Deloitte Cyprus approved backdated annual accounts in which $672m worth of Roman Abramovich’s assets had been removed from the company’s accounts, reports BBC Panorama
Roman Abramovich’s offshore companies used backdated documents to remove assets from the public accounts and evade tax in Cyprus, according to a joint investigation by BBC Panorama and the Bureau of Investigative Journalism.
Lawyers for the former Chelsea owner stated that he denies evading tax or hiding his wealth.
The BBC reported Deloitte’s Cypriot branch approved the 2003 financial statements for Abramovich’s company, Amiscan Investments, in 2006, after $672m worth of property, aircraft and yachts had been removed from the books.
The assets included an estate in West Sussex, a flat in London, a villa in the south of France and the superyacht Pelorus, valued at $147.5m. Amiscan reported $75,000 in assets after Deloitte had approved the financial statements, according to the broadcaster.
The findings come from leaked documents from MeritServus, a Limassol-based business services firm that managed Abramovich’s offshore network between 1995 and 2022. Deloitte owned MeritServus until 2005.
The leak forms part of the ‘Cyprus Confidential’ project by the International Consortium of Investigative Journalists, which the BBC, The Guardian and other media outlets have been reporting on since 2023.
Deloitte complicit in retroactive transfers
In 2006, Cyprus passed a law requiring companies to publish their annual accounts.
Abramovich’s business partners and MeritServus responded by transferring Amiscan’s assets to the parent company in the British Virgin Islands, where annual accounts remain confidential, and backdating the transfer to 2003, according to the BBC.
Deloitte Cyprus reviewed the backdated documents and deemed them sufficient to remove the assets from Amiscan’s annual accounts, as revealed by the leaked documents.
Lord Sikka, professor of accounting at the University of Sheffield, said misstating transaction dates constituted a breach of a legal obligation.
A second arrangement concerned Kravin Investments, a Cypriot company which held nearly $2bn in cash in 2003. Kravin received interest on that money, and tax was due in Cyprus on that interest.
In an email from MeritServus dated August 2005, following a meeting with Deloitte, Abramovich’s Russian business partners were informed that the 2003 and 2004 annual accounts needed to be amended. One of the business partners approved the plan a month later.
MeritServus then drew up documents with retroactive effect stating that Kravin held the money on behalf of its parent company in the British Virgin Islands (BVI), meaning that the Cypriot company had no taxable income. An email from Deloitte dated September 2005 listed the required changes to Kravin’s bank balances, interest income and profit and loss account.
Andrew Mitchell KC, a solicitor specialising in financial services, told Panorama that the arrangement amounted to tax evasion. He said that HM Revenue and Customs (HMRC) would consider prosecution if a case of that scale were to arise in England.
According to the BBC, MeritServus also drew up retrospective documents transferring ownership of more than $10bn in company assets from Electus Investments in Cyprus to a company of the same name in the British Virgin Islands. The published annual accounts of the Cypriot company showed that it held assets worth $145,000.
Abramovich’s lawyers said that the BBC had provided no evidence that he was aware of, had authorised or had instructed the falsification of any document. They argued that he played no role in the day-to-day running of the companies and that it was reasonable to rely on professional advice.
Deloitte Cyprus stated that it complies with applicable legislation, but was unable to comment on the specific allegations because the documents are more than 20 years old and are no longer accessible. MeritServus closed its doors following the Cyprus Confidential leak.
Abramovich bought Chelsea in 2003. The club won five Premier League titles and two Champions League titles under his ownership. The UK government sanctioned him in 2022 as an associate of Russian President Vladimir Putin following the full-scale invasion of Ukraine, and a consortium led by Todd Boehly and Clearlake Capital completed its purchase of the club in May 2022.
The current owners self-reported undisclosed payments made under Abramovich during the takeover. Chelsea has since settled with UEFA and the Premier League, and the FA fined the club £10m and imposed a suspended transfer ban in July.
