Oligarch's fund seeks legal action after being ordered to sell British broadband company

LetterOne, founded by Ukrainian-born billionaire Mikhail Fridman, is seeking judicial review of its Upp sale order. Credit: Pavel Golovkin/AP

An investment fund set up by a sanctioned oligarch has filed a lawsuit after the government ordered him to sell his UK broadband business on national security grounds.

LetterOne, which was founded by Ukraine-born billionaire Mikhail Fridman, is seeking judicial review in 2013 to sell Upp, arguing that his ownership poses no security risk.

In December, the government ordered LetterOne to sell Upp, a company behind the £1bn broadband project in East Anglia.

Grant Shapps, then business secretary, said the move was necessary to prevent, eliminate, or mitigate the national security risk. Upp will also be required to conduct a security audit of its network prior to the sale.

LetterOne said in a statement: “L1 is not sanctioned and has taken swift and decisive action to take strong action to distance itself from its sanctioned shareholders . They have no role in L1, no access to facilities, infrastructure, people and facilities, or benefits of any kind.”

The company said it is also subject to Ofcom regulation and is taking steps to «remove any perceived threat to national security.»

These include UK management, only UK, US and EU employees on the board and clear protocols on access to information, data and any key infrastructure.

LetterOne added: “L1 believes it is important to reconsider this decision so that Upp can continue to provide vital next-generation broadband to East Anglia and the East Midlands, with significant social and economic benefits that bring to the regions.”

Understood, that LetterOne will comply with the order as long as its lawsuit is in effect.

A government spokesman said, «In December, the Secretary of Energy issued a final order under the National Security and Investment Act requiring LetterOne to dispose of Upp.» .

If approved, the judicial review will be the first major test of the stringent new national security laws that went into effect early last year.

The National Security and Investment Act of 2021 was used to block five acquisitions. so far, four of them involved Chinese companies.

But the order to sell Upp was the first time the new laws were used against Russian oligarchs.

Mr. Fridman and fellow oligarch Petr Aven were forced to leave LetterOne after they fell under EU sanctions following Russia's invasion of Ukraine last year.

The EU said Mr. Fridman » actively supported materially or financially and benefited from the Russian entities responsible for the annexation of Crimea and the destabilization of Ukraine.»

The couple's shares in LetterOne are frozen and they cannot sell their shares or receive any financial benefit until are under sanctions.< /p>

Mr Friedman denies ties to the Kremlin and calls the sanctions «unfair.» The judicial review was first reported by the Financial Times.

LetterOne bought Upp, formerly known as Fiber Me, in June 2021 and set a goal of reaching one million premises with fiber broadband by 2025.

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A foundation that also owns Holland & Barrett, herself not under sanctions, has been quick to distance herself from Russia.

In October, she signed an agreement to buy nearly £900m of debt from Holland & Barrett creditors amid fears of possible sanctions.