Deloitte Accused of Aiding Tax Evasion on Roman Abramovich's Wealth

Deloitte, one of the world's largest accounting firms, allegedly assisted in falsifying documents to conceal Roman Abramovich's wealth and evade taxes, according to a joint investigation by BBC Panorama and the Bureau of Investigative Journalism.

Documents signed off by Deloitte in Cyprus appear to have removed assets valued at $672 million (£508 million), including superyachts, mansions, and private jets, from Abramovich's company accounts. The firm is also accused of advising on a scheme to evade a significant tax bill through document falsification.

Andrew Mitchell KC, an expert in financial services law, reviewed the evidence and stated that the scheme constituted "straightforward" tax evasion, calling it "blatant."

Abramovich's legal representatives deny that he evaded tax or concealed his fortune. They assert that no evidence has been provided to show he was aware of, authorized, or directed any document falsification, and that it is legitimate to rely on professional advice. Deloitte Cyprus has stated it "acts in compliance with applicable laws."

For nearly two decades, Roman Abramovich was a prominent Russian oligarch in the UK, notably purchasing Chelsea Football Club in 2003. Following Russia's full-scale invasion of Ukraine in 2022, he was sanctioned by the UK government as an associate of President Vladimir Putin, leading to the forced sale of the club. He is reportedly living in Turkey, a nation not applying sanctions.

Assets totaling £5.4 billion belonging to the oligarch remain frozen in Jersey, where a four-year criminal investigation is ongoing. Abramovich's lawyers have disputed the allegations in the Jersey investigation, labeling it as "undertaken for political purposes."

The investigation uncovered new evidence regarding the management of Abramovich's business empire and raises questions about the integrity of some of his professional advisors.

Professor Lord Sikka of the University of Sheffield described the alleged misrepresentation of transaction dates and failure to publish true and fair accounts as a "violation of a statutory duty" and "pretty scandalous."

Allegations of Backdated Documents

Evidence suggests that backdated documents were utilized in a tax evasion scheme involving another of Abramovich's Cypriot companies, Kravin Investments. This company held nearly $2 billion in 2003 and generated substantial interest income, which should have incurred Cypriot taxes.

According to an email from MeritServus dated August 2005 to Abramovich's Russian associates, a plan was devised after a meeting with Deloitte. The email stated, "If you agree, it will be necessary to change the financial statements and the accounting records accordingly for 2003 and 2004." MeritServus informed the associates that Kravin's "Provisional Tax Assessments for 2005" would be filed to show no income from the funds. An associate in Russia responded with agreement a month later.

MeritServus subsequently created a series of backdated documents that falsely suggested Kravin was merely holding and investing the funds on behalf of a parent company in the British Virgin Islands (BVI). This maneuver aimed to prevent Kravin from being liable for taxes in Cyprus by creating the appearance that it did not own the money.

An email from Deloitte in September 2005 indicated that "certain changes will have to be made to the accounts (bank account balances, interest income, profit and loss account)" due to the backdated alterations to Kravin's assets. Mitchell KC noted that such a scheme, if carried out in England involving millions, could lead to a prosecution by His Majesty's Revenue and Customs.

Cypriot MP Christos Christofides stated that if tax evasion occurred, authorities must pursue recovery of funds and ensure accountability according to Cypriot law.

Concealment of $10 Billion Fortune

In addition to the documents Deloitte allegedly helped backdate, advisors at MeritServus are accused of falsifying a third set of records concerning Abramovich's substantial fortune, exceeding $10 billion, held by a company named Electus Investments in Cyprus. MeritServus allegedly backdated documents to falsely claim that another Electus Investments company, based in the BVI where disclosures were less stringent, owned this fortune since November 2003.

Emails indicate that in 2006, MeritServus acknowledged Electus Cyprus as the owner of the fortune but proposed backdating the transfer of beneficial ownership to the BVI entity to appear as if it occurred three years earlier. MeritServus then signed and backdated documents to support this claim, resulting in the Cypriot company's publicly available accounts showing assets of only $145,000, effectively making Abramovich's billions disappear from public record in Cyprus.