(C) ROSUKRENERGO: HM TREASURY TO ALERT REGULATORS

C O N F I D E N T I A L LONDON 001893 SIPDIS SIPDIS STATE FOR EUR/UMB AND EUR/WE TREASURY FOR MEYER JUSTICE FOR OTT E.O. 12958: DECL: 05/17/2017 TAGS: EFIN KCRM PREL UP UK SUBJECT: (C) ROSUKRENERGO: HM TREASURY TO ALERT REGULATORS REF: STATE 66055 Classified By: John McNamara, Counselor for Labor and Social Affairs fo r reasons 1.4(b) and (d) ¶1. (C) Embassy delivered reftel demarche to the head of HM Treasury's Financial Crime Team Sean Byrne and to Foreign and Commonwealth Office desk officer Jasper Thornton. Byrne said that issues surrounding a possible initial public offering (IPO) for RosUkrEnergo "resonate well here," noting that the UK has continual concerns about Russian criminal interests using front companies to access London financial markets. Byrne promised to share the information contained in our background paper with appropriate crime, intelligence, and regulatory bodies. Byrne said that HM Treasury's message will be that the appropriate supervisors should ensure that they satisfy themselves that the concerns raised in our paper have been appropriately scrutinized. ¶2. (C) More broadly, Byrne noted that the UK's policy on the financial services sector is to ensure that London remains a fair and transparent place to raise capital and also to ensure that the regulatory environment is not "capricious." In this sense, he said that the regulators must be very judicious in denying someone the right to raise capital in London. ¶3. (SBU) Separately, an energy market analyst at UBS told us that he too had heard rumors that RosUkrEnergo was planning an IPO in London. But he is skeptical about the likelihood and viability of any IPO. According to him, companies like RosUkrEnergo exist as a vehicle to hide the real terms of its energy trading contracts. An IPO would require it to provide very sensitive business information to potential investors and analysts so that they could arrive at an informed valuation of the company. The analyst said that he found it unlikely that RosUkrEnergo would be willing to open its books sufficiently to successfully launch an IPO. Visit London's Classified Website: http://www.state.sgov.gov/p/eur/london/index. cfm TUTTLE