Chelsea football owner Roman Abramovich and the awkwardness of Russia sanctions

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By Greg Miller

Feb.25, 2022

LONDON — As Russian missiles rained down on Ukraine, one of the world’s largest private planes rose from a runway near Monte Carlo and followed a route around the unfolding carnage before landing in Moscow, according to online tracking sites.

The palatial Boeing belongs to Roman Abramovich, a billionaire backer of Russian President Vladimir Putin who has come to symbolize the conflicted position of Western governments now moving to sanction oligarchs long welcomed by the European elite.

Abramovich arguably stands at the head of this class. He owns one of the most valuable soccer clubs in Britain’s Premier League, a yacht with a helipad and swimming pool that he keeps moored off the coast of Spain, a $200 million home just steps from Kensington Palace, and other properties scattered between Colorado, the Caribbean and Southern France. He looms as one of the most obvious sanctions targets, because of his ties to Putin and exposure in Western jurisdictions.

So far, he has remained unscathed by the sanctions announced by the United States, Britain and the European Union this past week. But there are signs he may be getting nervous.

On Saturday, he announced that he would put his Chelsea Football Club in the “stewardship and care” of the team’s charitable foundation. The team is not for sale. Abramovich is still the owner. But he said the foundation trustees “are in the best position to look after the interests of the Club, players, staff, and fans.”

Although the purpose of the flight to Moscow remains unclear, the trip put his aircraft out of reach of authorities in Europe, preventing it from being grounded or seized.

Both moves came after British Prime Minister Boris Johnson erroneously claimed in the House of Commons on Tuesday that Abramovich had already been sanctioned, an assertion that heightened the attention on the Chelsea owner, even though Johnson’s office later acknowledged that his statement was incorrect.

Efforts by The Washington Post to reach Abramovich for further comment, through Chelsea and other entities, were unsuccessful. Lawyers for Abramovich, speaking this month before the Russia invasion of Ukraine, told the Guardian that he didn’t fit the criteria of British sanctions under discussion. “It would be ludicrous to suggest that our client has any responsibility or influence over the behavior of the Russian state,” they added.

Some British officials, though, have called for Abramovich to be stripped of his Western assets as part of an overdue crackdown. Chris Bryant, a Labour Party lawmaker, said on Thursday that he had obtained a secret 2019 government report on illicit finance citing Abramovich for “his links to the Russian state and his public association with corrupt activity and practices.”

“Surely Mr. Abramovich should no longer be able to own a football club in this country,” Bryant said in Parliament. “Surely we should be looking at seizing some of his assets, including his 150-million pound home.”

There are constraints that may keep that from happening, including complicated ownership structures Abramovich and other oligarchs have used to shield assets as well as a perceived British reluctance to combat an influx of Russian money so pervasive that the capital is sometimes derided as “Londongrad.”

Still, that climate of accommodation may be changing, as Western governments signal their determination to punish Russia for launching one of the largest military onslaughts in Europe since World War II.

The United States and Europe on Friday announced sanctions on Putin and his Foreign Minister Sergey Lavrov. The U.S. government has also cut off Russia’s largest bank and blocked four others from doing business in the United States. The European Union has announced similar measures. It joined the United States and Canada in vowing to cut off Russia’s financial institutions from a key banking network on Saturday.

Johnson described Britain’s sanctions as the “largest and most severe” his country has ever implemented — freezing all Russian bank assets in the United Kingdom, denying Russia access to British finance markets, and imposing travel bans, asset freezes and other punitive measures against more than 100 companies and oligarchs.

Those named in the initial rounds fell into the realm of usual suspects, including Gennady Timchenko, an oil baron and Putin ally who has been sanctioned by the United States since 2014. But Johnson indicated that dozens of additional names could be added in the coming weeks.

Whether Abramovich, 55, will be among them is not yet clear.

Like other oligarchs, Abramovich built a fortune by gaining control of vast stores of resources, including oil and aluminum, that had been state-owned before the Soviet Union’s collapse.

Abramovich served as governor of a far eastern Russian province in his 30s. But he also developed influence in Moscow, with connections to both Putin and his predecessor, Boris Yeltsin.

Abramovich has amassed an empire now estimated by Forbes at $13.6 billion, and he was part of an early wave of wealthy Russians who began taking their riches outside the country in pursuit of the more opulent lifestyles and financial security offered in the West.

Even advocates of sanctions voice skepticism that financial penalties can influence Putin, let alone cause him to reverse course. But Russia may be uniquely vulnerable because of how much of its money has moved abroad. A 2018 study in the Journal of Public Economics estimated that 60 percent of the wealth of Russia’s richest households is held offshore, vastly more than any other country.

Britain is attractive because of the stability of its government, robust banking system and laws protecting property rights. But the country has also offered inducements. Thousands took advantage of a “golden visas” program that offered residency to foreigners pledging to invest at least 2 million pounds upon arrival — a program the government concluded was rife with fraud and shut down this month.

