Sanctioned Russian oligarch Roman Abramovich could owe the UK up to £1 billion after a botched attempt to avoid tax on hedge fund investments, evidence seen by the BBC suggests.
Leaked papers reveal investments worth $6 billion (£4.7 billion) were routed through companies in the British Virgin Islands (BVI). But evidence suggests they were managed from the UK, so should have been taxed there.
Some of the money that funded Chelsea FC when Mr Abramovich owned it can be traced back to companies involved in the scheme, the BBC and the Bureau of Investigative Journalism (TBIJ) also found.
The oligarch’s lawyers said he “always obtained independent expert professional tax and legal advice” and “acted in accordance with that advice”.
Mr Abramovich – who now reportedly divides his time between Istanbul, Tel Aviv and the Russian resort of Sochi – denies having any knowledge of or being personally responsible for any unpaid tax.
Joe Powell, a Labour MP who leads a Parliamentary group on fair taxation, called on HM Revenue and Customs to “urgently” investigate the case to recover what could be “very significant amounts of money that could be invested in public services”.
At the heart 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 for his close links to Mr Abramovich.
Mr Shvidler moved to the USA after Russia’s invasion of Ukraine, but from 2004 until 2022 he lived in the UK, with properties in London and Surrey.
A tax expert told the BBC that evidence Mr Shvidler had been making strategic decisions on the investments while based in the UK, and not in the BVI, was “a pretty big smoking gun”, suggesting the companies should have been paying UK tax.
Lawyers for Mr Shvidler said the BBC was basing its reporting on “confidential business documents that present an incomplete picture” and had “drawn strong and erroneous conclusions as to Mr Shvidler’s conduct”.
They said “the structure of investments” was “the subject of very careful and detailed tax planning, undertaken and advised on by leading tax advisors”.
The scheme involving Mr Abramovich’s hedge fund investments was revealed in a huge leak of data that the BBC and the Bureau of Investigative Journalism have been examining for over a year – thousands of files and emails from a Cyprus-based company that administered Mr Abramovich’s global empire.
The BBC and its media partners, including The Guardian, have been reporting on the leaked files since 2023 as part of the International Consortium of Investigative Journalists’ Cyprus Confidential investigation. On Tuesday, we revealed how Mr Abramovich had dodged millions in VAT on the running costs of his yacht fleet.
The leaked data shows how Mr Abramovich invested a large part of the wealth he acquired in the 1990s through a corrupt deal – ploughing it into a company in the BVI 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 early 2020s – into Western hedge funds, according to the leaked files.
These investments made the oligarch an estimated $3.8 billion (£3.1 billion) in profits over almost two decades. By making the investments through companies in the BVI, which does not levy tax on corporate profits, the scheme appears to be set up to ensure as little tax as possible was paid.
The leaked documents also reveal how large amounts of the untaxed profits from Mr Abramovich’s hedge fund investments passed through a network of the oligarch’s companies before flowing into Chelsea FC.
The hedge fund investments flowed back into his companies in the BVI and then into Keygrove, their parent company.
Keygrove then loaned out money to other companies in Mr Abramovich’s network, which in turn lent money to Camberley International Investments Ltd – a company set up to bankroll Chelsea FC.
By 2021, when Chelsea won the Champions League, Club World Cup and UEFA Super Cup, hundreds of millions of dollars in loans to the club could be traced back to companies benefiting from Mr Abramovich’s untaxed hedge fund investments.
BBC
