How the Wagner Group Escaped Sanctions

Whatever happened to the Wagner Group, Yevgeny Prigozhin’s shadowy army of prisoners and mercenaries? After Wagner’s failed mutiny in June 2023—and Prigozhin’s own not-so-mysterious death two months later in a plane crash near Moscow—most of the group’s Russia-based units were merged into the Kremlin’s official military. But in Africa, where Wagner built not only an empire of mercenaries but also of shady mining and oil concessions, Prigozhin’s former henchmen continued their bloody—and lucrative—trade. According to a new report from the Center for Advanced Defense Studies (C4ADS), part of that industry relied on the unintended help of international banks, including JP Morgan Chase and HSBC Group’s Hang Seng Bank, as well as international shipping companies including Maersk, the Mediterranean Shipping Company (MSC), and the Compagnie Maritime d’Affrètement et de la Compagnie Générale Maritime (CMA CGM).

Western sanctions have so far failed to stop determined potential sanctions violators

The transactions and shipments detailed in the C4ADS report date back to 2017, when Prigozhin had already been under U.S. sanctions for a year, but his companies — including Wagner’s Sudanese mining company Meroe Gold — were still operating legally. There is no indication that any of these international institutions knew their accounts and ships were being used by front companies owned by Wagner (JPMorgan told the Financial Times that they could find no details matching the transactions in question, while HSBC expressed a “deep commitment” to fighting financial crime). But the picture that emerges is of an opaque and complex web of front companies and correspondent accounts that allowed the group and its heirs to move money and goods around the world in defiance of sanctions — a system, says Jack Margolin, author of The Wagner Group: Inside the Russian Mercenary Armywhich continues to this day.

Wagner was founded in 2014 by former Russian Special Forces Lieutenant Colonel Dmitry Uktin as a private military company modeled on the U.S. Blackwater and staffed largely by Russian military veterans. Wagner forces first saw combat that year in eastern Ukraine, where they acted as a deniable arm of the Russian state—a role they resumed in Syria in 2016 and later in Libya, Mali, the Central African Republic and Burkina Faso. Part Kremlin proxy and part private army, Wagner received partial payment for its services to unstable regimes in the form of lucrative mining concessions and other businesses.

According to Margolin, who has used open-source material including flight and vessel tracking, customs declarations and leaked financial documents to paint a detailed picture of the group’s business activities since 2016, Wagner is “a highly flexible network that includes military-operational, political, strategic and commercial elements all operating in parallel, often with a high degree of overlap.” As of May of this year, the group was estimated to have stationed around 5,000 mercenaries in Africa – many of whom are former Russian soldiers and convicts. Since Prigozhin’s death, some military elements have been merged into a unit called the Africa Corps, controlled by the Russian state. But other parts of Wagner – notably in the CAR and Mali – continue to operate independently, C4ADS said. Today, “so many people are using[Wagner’s]signifiers and symbols that there is no clear demarcation in the network,” Margolin said. Even less clear is the separation between the group’s remaining commercial and military components. Some of Wagner’s senior officers have even become official advisers to local African governments, for example Dmitry Syty, who is an adviser to the President of the Central African Republic, Faustin-Archange Touadéra.

What is clear, as far as the U.S. government is concerned, is that Africa Corps and the Wagner Group continue to commit atrocities in Africa, including mass executions, rapes, and child abductions — most recently in Mali. In January 2023, the U.S. designated Wagner a transnational criminal organization, and the Treasury Department imposed sanctions on a host of associated individuals and companies. But that hasn’t stopped some countries — including the United Arab Emirates (UAE) — from continuing to do business with them. As Margolin details in his book, the UAE “coordinated with the Wagner Group on the ground in places like Libya, not only supplying the Russian-owned, Emirati-owned air defense systems that Wagner helped them operate, but also collaborating on strikes and sharing intelligence on specific targets.”

Over the past year, Vice President Kamala Harris has led efforts to force the UAE — a key U.S. ally — to stop supporting Sudanese rebels with weapons and money and to stop funneling money to sanctions-defying actors. But Dubai and Abu Dhabi remain important conduits for “a lot of the illicit finance around the world” — including ongoing Wagner-related financial transactions, Margulin says. “But there are only certain parts of this network that we can meaningfully hit,” he concedes. The West will have to “make some really tough political decisions about where we want to apply pressure if we want these sanctions to really have an effect… it’s going to mean expending political capital on pressuring allies in places like the UAE, and so far I haven’t seen a willingness to really step up there and get those partners to pay their fair share in terms of international enforcement.”

Western sanctions have so far failed to stop determined potential sanctions violators. Whether they are dual-use technology importers in Russia or mercenaries in Africa, they can continue to use the global financial system as they see fit.

This article was originally published on The SpectatorBritish website.