Deloitte, the world’s largest provider of accounting and audit services, may have helped conceal the income of Russian billionaire Roman Abramovich, thereby enabling the businessman to avoid paying taxes, reports BBC.Financial statements approved by Deloitte’s Cyprus branch reveal that the accounting records of Abramovich’s company omitted yachts, mansions, and private jets worth 672 million dollars. Furthermore, Deloitte allegedly recommended a scheme to evade a substantial tax bill through the falsification of documents.Andrew Mitchell, a barrister and expert in financial services law, stated that evidence obtained by BBC Panorama points to a scheme that constitutes blatant tax evasion and could hardly be more brazen.Meanwhile, Abramovich’s lawyers stated that he denies evading taxes or concealing his income. The billionaire’s lawyers stated that Panorama possesses no evidence indicating that Abramovich knew about, authorized, or directed the falsification of any documents, adding that it was legitimate to rely on the advice of professionals.Deloitte’s Cyprus branch stated that it acted in accordance with the law.For nearly two decades, Abramovich was the most prominent Russian oligarch in the UK, where he purchased Chelsea Football Club in 2003 and served as its primary financier during the club’s most successful period. Following Russia’s full-scale invasion of Ukraine in 2022, Abramovich was placed on the British government’s sanctions list and sold the club.Abramovich is reportedly residing in Turkey, which has not imposed sanctions on him. Assets worth 5.4 billion pounds belonging to Abramovich have been frozen in Jersey, and an investigation has been ongoing for four years. The oligarch’s lawyers told the BBC that he denies the allegations raised in Jersey, claiming they are politically motivated.A BBC investigation has uncovered evidence regarding the management of Abramovich’s business empire, raising serious questions about the integrity of some of his professional advisors. The evidence was found in leaked information comprising thousands of documents related to the oligarch’s finances and the operations of offshore companies managed from Cyprus between 1995 and 2002.In 2022, BBC Panorama reported on how Abramovich amassed his wealth through a corrupt deal involving the purchase of a Russian state-owned oil company in the 1990s, which he later sold back for a profit of several billion. Abramovich has previously stated that the corruption allegations are false. The profits from the sale of the oil company flowed into a network of offshore entities managed by the Cyprus-registered firm MeritServus. This entity, in turn, belonged to Deloitte—now one of the “Big Four” firms dominating the international accounting sector—until 2005. Even after MeritServus spun off, the two companies continued to collaborate closely on managing Abramovich’s wealth.Leaked documents from MeritServus reveal some of the methods employed. The first example dates back to 2006, when Cyprus enacted a law requiring the disclosure of corporate financial statements. The new legislation threatened to expose the secrets surrounding Abramovich’s wealth. Deloitte had prepared the 2003 financial statements for Abramovich’s company, Amiscan Investments, but they had not yet been finalized; these statements included luxury assets valued at 672 million dollars. To keep these assets secret, Abramovich’s associates and MeritServus decided to rewrite history and devised a plan to circumvent the new law. The assets were transferred to Amiscan Investments’ parent company in the British Virgin Islands—where they could be concealed—and the transaction was backdated to make it appear as though it had taken place in 2003. Deloitte reviewed backdated documents and determined they were sufficient to remove the relevant assets from Amiscan Investments’ accounts. Consequently, when Deloitte approved the 2003 financial statements in 2006, houses, aircraft, and yachts vanished with a single signature, leaving Abramovich’s company with assets valued at just 75,000 dollars. Deloitte approved the statements even though leaked documents clearly indicate the firm knew they were misleading.Lord Prem Nath Sikka, a professor of accounting at the University of Sheffield, stated that this constituted a breach of statutory obligations and described the misdating of transactions as quite scandalous.Panorama also uncovered evidence that backdated documents were used to avoid paying taxes. Another of Abramovich’s Cyprus-based companies, Kravin Investments, was involved in the scheme. In 2003, it held nearly 2 billion dollars in its account. Since this sum generated significant interest income, Abramovich’s company should have paid profit tax; however, his associates had a different idea. In an email sent in August 2005, MeritServus wrote to Abramovich’s Russian partners stating that a plan had been devised following a meeting with Deloitte. If the partners agreed to it, the financial statements and accounting records for 2003 and 2004 would need to be altered. MeritServus informed Abramovich’s partners in Russia that the 2005 report for Kravin Investments would state that the company had generated no profit from the deposited funds. A month later, the Russian partners replied that they agreed to the plan.MeritServus created a series of backdated documents that misleadingly indicated Kravin Investments was merely managing and investing funds on behalf of its parent company in the Virgin Islands. This created the impression that Kravin Investments held no assets of its own and, consequently, was not liable for taxes.Lawyer Mitchell told Panorama that the lesson to be drawn from these cases is that there are professionals willing to bend and break the rules of their profession—and thereby violate the law—and that seemingly nothing can stop them when it comes to the preparation of documents. Vladimir Milov—who served as Russia’s deputy energy minister when Abramovich amassed his fortune and is now a harsh critic of the Russian government—said that for every corrupt oligarch from Russia, the Middle East, or Africa, there is an army of Western financial and legal service providers ready to launder any reputation for a fee and help the oligarchs appear respectable.
World’s largest accounting firm allegedly helped conceal Abramovich’s income
