Jacob Rees-Mogg’s investment firm has a stake in a string of Russian companies with links to the Kremlin and to some of Moscow’s wealthiest oligarchs, The Mail on Sunday can reveal.

The hardline Brexiteer owns almost a fifth of Somerset Capital Management, which he founded and which now manages nearly £7.5 billion for wealthy private investors and City institutions.

On behalf of its clients, SCM has bought shares in two Russian firms blacklisted by the US and others which are controlled by powerful oligarchs in President Vladimir Putin’s inner circle.

Despite the Tory MP’s avowed belief that the British economy will thrive after Brexit, the funds have almost nothing invested in the UK.

Jacob Rees-Mogg’s investment firm has a stake in a string of Russian companies with links to the Kremlin and to some of Moscow’s wealthiest oligarchs, The Mail on Sunday can reveal

However, Mr Rees-Mogg distanced himself from the investments made by his company. He told The Mail on Sunday: ‘I have not run the investment policy for SCM for years. Contractually we can only invest in emerging markets and the UK is not an emerging market.’

The countries SCM has invested in include Russia, South Korea, India, Peru and Saudi Arabia.

Its Russian assets are worth £217 million, according to the latest valuation by City data sources.

They include:

An £84 million stake in internet giant Yandex, the Russian version of Google. Critics say its news section trumpets pro-Kremlin stories. It has also been accused of providing the Russian secret service with the bank account details and phone numbers of supporters of one of Putin’s political opponents.

A £44.5 million holding in Sberbank, a lender that is majority-owned by the Russian central bank and widely considered to be an arm of the state. Herman Gref, its chief executive, is a long-standing ally of Putin and was minister of economics and trade from 2000 to 2007. He is also on the board of Yandex.

A £15.9 million stake in Lukoil, Russia’s second-largest energy firm. Lukoil is controlled by Russia’s fourth-richest man and is on the US sanctions list. It was embroiled in controversy earlier this year when it emerged Lukoil staff had meetings with disgraced data firm Cambridge Analytica.

SCM has not broken any City rules by investing in Russia. However, Rees-Mogg recently said we ‘must not deal with Putin who has put himself beyond the pale’ for his suspected involvement in the Salisbury poisoning earlier this year.

And in March, he praised Theresa May ‘because she has learned the lesson of history that tyrants must be stood up to’ – in direct reference to Putin. Rees-Mogg also encouraged the Prime Minister to impose a freeze on Russian assets in Britain.

He co-founded SCM in 2007 with two others: Dominic Johnson, who is the current chief executive, and investment manager Edward Robertson. The three still own most of the firm, which is named after the county where Rees-Mogg grew up, and where his constituency is.

The emerging markets the company specialises in are nations that offer the promise of high rewards – but at high risk – and are typically regulated by fewer rules than in the UK or the EU.

‘These Russian investments are not what you would expect to find in a Rees-Mogg fund,’ said Justin Urquhart Stewart, of Seven Investment Management.

‘As a politician, he has taken a hardline stance on Brexit and on Russia. So to have a fund investing millions in Russian companies goes totally against what he says he stands for. This is hardly a pro-UK fund, as it has no stake in the future prosperity of Britain.’

However Rees-Mogg said: ‘It is not my money. It belongs to people who have contractually asked SCM to invest in emerging markets which is our field of expertise.

Some of the big-money players who are allies of Russian President Vladimir Putin

‘It would be unlawful for us to ignore the investment mandate and the Financial Conduct Authority would be duly concerned if we treated our money as our own.’ He reiterated his belief that Brexit will mean ‘strong economic growth’, but asked why he did not ‘put his money where his mouth was’ and plough some of the assets into the UK, he said: ‘Confusing clients’ money with one’s own has been the commonplace of fraudsters over the centuries.’

Among SCM’s investments are Lukoil, which has been accused of links with Putin’s security services. It is controlled by oligarch Vagit Alekperov, 67, a former energy minister who is seen as a Putin ultra-loyalist.

Another oil and gas holding is a £16.7 million stake in Novatek, Russia’s second biggest gas producer. It is co-owned by billionaire Gennady Timchenko, another close associate of Putin. Both Timchenko and Novatek were placed on the US sanctions list following Russia’s 2014 invasion of Crimea.

The US Treasury has claimed that ‘Timchenko’s activities in the energy sector have been directly linked to Putin’ – although the Kremlin has described such claims as ‘nonsense’ and ‘rubbish’.

Rees-Mogg has presented himself as a financial sage since boyhood. Aged 12, he attended the annual meeting of industrial giant GEC with his father, the former Times editor Lord Rees-Mogg, where he berated the board for their ‘pathetic’ dividend.

