British lawmakers have called for a probe into Russian billionaire Roman Abramovich’s offshore financial affairs after reporting by the BBC, the Guardian and the Bureau of Investigative Journalism revealed he may owe up to $1.24 billion to the U.K. tax authority.

An analysis of leaked documents suggested the oligarch’s companies failed to pay tax on profits from offshore investments worth $6 billion, the media outlets reported. Although the investments were routed through companies in the British Virgin Islands, they appeared to have been managed by an executive living in the U.K. and should have been taxed there, the analysis found.

The executive, Eugene Shvidler, who became a British citizen in 2010, has previously been described as Abramovich’s “right-hand man,” according to The Guardian.

From the late 1990s until 2022, Abramovich, now sanctioned by the U.K. and the EU, invested a significant portion of his vast fortune into a global network of hedge funds, the BBC, the Guardian and TBIJ found. The returns on those investments were reportedly used to bankroll other parts of the oligarch’s business empire — including the Chelsea Football Club, which he was forced to sell in 2022.

In a letter to the head of HM Revenue & Customs urging an investigation, Labour MP Joe Powell, who leads a parliamentary group on fair taxation, said: “It is critical that we understand what measures HMRC is taking to investigate this matter and ensure that any unpaid taxes are recovered.”

The letter, sent on behalf of the group, noted that under U.K. tax law “a company is deemed a tax resident based on the location of its central management and control, regardless of where it is registered.”

In a statement to the International Consortium of Investigative Journalists, a spokesperson for HMRC declined to comment on identifiable taxpayers or confirm or deny investigations.

“We’re continuing to lead international efforts to improve global transparency and are committed to ensuring everyone pays the right tax under the law, regardless of wealth or status,” the spokesperson said.

Abramovich’s lawyers declined to answer detailed questions sent by ICIJ and its media partners but said he “always obtained independent expert professional tax and legal advice” and “acted in accordance with that advice.”

The new reporting was based on the trove of leaked documents at the center of the 2023 Cyprus Confidential investigation, led by ICIJ and Paper Trail Media. The investigation exposed how Cyprus’ financial services industry had enabled the Russian elite to hide their wealth, and then shield billions in assets from impending sanctions after Russia’s 2022 invasion of Ukraine.

ICIJ’s analysis of more than 3.6 million leaked files found nearly 800 companies and trusts registered in secrecy jurisdictions that were owned or controlled by Russians who had been sanctioned since 2014.

In recent years, the U.K.’s so-called “second empire,” which includes overseas territories such as the BVI, has accounted for nearly a quarter of the world’s corporate tax loss, according to the Tax Justice Network.

“People are rightly angry at wealthy individuals using complex corporate structures and British Overseas Territories to dodge tax while ordinary people pay their fair share,” Powell told ICIJ via email.

‘A smoking gun’

After rising to the top of Russia’s oil sector in the 1990s, Roman Abramovich received a windfall in 2005 when the Russian government paid $13 billion to reacquire Sibneft, a large oil company he and a partner bought a decade earlier for around $200 million. In 2022, a BBC investigation found evidence the initial auction for Sibneft was “rigged,” though Abramovich denied the deal was corrupt.

Over the next two decades, the billionaire made flashy investments in luxury yachts, planes and properties and London football club Chelsea F.C., while also amassing a nearly $1 billion art collection. But he also made hidden investments through a complex offshore structure with a BVI-registered company at the center, according to the BBC, the Guardian and TBIJ.

That company, Keygrove Holdings Ltd., was owned in succession by two trusts based in Cyprus of which Abramovich was the sole beneficiary until he was replaced by his five children in 2022, The Guardian reported. Keygrove, in turn, owned more than a dozen BVI companies, each of which reportedly poured hundreds of millions of dollars into investments including Western hedge funds. The Guardian described the list of more than 200 hedge funds as “a roll-call of the top firms on Wall Street and in the City of London.”

The BBC mapped how the hedge fund profits flowed back into Abramovich’s companies in the BVI and eventually, via Keygrove, into other companies in his network, including Camberley International Investments Ltd., which was set up to fund Chelsea F.C.

