Jacob Rees-Mogg was accused by Labour of “letting the side down” because his fund management firm profits from a £60m investment in a Russian bank that has been the target of European Union sanctions since 2014.

The criticism came after Somerset Capital Management (SCM) confirmed that it runs an emerging markets fund that holds a stake worth around £60m in Russia’s largest bank, Sberbank.

The arch-Brexiter is a partner in SCM and normally earns £14,500 a month for 30 hours’ work there. Owning shares in a sanctions-restricted Russian bank is legal but surprising given Rees-Mogg last week called on Theresa May to hurt Russia by introducing tougher economic sanctions against the country in the wake of the poisoning of Sergei and Yulia Skripal.

Referring to Vladimir Putin’s Russia, Rees-Mogg told May in the Commons last week that “tyrants need to be stood up to” and added: “I encourage her to impose a freeze on assets, so that people do not have the opportunity of taking them out of the country in the short term.”

Alison McGovern, a Labour MP, said Rees-Mogg should be prepared to back up his words with actions. “British politicians cannot let the side down,” she said. “We have to protect the existing effectiveness of financial measures or Putin will think Britain is simply not serious.”

Sberbank is one of several Russian banks that have been subject to EU-wide sanctions since the Ukraine crisis of 2014. It is banned from borrowing money with more than 30 days’ maturity across Europe. In the United States, the limit was tightened to 14 days following allegations of Russian meddling in the presidential election.



Rees-Mogg is a founding partner of SCM, which specialises in emerging markets investment.

As a partner he is eligible to receive dividends from the firm, although there is no requirement to disclose this on the register of member’s interests.

The investment was first noted by Political Scrapbook and it is not the first time there has been controversy about Rees-Mogg and SCM’s investments. Rees-Mogg is opposed to abortion, even in the case of rape, but Somerset invested £5m in an Indonesian pharmaceutical company, Kalbe Farma, which makes stomach ulcer pills that are also widely used to trigger terminations in the south-east Asian country, where abortion is illegal.

SCM runs several funds, the portfolios of which are not usually disclosed. But its emerging markets growth fund, with £1.4bn under management, is listed on Hargreaves Lansdown, because retail investors can buy into it. A listing there, which SCM said was accurate, says that the Sberbank holding accounts for 4.1% of the fund, or around £60m.

Despite the sanctions, Sberbank would appear to be a good investment. Its London-listed shares are worth roughly four times what they were in May 2015. Rees-Mogg did not respond to a request for comment.