Four executives at Gazprombank Luxembourg exploited market chaos from EU sanctions in 2022 to make millions on personal accounts. As Gazprom’s foreign currency bonds plummeted in value due to sanctions, Putin allowed replacement with full-value rouble bonds in Russia. The bankers received personal loans from their employer and bought cut-price bonds, exchanging them for full-value equivalents in over 50 transactions, potentially netting over €9mn.

Gazprombank Luxembourg is the main conduit for European payments to Gazprom. The trades involved the sanctioned National Settlement Depository and raised concerns about sanctions circumvention and insider use. EU officials said the activity “sounds like circumvention” and needs criminal investigation in Luxembourg.

The four directors coordinated trades, often buying before public eligibility notices. Luxembourg regulators inspected after a tip-off but only required an employee handbook update. Gazprombank Luxembourg denied wrongdoing, stating strict compliance with EU and Luxembourg laws and that the bank was never involved in sanctions violations, even as individuals acted in personal capacity.

Former director Dmitry Derkatch also denied wrongdoing, citing regulator findings of no material irregularities. Gazprom was spared from sweeping EU sanctions but its bonds stranded as Western sanctions blocked interest payments. The Kremlin’s bond swap fix created high demand and a substantial price gap, which financial players warned created opportunities for abuse.