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Sanctions could be a wrecking ball for Miley booking

Miley Cyrus has twerked her way into a geopolitical controversy amid questions over whether the promoter of her sellout concert in Finland risks falling foul of US sanctions on Russia after its annexation of Crimea.

The Helsinki venue due to host Ms Cyrus, Justin Timberlake and other US stars in the coming months is owned by a Finnish holding company controlled by three Russians singled out for US retaliation.

Steve Russell | Toronto Star | Getty Images

The concerts Mr Timberlake and Ms Cyrus are due to perform in May and June respectively were booked by Live Nation Entertainment, the US promoter and ticketing agency.

However, according to the wording of the new US sanctions and lawyers specialising in this area, Live Nation should theoretically be barred from completing any financial transactions with Helsinki's Hartwall Arena unless it first receives special dispensation from the US Treasury.

Anthony Woolich, a partner at London law firm Holman Fenwick Willan, said the legality of Live Nation's partnership with Hartwall would probably depend on whether or not all the financial transactions involved had taken place before the sanctions list was released.

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"If [Live Nation] still has to pay money for the use of the venue that could be a problem," Mr Woolich said.

The stadium is owned by a company called Arena Events OY which is 50 per cent owned by Gennady Timchenko, co-founder of oil trader Gunvor and one of 27 Russian businessmen and officials who have been sanctioned by the White House. Arkady and Boris Rotenberg, two businessmen brothers who also appear on the sanctions list – and, like Mr Timchenko, have longstanding ties to Russian president Vladimir Putin – each own 25 per cent.

Of course you can pay the [gas] bill but you need two hours time to change the account and find a bank that's not connected to the US.

The Helsinki case highlights the confusion and legal uncertainty surrounding the two-week-old sanctions. The question of how strictly the White House intends them to be interpreted is something multinationals, law firms and banks in Moscow are grappling with, said Alexis Rodzianko, president of the American Chamber of Commerce in Russia.

"Everyone is sitting with their lawyers and wondering what to do and how to behave," he said.

"We are currently reviewing our portfolio and we will work to ensure the US sanctions against the identified Russians are upheld," said Live Nation, which is the world's largest promoter and ticket seller.

Representatives for Mr Timberlake and Ms Cyrus declined to comment.

Read MoreRussia sanctions: Who's losing out so far

There has been no indication of any cancellations at the venue in light of the sanctions, said Roman Rotenberg, the son of Boris Rotenberg who manages the Rotenberg family's Finnish assets. "It's business as usual," he said in an interview. "Why should the Finnish people suffer from US sanctions? The concerts are sold out."

A representative for the US Treasury declined to comment on specific sanctions-related cases.

Roman Rotenberg said his family was well aware of the sanctions and was in numerous conversations with their lawyers trying to determine how their EU businesses would be affected.

His father, he said, owns one of Finland's top luxury hotels – the Langvik Congress Wellness Hotel outside of Helsinki, which regularly hosts conferences for major multinationals and welcomes American guests, some of whom are staying at the hotel currently.

The sanctions were bringing "some tensions" to the family's business and personal lives, admitted Mr Rotenberg, who was educated in London and, like his father and Mr Timchenko, holds Finnish citizenship.

The Langvik, he said, could no longer open an account with a major bank with US operations, while family members – even those who were not directly sanctioned – had decided to refrain from travelling to the US for the time being.

Even paying the gas bill for his residence in Europe had become complicated, Mr Rotenberg said. "Of course you can pay the bill but you need two hours time to change the account and find a bank that's not connected to the US."

David Johnson, a partner at Vinson & Elkins, a Washington law firm with a sanctions practice, noted the US sanctions stated that no US person could deal with an entity or property, either majority-owned or controlled by one of the sanctioned individuals. "The bottom line is no US person can transact business with this hotel," he said, adding that the same appeared to be true for Hartwall Arena, given the clear ownership.

US institutions will have a harder time determining whether they can continue to work with companies where ownership or control is less clear, Mr Johnson said.

Read More No vodka for Obama: Russians impose joke 'sanctions'

Bank Rossiya, a top-20 lender which was sanctioned, has significant Russian media holdings. Russian media companies, controlled by the bank and partners, do business with the top five international advertising agencies, which in turn work for some of the biggest US multinational brands.

Bank Rossiya, for instance, owns a stake in Vi, Russia's leading television media buyer, which works with leading international ad agencies including WPP, Omnicom and Publicis.

A spokesman for Vi, which controls one-third of Russia's TV advertising market, said Bank Rossiya had a 16 per cent stake in Vi and did not exercise control over the company. However, a person with direct knowledge of VI's workings said that Bank Rossiya effectively controlled the company through affiliated structures.

He added that big international ad agencies were likely to only terminate their relationship with Vi "at gunpoint". "Russia is a major advertising market and the only market that's growing" he said.

A senior executive at an American media agency that works with Vi agreed, saying his employer's compliance department had not even looked into the matter.

"Nobody in the industry here thinks that the sanctions will have any impact," he said. "As for us, we haven't received any instructions from headquarters on this."

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