Deloitte Accused of Aiding Abramovich Tax Evasion Scheme

A joint investigation by BBC Panorama and the Bureau of Investigative Journalism alleges that Deloitte, a major auditing firm, helped Roman Abramovich conceal assets worth $672 million and evade taxes. The investigation, based on leaked financial documents, suggests Deloitte's Cyprus branch certified financial statements that omitted mansions, yachts, and private jets. Documents also point to auditors' involvement in devising schemes to avoid taxes on interest income.

Abramovich's lawyers deny the accusations, stating there is no evidence he was aware of or authorized any document falsification. Deloitte Cyprus maintains it operates within the law. The investigation draws on thousands of documents related to Abramovich's finances and offshore companies managed by Cyprus-based Merit Servus from 1995 to 2022.

One alleged scheme involved backdating documents in 2006 to conceal assets worth $672 million, including a mansion, a London apartment, a French estate, helicopters, and the yacht Pelorus ($147.5 million), from a Cypriot company's financial reporting. This was done to avoid disclosure requirements under a new Cypriot law. Deloitte Cyprus reportedly deemed the documents sufficient to exclude these assets, leading to the omission of the properties and vehicles from the 2003 financial report, which was certified in 2006.

Another instance concerns Abramovich's Cypriot company Kravin Investments, which held nearly $2 billion in 2003 and was liable for taxes on significant interest income. A 2005 email exchange suggests Merit Servus, after meeting with Deloitte, proposed altering financial records for 2003 and 2004 to show that the funds belonged to an offshore parent company, thereby avoiding Cypriot taxes. Deloitte's subsequent correspondence indicated adjustments to financial statements were needed due to these changes, which journalists interpret as advice on altering financial records to evade millions in taxes.

A third case involves Electus Investments, a Cypriot company with over $10 billion in assets. Documents allegedly show Merit Servus backdating documents to transfer ownership to a similarly named company in the British Virgin Islands, making it appear the offshore entity owned the assets since 2003. This resulted in the Cypriot company's published reports showing assets of only $145,000.

Experts like Professor Lord Sikka and lawyer Andrew Mitchell have condemned the alleged practices as breaches of legal duty and direct tax evasion. Christos Christofides, a Cypriot MP, called for authorities to investigate and ensure accountability. Vladimir Milov commented that Western financial and legal service providers often facilitate such schemes for Russian oligarchs.

Merit Servus has since closed, and Deloitte Cyprus stated it cannot comment on specific allegations due to the age of the documents. Abramovich, who acquired Chelsea Football Club in 2003 and later faced sanctions in the UK, sold the club in 2022. His assets remain frozen in Jersey, and a four-year criminal investigation is ongoing, which his lawyers claim is politically motivated. Abramovich, an Israeli citizen since 2018, has also invested in Israeli companies and supported local scientific and medical projects.