It is not unusual or illegal for businesses to avoid tax liability by making investments through companies in tax havens. However, the question of whether Abramovich’s companies may owe U.K. tax and how much hinges on who “managed and controlled” the offshore structure and where they made strategic decisions.

That key decision-maker appears to have been Eugene Shvidler, according to leaked documents and court records reviewed by the BBC, the Guardian and TBIJ. “General power of attorney” documents from several years beginning in 2004 show Shvidler was given authority to make decisions on behalf of the BVI companies, the media outlets reported.

They found further evidence of Shvidler’s role in a 2023 court case brought by the U.S. Securities and Exchange Commission against a New York financial advisory firm, Concord Management, which the SEC said had a single client: Abramovich.

The SEC filings reportedly show Concord advised on investment decisions for Abramovich’s BVI companies and identified a “longtime close associate” of Abramovich who “made investment decisions” on his behalf. The media outlets determined that the associate, referred to by the SEC as “Person B,” was Shvidler based on the Cyprus documents. Lawyers for Shvidler denied he was “knowingly or negligently” involved in any unlawful scheme to avoid paying tax.

Tax expert Rita de le Feria told the BBC that evidence Shvidler made “strategic big decisions” on the hedge fund investments as a U.K. resident would be a “clear indication” any profits should have been taxed there. Shvidler lived in the U.K. from 2004 until 2022, the BBC noted.

“I think this is a pretty big smoking gun,” de le Feria, a professor of tax law at the University of Leeds, said. “That would be, again, strong evidence that the effective management of the company was not taking place in the BVI.”

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The $1 billion bill

While it was impossible to calculate exactly how much Abramovich’s companies may owe in U.K. tax from the available data, the BBC, the Guardian and TBIJ’s analysis determined that the offshore scheme may have generated $3.8 billion in profits by the end of 2018. Tax experts who reviewed the analysis said the amount of unpaid tax could therefore be $665 million. Combined with interest and late-payment penalties, the media outlets estimated that HMRC could potentially demand between $800 million and $1.2 billion, although its investigations are time-limited to the past 20 years.

Cyprus Confidential was partly based on leaked documents from a Cypriot financial services provider, MeritServus, whose high-profile clients included Abramovich before it was shuttered after being hit with U.K. sanctions over its ties to the oligarch.

Alongside the new reporting on Abramovich’s hedge fund investments, the BBC, the Guardian and TBIJ uncovered what appeared to be a separate tax scheme — involving five of Abramovich’s luxury yachts — in the MeritServus documents. The scheme reportedly presented the fleet of yachts as part of a commercial charter operation to avoid millions in EU taxes on running costs. The yachts were leased to a Cypriot company, Blue Ocean Yacht Management, which chartered them out to seemingly independent BVI companies that, the media outlets found, were actually controlled by Abramovich.

The six-story ultra-luxury yacht named ‘Eclipse’ owned by Russian businessman Roman Abramovich, anchored in Mugla, Turkiye, in August 2023. Image: Sabri Kesen/Anadolu Agency via Getty Images

Cypriot MP Alexandra Attalides asked her government what steps authorities had taken to ensure Blue Ocean Yacht Management had paid any of its potential debts to the state, The Guardian reported.

Meanwhile, in the U.K., the status of at least some of Abramovich’s billions in frozen assets remains unknown — approximately $3 billion from the sale of Chelsea F.C. that was pledged to humanitarian aid programs for victims of the Ukraine war has yet to be spent, according to Powell, the Labour MP who wrote to HMRC.

His colleague Phil Brickell, a fellow Labour MP and a member of the same parliamentary group, told ICIJ via email that HMRC should use “every tool in its arsenal” to ensure any U.K. tax owed is recovered “swiftly and in full” for the benefit of taxpayers.

“The UK is in a cost-of-living crisis with schools, hospitals and transport in desperate need of investment,” he said.

“We cannot continue tolerating the industrial scale of tax abuse we are seeing in our offshore financial centres. It doesn’t matter how rich you are — everyone should have to pay their fair share.”