One of the natural gas plants belonging to Novatek in the village of Sabetta in Russia

As well as the money he has made from SCM, he and his wife Helena have an enviable property portfolio. The London house he is purchasing in the shadow of the Commons joins a four-bedroom Mayfair townhouse worth about £3.4 million.

The family’s main home is the Grade II*-listed manor house of Gournay Court in the village of West Harptree in Rees-Mogg’s North East Somerset constituency, bought for £2.9 million in 2010.

Since becoming an MP in 2010, he is no longer directly involved in running the funds at SCM. However, he still earns fees of about £180,000 a year from the business, working for them for 30 hours a month, according to his entry on the Register of Members’ Interests.

He also receives dividends, which he claims he does not have to declare under parliamentary guidelines. Last year, he and SCM’s 20 other partners shared profits of £21.9 million.

Another of SCM’s holdings is in Russian supermarket group X5 Retail, with a £49.6 million stake.

Intriguingly, its former top PR man, Yuri Kobaladze, was a notorious spy who frequented Fleet Street pubs, becoming known as ‘The Spy Who Came in from Ye Olde Cheshire Cheese’.

X5’s biggest shareholder is investment group Alfa, controlled by oligarch Mikhail Fridman.

SCM’s other Russian investments include Mail.ru, a Russian internet and social media business. The $5 billion company is controlled by oligarch Alisher Usmanov via his telecoms conglomerate Megafon. Its mobile phone service is said to be widely used by the Russian secret service.

Usmanov is linked to Putin via his wife Irina Viner who was gymnastics coach to Putin’s suspected lover, 35-year-old Olympic gold medallist Alina Kabaeva.

Sberbank, the Kremlin-controlled lender in which SCM has a substantial stake, was shaken by US sanctions earlier this year because some of its customers were on the latest blacklist, including oligarch Oleg Deripaska. The bank has also funded defence and arms projects.

‘There is a concern about Russian investments in that they are not subscribing to the same standards of diligence and control as we are accustomed to here,’ said Justin Urquhart Stewart.

Before setting up SCM, Rees-Mogg worked at an investment firm called Lloyd George Management, founded by the great-grandson of the Liberal Prime Minister and based in the British Virgin Islands. Rees-Mogg owned shares and made £520,000 when it was sold in 2011.

Because of this deal, the MP was named in the Paradise Papers scandal last November, although there is no suggestion he avoided tax on any of his profit.

SCM runs 25 funds on behalf of clients and has two subsidiaries registered in the tax havens of the Cayman Islands and Singapore.

A spokesman said the firm gained no tax advantage from this and added that SCM needed the subsidiaries ‘for regulatory purposes’ and to cater to ‘our global client base’. The company declined to comment on its Russian investments.

Additional research: Harriet Dennys

Shouldn’t you be putting your money where your mouth is, Jacob? By Ruth Sunderland

Condsidering his vociferously pro-Brexit beliefs, you might expect Jacob Rees-Mogg’s firm would put its money where his mouth is and invest in British businesses.

Having wrapped himself in the Union Jack, you certainly wouldn’t expect funds at the firm founded by the MP for North East Somerset to have hundreds of millions of pounds invested in – of all places – Russia.

Rees-Mogg’s firm, Somerset Capital Managment (SCM), could have set up funds to channel some much-needed capital into British engineering companies, high-tech start-ups or the biotech companies researching potential new cures for cancer and other deadly diseases. It could have – but didn’t.

Instead, SCM has parked virtually all the assets overseas, including around £200 million in a string of Russian companies at a time when Britain’s relationship with Vladimir Putin’s Kremlin is particularly fraught.

Rees-Mogg takes a bulldog stance on the UK economy, pooh-poohing anyone who suggests it might suffer as a result of Brexit, including the Bank of England’s governor Mark Carney, whose careful analyses he brushes aside.

How curious, then, that the investment firm he set up has virtually no stake at all in British businesses – in a clear signal of belief stronger growth lies elsewhere.

There is nothing wrong with investing in overseas markets in itself – it’s a common strategy and many City fund managers do exactly that.

The trouble is, Rees-Mogg is not just any old money-man, but a leading politician who has put himself very firmly in the public eye.

So in this case, his firm’s apparent lack of economic patriotism raises eyebrows. It looks suspiciously like a vote of no confidence in UK companies.

Rees-Mogg’s media handlers say that he does not make the investment decisions at SCM.

So what? He cannot shrug off moral responsibility for the firm’s holdings so easily.

He may not directly manage money, but he is a co-founder, a major shareholder and earned around £180,000 last year from the firm, while serving as an MP. That does not put him in a position to wash his hands of its investment policy.

Whether Rees-Mogg likes it or not, we no longer live in the 18th Century but the 21st.

Nowadays, the public expects institutions and politicians to invest in line with the principles they proclaim.

Which is precisely why it looks so jarring for a Rees-Mogg firm to be backing Moscow ahead of Britain.