Roman Abramovich could owe UK £1bn over tax dodge that helped bankroll Chelsea FC

London: Sanctioned Russian oligarch Roman Abramovich could owe the UK up to £1bn after a botched attempt to avoid tax on hedge fund investments, evidence seen by the BBC suggests.

Leaked papers reveal investments worth $6bn (£4.7bn) 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.

Getty Images Roman Abramovich and Eugene Shvidler standing next to each other. Mr Abramovich is wearing a blue blazer over jeans and has his hands clasped together as he looks into the distance. Mr Shvidler is wearing a quarter-zip jumper in green and is leaning on the railing, looking downwards with a resigned expressionGetty Images

Eugene Shvidler, right, is a former Chelsea FC director and long-standing friend of Mr Abramovich

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 $6bn (£4.8bn) between the late 1990s and early 2020s – into Western hedge funds, according to the leaked files.

These investments made the oligarch an estimated $3.8bn (£3.1bn) 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.

It is not unusual for businesses to legally avoid paying tax on their profits by making their investments from companies in tax havens. But the companies involved must be managed and controlled offshore where they are incorporated.

If an offshore company’s strategic decisions are being taken by someone in the UK, its profits could be taxed as if it were a UK company.

The leaked documents show how the directors of the BVI investment companies handed sweeping powers over them to Mr Shvidler, who was living in the UK and gained British citizenship in 2010.

The BBC has seen “general power of attorney” documents dated between 2004 and 2008, that gave him the “broadest possible powers” and “full power to do everything and anything” to investment companies in the BVI.

From 2008, Mr Shvidler appears to have acquired the power to direct the investments of Keygrove, which owned the BVI companies, through another company.

Millennium Capital Ventures Ltd, which was owned indirectly by Mr Shvidler’s wife and appointed him as a director in 2000, became Keygrove’s investment manager. It was assigned “full power and authority to supervise and direct” the investment of the assets, “all without prior consultation with client”.

Further evidence of Mr Shvidler’s crucial role in the investment decisions of the BVI companies emerged in a court case brought in September 2023 by the US Securities and Exchange Commission (SEC) against a New York firm called Concord Management.

The SEC filing says that Concord had only one client, since identified as Mr Abramovich. The company advised on investment decisions for the oligarch’s BVI companies.

It identifies a “longtime close associate” of Mr Abramovich, referred to as “Person B”, who “made investment decisions” for Mr Abramovich.

It says he was “the point of contact for receiving investment advice” and “for either deciding or communicating the decision whether to go forward with recommended transactions”.

Using the leaked documents, the BBC was able to identify “Person B” as Eugene Shvidler.

The evidence suggests Mr Shvidler was making the decisions described by the SEC, managing and controlling Mr Abramovich’s investments, from the UK rather than the BVI.

Tax expert Rita de le Feria told the BBC that evidence a UK resident, such as Mr Shvidler, was taking “strategic big decisions” on the hedge fund investments was a “clear indication” the huge profits should have been taxed by the UK.

“I think this is a pretty big smoking gun. That would be, again, strong evidence that the effective management of the company was not taking place in the BVI,” she said.

Mr Shvidler’s lawyers said there can be “no question of Mr Shvidler, either knowingly or negligently, being involved in an unlawful scheme to avoid paying tax”.

Lawyers for Mr Abramovich said that in addition to the advice he obtained over his tax affairs, he “expects that similar advice was sought” by those with responsibility for running companies related to him.

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.