Investors led by gold-mining tycoon Sir Peter Hambro lined up at an event in Westminster to castigate the British political establishment for not doing enough to repair tattered relations with Russia.

Hambro, a City grandee and chairman of gold-miner Petropavlovsk, criticised the British political establishment for “a lack of understanding” of the reality of doing business on the ground in Russia.

“Lugovoi, Litvinenko all happened a long time ago and should be forgotten,” Hambro said at the event on November 30, referring to the alleged murder in London of former FSB Alexander Litvenko by Russian businessman Andrey Lugovoi. “We should now be looking at a more collaborative effort.”

Relations between London and Moscow are at their chilliest since the Cold War. A British public inquiry concluded in January it was probable that senior Kremlin officials had ordered the 2006 killing of Litvinenko by radioactive polonium-210, and that Putin himself likely gave the nod to the hit. But investors like Hambro say that the world has moved on and that the UK has to adjust its view of Russia given the fallout from the Brexit vote and the elevation of Donald Trump to the White House in the US.

Hambro has been a stalwart Russia investor and asset owner for 22 years and, prior to that, was the Soviet Union’s biggest gold counterparty. London-listed Petropavlovsk, which employs 8,000 people in Russia, hammered out a deal to refinance its entire debt worth $530mn on November 30 with Russian state lenders Sberbank and VTB. The new repayment schedule now runs until September 2022 as opposed to May next year, with a lower interest rate of 8%.

Breaking the deadlock

Speaking to bne IntelliNews after the event, Hambro said his company hadn’t been able to refinance with any Western banks despite the fact neither he nor Petropavlovsk has been sanctioned.

“The Westerns banks do nothing,” he said. “They just sit there and recycle the money back to the government. They are not taking any risk at all but we think Western capital will eventually come back. Mr Trump is busy saying how wonderful Mr Putin is and the world will follow America’s lead, as it usually does.”

The UK has been one of the most vocal supporters of stringent European Union sanctions imposed on Russia over its actions in Ukraine and of Nato boosting its military presence in the Baltic States and Poland to deter Russia. British diplomatic sources in Moscow told bne IntelliNews that such is the level of distrust between the two nations that the British Ambassador Laurie Bistrow couldn't get to see anyone of note at the Ministry of Foreign Affairs.

Hambro was speaking at the Russian-British business forum at the Queen Elizabeth II conference centre, located a literal stone’s throw from the House of Commons on Parliament Square. The event was attended by members of parliament, including Sir Edward Leigh, who chairs the All-Party Parliamentary Russia Group, Russian Ambassador to the UK Alexander Yakovenko, investors, bankers and government officials. The forum is part of the annual Eastern Seasons week of cultural, sporting and business events celebrating East-West relations.

Delegates at the forum had to run the gauntlet of a small group of vocal protestors wearing "Save Aleppo" jumpers and holding banners with images of the Russian President: "Blood Money: Don't Trade With Killer Putin."

Philip Bouverat, director of global external affairs at industrial machinery manufacturer JCB, said its workforce in the UK as well as in Russia had been decimated by the sanctions. A UK staff reduction of 400 jobs was announced in September due mainly to slump in Russian demand.

JCB, which is known globally for its diggers, started local assembly at its plant in Russia three weeks ago in a big to regain market share. “At the height, our trucks used to leave our factories to head to Felixstowe and on to Russia,” Bouverat told delegates. “We are hopeful of recovering our position in Russia but it make take years,”

David Walker, regional head for Citigroup in Europe, Middle East and Africa, admitted that Western banks need to play a bigger role in helping to revive Russia’s capital market and the seemingly doomed project to transform Moscow from a backwater into an International Financial Centre.

Walker said Citigroup has 3,000 employees on the ground in Russia but, as bne IntelliNews reported in March, the bank has been closing branches in Moscow and St Petersburg, retreating from regional cities, and by slashing its retail client base.

The New York-based lender is understood to be shutting 10 branches this year after some closures in 2015, and has already shrunk its retail client base to 700,000 from 1mn less than a year ago, sources close to the bank told bne IntelliNews.

“We need to play a bigger role in providing capital and by crowding in players,” said Walker in a presentation focused on the lack of financing primarily for small to medium-sized enterprises.

Competing with Russian money

Richard Ogdon, senior advisor at the Russian Direct Investment fund, reminisced that the last time he was in the Queen Elizabeth conference centre was for an event ten years ago, when there were 5,000 delegates and bankers were toasting bumper fees from the massive $10.5bn Rosneft IPO.

“Russians are now raising money locally,” said Ogdon, a former banker at Troika Dialog, Russia’s oldest brokerage which was acquired by Sberbank. “They are no longer raising money in London and New York - that is a fact.”

Russneft and Alrosa, the two biggest Russian equity listings this year, were both exclusively held in Moscow.

RDIF, a sovereign fund which co-invests with international partners, has pivoted to the Middle East and Asia after the US and the EU slapped sanctions on most of Russia’s leading state-controlled financial institutions. Plans for the RDIF to co-invest with European sovereign funds have stalled due to the sanctions over Russia's involvement in the Ukraine conflict.

The fund, which has invested in 30 projects with its co-investors since its inception five years ago, completed a deal in late November to acquire Vladivostok Airport with Singapore’s Changi Airports International (CAI). RDIF said in May it is partnering with Thai conglomerate Charoen Pokphand Group and China's Banner Infant Dairy Products, to spend $1bn on the creation of a dairy complex in Russia,

“Russians remember who their friends are – especially those who stick with them in the tough times, as well as the good times,” said Ogdon, who is an independent director at Russian brokerage Otkritie.