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Russian fighting for vodka trademark hires lobbying help in Washington

Russian fighting for vodka trademark hires lobbying help in Washington
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As the Trump administration is under pressure to take more action on Russian sanctions, one billionaire hired a powerhouse K Street firm to diffuse any issues that may come along with appearing on a Treasury Department list of powerful Russians.

The fight is particularly important because that man, Yuri Shefler, is fighting the Russian government in courts around the world in an attempt to retain the trademark rights to Stoli vodka, including the United States.

The Treasury Department compiled the names of high-level Russian officials and business leaders worth at least $1 billion, following a request from Capitol Hill. Shefler is reportedly worth about $2 billion.

His company, SPI Group, is also known as Spirits International and sells various types of spirits to 160 countries. SCI Group’s most well-known brand in the United States is likely Stolichnaya vodka, recognized more commonly as Stoli.

For nearly two decades, he has been locked in a battle with the Russian government following a high-court ruling in the country in 2001 that determined state-owned corporation Soyuzplodoimport owned Stoli’s trademark rights there. Stolichnaya is distilled in Latvia.

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The row actually dates back to the former Soviet Union, where its fall led state-owned corporations to quickly privatize. Soyuzplodoimport claims that the company owners at the time illegally turned the company private, while also alleging Shefler intimidated shareholders into selling it to him. (Shefler denied those charges, claiming the government framed him and is attempting a power grab.)

Now exiled, Shefler has since been accused of, among other things, threatening to kill a government official and being a "fugitive of justice" for not appearing before investigators for questioning. (He has denied that charge as well, and once considered filing libel charges against the official.) 

SCI Group is now fighting legal battles to establish his company’s right to the brand in more than a dozen locales worldwide — including the United States and multiple countries in the European Union. Stoli vodka sales in the United States represent 45 percent of its output, according to the Financial Times

In a contract that began last month, but appeared more recently in a Senate disclosure database, SCI Group hired law and lobbying firm Covington & Burling to talk with federal officials related to a report to Congress earlier this year.

The firm will conduct “[o]utreach related to the report submitted to Congress by the Department of the Treasury pursuant to section 241 of the Combating Americas Adversaries Through Sanctions Act (CAATSA) and its consequences on SPI Group and its principal owner, Yuri Shefler.”

Covington & Burling did not respond to a request for comment. SCI Group, through Stoli Group USA, said that Shefler does not talk to media, and did not respond to follow-up questions about the context or details of the contract.

Congress, as part of the Countering America's Adversaries Through Sanctions Act (CAATSA), ordered the Treasury Department to send it reports on a wide range of sanctions-related topics that would ultimately tighten sanctions against Russia, Iran and North Korea.

One part of the CAATSA — section 241 — specifically asked the department to compile a list of senior Russian government officials at the Kremlin and elsewhere throughout the government, in addition to leaders of state-owned companies and private business tycoons.

In January, the Treasury Department sent its report of Russian individuals to Congress, emphasizing that the names included on the list automatically met the criteria to be included in any future actions.

Following pressure on the administration to act on those sanctions as punishment for Moscow interfering in the 2016 presidential elections, the department followed through on Thursday, adding five entities and 19 individuals, many connected to the Russian “troll farm” Internet Research Agency, to those designated under sanctions.

It’s unclear whether there will be more, or if appearing on the Treasury Department list could have an impact on Shefler’s Stoli trademark lawsuit in the United States.

Covington & Burling, however, has set up an impressive roster to work on Shefler’s behalf, assembling a team of lawyers and lobbyists with decades of experience in government spanning several administrations.

Those include former U.S. Ambassador to the European Union Stuart Eizenstat, a veteran of three presidential administrations who also served as deputy secretary of the Treasury during the Clinton administration.

Also listed on disclosure are Alan Larson, who held top posts at the State Department, including assistant secretary of State for economic and business affairs; and Stephen Rademaker, who served in the State Department, in House GOP leadership and the George H.W. Bush White House.

In Shefler's quest to retain the rights to Stoli profits around the world, court rulings have been mixed.

This year alone, a court in the Netherlands ruled that he could no longer reap the benefits of the sales of Stolichnaya and Moskovskaya vodkas in Belgium, the Netherlands and Luxembourg. SCI Group has vowed to appeal.

A ruling in Austria last month, meanwhile, was returned in his favor.