for the “complex exercise” of “the routine holding and maintenance” of his property.

“A property of the size, age and cultural significance of Athlone House requires considerable maintenance to prevent dilapidation,” Ms Barnes said.

“The only realistic way to ensure that the required maintenance can be carried out is by use of a full-time estate manager together with a team of full-time staff.”

She continued: “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 said service fees need to be paid to Ideaworks, a firm providing systems for such services, without which residents “have no control over any utilities”.

She added that a technical surveyor’s report said “automation of lighting control means that residents of Athlone House cannot switch on lights without Ideaworks”, nor can they “regulate (the) temperature of the house”.

“Controlling lighting, hearing and windows is plainly a basic need of any occupier,” Ms Barnes said, adding that the surveyor had mentioned “the repercussions of being unable to control lighting, heating and windows on the art collection”.

The lawyer said staff services do not support Mr Fridman’s “lifestyle” and are necessary to maintain the house, adding that Ofis has “comprehensively misunderstood” its needs and “risks of neglect”.

Ms Barnes said Mr Fridman, who regularly appears in the Sunday Times Rich List and is believed to be worth £8.2 billion, needs a staff driver for “security reasons”, but this has been refused by Ofis on the basis he is “able to travel by public transport”.

Ofis has previously granted a £18,500 payment for TV, audio and phoneline services and “recognised the need for security services”, she said, adding that there had been a “security incident” on September 1.

Ms Barnes said Mr Fridman is described by Mr Putin and his supporters as “scum” and “a traitor”, with him being “at personal risk by reason of this and his opposition to the war”.

Malcolm Birdling, for Ofis, said in written arguments that it had previously permitted £1,974.43 monthly payments for CCTV and £24,083 monthly payments in relation to seven security staff.

He said Ofis “rationally” concluded that “an estate director/manager, six housekeeping assistants, two handymen and one individual providing ad hoc services” are not necessary to maintain the house.

He added that Mr Fridman has “a strained and unrealistic interpretation” over what counts as “basic needs” under the sanctions regime.

Mr Birdling said Ofis has “rightly rejected” payments to Athlone House Limited because its sole director and shareholder, Nigina Zairova, is also subject to sanctions.

The barrister added that Mr Fridman has also not provided “sufficient information as to what charges were for entertainment and what charges were for security” in relation to house maintenance-linked payments.

Mr Fridman made his fortune in Russia across banking, retail, oil and telecoms, through companies Alfa Group and Letter One, before moving to London in 2015.

In July, he received the go-ahead to bring a challenge at the High Court over the National Crime Agency’s raid on Athlone House in December last year.

A hearing is expected to take place on November 14.

Tuesday’s hearing before Mr Justice Saini continues.