British officials have debated among themselves for years the perils of their country’s enthusiasm for Russian money, with critics likening it to other European nations’ dependence on Russian oil and gas. A landmark report on Russia completed by a parliamentary intelligence committee in 2020 concluded that national security was being compromised by laws that enabled illicit money to “be recycled through what has been referred to as the London ‘laundromat.’”

“Russian influence in the UK is the ‘new normal,’ ” the report said. “And there are a lot of Russians with very close links to Putin who are well integrated into the UK business and social scene, and accepted because of their wealth.”

The issue has been a source of strain, at times, with the United States.

“The more rocks they kick over, the more of an indictment it becomes of how lax they’ve been the last couple decades on dirty Russian money flooding their system,” said Gavin Wilde, who served as director for Russia, Baltic and Caucasus Affairs on the National Security Council in the Trump administration.

Former British officials said the country’s ability to police illicit finance, let alone crack down on Russian nationals in retaliation for the invasion of Ukraine, is constrained by years of underinvestment in financial expertise.

“The British state simply has not built and invested in the investigatory capacity to act for its economic security,” said Paddy McGuinness, an adviser at the Brunswick Group who served as a senior national security adviser to Prime Minister Theresa May. “There aren’t the forensic accountants in government service, the really smart lawyers who know how to go after banks.”

Some argue that the emphasis on financial sanctions is inadequate. Jamison Firestone, an American attorney who set up a law firm in Russia after the fall of the Soviet Union, said it would be more effective for Western governments to revoke the visas of oligarchs and their families.

“If you knock $2 billion off Abramovich’s valuation, he’s still a rich guy,” Firestone said. “It’s about denying people a lifestyle that they feel is theirs, that they want. When you deny that lifestyle and make it clear you’re denying it because of what their government has done, and send them back to live in the mess that Putin has created, you turn all these people into advocates against the war.”

Firestone fled Russia in 2009 after the imprisonment of a tax lawyer with his firm, Sergei Magnitsky, who had uncovered what he said was extensive fraud by Russian tax authorities. Magnitsky died in prison before facing trial. In 2012, the United States passed a law named for him that has been used to impose sanctions on foreign individuals accused of corruption or human rights abuses.

There is no authoritative list of Russian nationals with substantial assets in Britain, but several names are raised repeatedly by government officials and in media reports.

Among them is Evgeny Lebedev, a media entrepreneur who is the son of a former KGB officer and holds the title of “Baron of Hampton and Siberia,” as well as a seat in the House of Lords. Another is Alisher Usmanov, a telecommunications investor and executive who owns an 11-acre compound in the Highgate neighborhood of London, according to British media reports.

Usmanov and Abramovich both appeared on a list of sanctions targets proposed last year by Alexei Navalny, a Russian dissident and Putin critic who was poisoned in 2020 and subsequently imprisoned.

Abramovich, who also reportedly has Israeli and Portuguese citizenship, is described on the Navalny list as “one of the key enablers and beneficiaries of Russian kleptocracy, with significant ties/assets in the West.”

The most prominent of those assets is the Chelsea Football Club in West London, which he purchased in 2003. He plowed millions into the team and its facilities after his acquisition, transforming it into a Premiere League powerhouse and global brand. His status in Europe has to a large degree been defined by his association with that team.

Experts said his move to hand off some degree of control could be an attempt to stave off sanctions. “It looks like either he senses something is coming or is hoping this move forestalls it,” said Wilde, who added that the maneuver may not work if Abramovich’s ownership remains in tact.

“I don’t see this move abating the pressure, if he’s still drawing a paycheck from Chelsea while making flights to Moscow, while Ukrainian civilians fight occupiers in the streets,” Wilde said.

Other Abramovich assets include his yacht in Barcelona, Solaris. It’s more than 450 feet long, according to online records, with cabins for 36 guests, a 60-person crew, a dance club and a missile-detection system. It’s not the biggest boat in Abramovich’s fleet — that would be Eclipse, more than 500 feet long and now in the Caribbean.

He also acquires planes. His most recent addition, the 787 Dreamliner, is valued at an estimated $350 million, including expenditures on luxury upgrades, according to a report in Forbes Russia.

The aircraft departed an airport in Nice, on the Mediterranean coast of France, late morning on Thursday, as the Russian shelling of Ukraine intensified. The plane touched down in Moscow around 3:15 p.m. local time, according to websites that track the movements of private aircraft. It was not clear if Abramovich was on board.

The following day, as Russia escalated its attack on Ukraine, British Transport Secretary Grant Shapps announced that “no Russian private jet can fly into UK airspace, or touchdown — effective immediately.”

But the ban may not apply to Abramovich’s jet. The 787 is operated by Global Jet Luxembourg, according to Federal Aviation Administration records, and it is registered in Aruba.

https://www.washingtonpost.com/world/2022/02/26/roman-abramovich-russia-sanctions/