Deloitte's Cyprus arm helped conceal Abramovich's assets
The Cyprus arm of Deloitte took part in approving backdated paperwork that moved assets belonging to Russian billionaire Roman Abramovich off the books of Cypriot companies and cut his tax exposure, according to investigations by the BBC, the Bureau of Investigative Journalism and The Guardian.
The reports are based on a leak of documents and emails from Meritservus, a Cypriot corporate services provider that has been reported to run Abramovich's business affairs. The BBC and TBIJ published a joint investigation, and The Guardian a separate piece on the same case.
One episode concerns 2006, when Cyprus adopted a law requiring companies to publish financial statements. Abramovich's assets were then held by the Cypriot firm Amiscan Investments, whose balance sheet carried $672 million: a mansion in West Sussex, a London apartment and an estate in southern France, along with helicopters, private jets and yachts, among them the 115-meter Pelorus.
Abramovich's aides and Meritservus decided to move the assets to Amiscan's parent company in the British Virgin Islands, where accounts did not have to be disclosed. The transfer was documented retroactively, as though it had taken place in 2003, the investigations say.
Deloitte's Cyprus unit examined the paperwork and found it sufficient to remove the assets from Amiscan's accounts, leaving the company with holdings of $75,000. Emails in the leak show that staff of Deloitte's Cyprus office took part in discussing the arrangement, The Guardian reported, and the firm signed off on the accounts without the assets.
Another episode involves the Cypriot company Kravin Investments, which in May 2003 held about $2 billion that Abramovich had received from the sale of assets in Russia. Part of the money was lent to other companies, and all of it was liable to tax in Cyprus.
According to the documents, Abramovich's advisers drew up a plan to remove tax liabilities that could have been very large. Kravin's accounts and bookkeeping records for 2003 and 2004 were altered retroactively to show that the company did not own the funds but only managed them on behalf of its parent in the British Virgin Islands, which allowed it to be argued that the Cypriot company had no taxable income.
Citing the leaked correspondence, the BBC said the tax plan was drawn up by Abramovich's advisers after a meeting with representatives of Deloitte.
A third arrangement concerns another Cypriot company linked to Abramovich, Electus Investments, which held $10 billion. The leaked emails show that in 2006 Meritservus proposed drawing up backdated documents indicating that a structure of the same name in the British Virgin Islands had owned the assets since 2003. When the Cypriot company's accounts became public, they showed $145,000.
Abramovich's lawyers rejected allegations of any unlawful conduct and said he had followed the recommendations of his advisers and of Deloitte's Cyprus unit. Deloitte Cyprus said it had always complied with local law, adding that it could not comment on the specific allegations because the documents and correspondence cited by the journalists are "no longer available."
