Roman Abramovich could owe the UK £1bn over tax fraud that helped fund Chelsea FC.
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BBC A composite image with a portrait of Roman Abramovich in a suit in the centre. Behind, in a blue and yellow colour scheme, is a map of the British Virgin Islands and a view from the top of the Stamford Bridge stands, with part of the words "Chelsea Football Club" and the club's lion crest. BBC
Sanctioned Russian oligarch Roman Abramovich could owe the UK up to £1bn after a failed attempt to avoid tax on hedge fund investments, evidence seen by the BBC suggests.
Leaked documents reveal that investments worth $6bn (£4.7bn) were channelled through companies in the British Virgin Islands (BVI). But evidence suggests they were managed from the UK, and so should have been taxed there.
Some of the money that funded Chelsea FC when Mr Abramovich was its owner can be traced to companies involved in the scheme, the BBC and the Bureau of Investigative Journalism (BIJ) have also found. The oligarch's lawyers said he "always received independent professional legal and tax advice" and "acted in accordance with that advice."
Abramovich – who now divides his time between Istanbul, Tel Aviv and the Russian resort of Sochi – denies any knowledge of or personal responsibility for any unpaid taxes.
Joe Powell, a Labour MP who leads a parliamentary group on fair taxation, has called on HM Revenue and Customs to investigate the matter "urgently" to recover what could be "very significant sums of money that could be invested in public services."
At the centre of the scheme was Eugene Shvidler, a former Chelsea FC director and a billionaire businessman in his own right, who is currently challenging the UK government's decision to sanction him over his close links with Abramovich.
Shvidler moved to the United States after Russia invaded Ukraine, but from 2004 to 2022 he lived in the United Kingdom, with properties in London and Surrey. A tax expert told the BBC that evidence showing Shvidler made strategic investment decisions while based in the UK, not the British Virgin Islands, was "compelling evidence", suggesting that the companies should have been taxed in the UK.
Mr Abramovich's lawyers
They said the "investment structure" was "the subject of very careful and detailed tax planning undertaken and advised by leading tax advisers".
The scheme involving Mr Abramovich's hedge fund investments was revealed in a major data leak that the BBC and the Office of Investigative Journalism have been examining for more than a year - thousands of files and emails from a Cyprus-based company that manages Mr Abramovich's global empire. .
Eugene Shvidler, right, is a former Chelsea FC manager and a long-time friend of Mr Abramovich.
The BBC and its media partners, including The Guardian, have reported on the files discovered since 2023 as part of the International Consortium of Investigative Journalists' confidential Cyprus investigation. On Tuesday we learned how Mr. Abramovich avoided paying millions of dollars in VAT on the operating costs of his yacht fleet.
Leaked records show how Abramovich invested much of the wealth he acquired in the 1990s through a corrupt deal – investing in a British Virgin Islands company called Keygrove Holdings Ltd.
A network of British Virgin Islands companies owned by Keygrove invested this money – up to $6 billion (£4.8 billion) between the late 1990s and the early 2020s – in Western hedge funds, according to the leaked files.
These investments brought the oligarch around $3.8 billion in profits over almost two decades. By making investments through British Virgin Islands companies, which do not pay corporate tax, the system appears to be designed to ensure that the least possible tax is paid. "Unlimited power"
It is not uncommon for companies to legally avoid paying taxes on their profits by investing in companies located in tax havens. But the companies in question must be managed and controlled outside the country where they are incorporated.
If the strategic decisions of an offshore company are made by a person in the UK, its profits can be taxed as if it were a UK company.
Leaked documents show how directors of investment companies in the British Virgin Islands gave Mr. Shvidler, who lived in the UK and obtained British citizenship in 2010.
The BBC has seen documents from the "attorney general" dated between 2004 and 2008, which gave him "the broadest possible powers" and "absolute authority to do anything and everything" for the islands' investment companies. Since 2008, Mr. Shvidler appears to have taken over the management of Keygrove's investments, which owns the British Virgin Islands companies, through another company.
Millennium Capital Ventures Ltd, which was indirectly owned by Mr. Shvidler's wife and appointed him as a director in 2000, became Keygrove's investment manager. It was given "full power and authority to oversee and direct" the investment of the assets, "all without prior consultation with the client."
"Strong evidence"
New evidence of Mr. Shvidler's pivotal role in the investment decisions of the British Virgin Islands companies has emerged in a September 2023 lawsuit filed by the U.S. Securities and Exchange Commission (SEC) against a New York company called Concord Management.
The SEC filing shows that Concord had only one client, as he was identified as Mr. Abramovich. The firm advised the British Virgin Islands oligarchs' companies on their investment decisions.
It identifies a "long-term close associate" of Mr Abramovich, called "Person B", who "made investment decisions" for Mr Abramovich.
It says he was the "point of contact for receiving investment advice" and "for making or communicating the decision to proceed with the recommended transactions".
Using the leaked documents, the BBC was able to identify "Person B" as Eugene Shvidler.
The evidence suggests that Mr Shvidler made the decisions outlined by the SEC in the management and control of Mr Abramovich, from the UK and not from the British Virgin Islands.
Tax expert Rita de le Feria told the BBC that the evidence that a UK resident like Mr. "I think this is irrefutable evidence." "This constitutes, once again, strong evidence that the current management of the company was not in the British Virgin Islands," she said. Mr. Abramovich's lawyers said that, in addition to the advice he had received on his tax affairs, he "expected that similar advice would have been sought" by those responsible for managing the companies he owned. The leaked documents also reveal how vast amounts of Mr. Abramovich's untaxed profits flowed through the oligarch's network of companies before being paid to Chelsea FC. The hedge fund's investments were then returned to his companies in the British Virgin Islands and then to Keygrove, its parent company. Keygrove then lent money to other companies in Abramovich's network, which in turn lent money to Camberley International Investments Ltd – a company set up to finance Chelsea FC. In 2021, when Chelsea won the Champions League, the Club World Cup and the UEFA Super Cup, hundreds of millions of dollars in loans to the club could be traced back to companies that benefited from Abramovich's tax-free investments.
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