Accounting giant Deloitte allegedly helped falsify documents to conceal Russian oligarch Roman Abramovich's wealth and evade taxes, according to an investigation by the BBC's Panorama program conducted jointly with the U.K.-based Bureau of Investigative Journalism.
According to the investigation, financial statements approved by Deloitte's Cyprus office made $672 million in assets, including yachts, mansions and private jets, disappear from the accounts of Abramovich's companies. Deloitte also allegedly advised on a scheme to evade substantial taxes on the oligarch's wealth through falsified documents.
Andrew Mitchell, an expert in financial law, said the evidence presented in the investigation demonstrated "straightforward tax evasion," adding that "it couldn't be more blatant."
Abramovich's lawyers said he denies evading taxes or concealing his wealth. They argued that Panorama had presented no evidence that he knew about, approved or instructed anyone to falsify documents. In cases where professional advisers proposed financial arrangements, relying on their advice was "entirely proper and legitimate," they said.
Deloitte Cyprus said it "acts in compliance with applicable laws."
For nearly two decades, Abramovich was Britain's most prominent Russian oligarch. Following Russia's invasion of Ukraine in 2022, the British government imposed sanctions on him over his ties to President Vladimir Putin, forcing him to sell Chelsea Football Club.
Abramovich, who also holds Israeli citizenship, reportedly lives in Turkey, which has provided a safe haven because it has not enforced the sanctions against him.
Authorities on the island of Jersey have frozen assets belonging to Abramovich worth 5.4 billion British pounds ($7.2 billion), and a criminal investigation into his affairs has been underway there for four years. His lawyers deny the allegations underlying that investigation and say it is being conducted for "political purposes."
Cyprus and its ties to wealthy Russians
The investigation is based on thousands of leaked documents related to Abramovich's finances and a network of companies managed from Cyprus between 1995 and 2022. Cyprus was once a popular tax haven for wealthy Russians.
In 2022, Panorama reported that Abramovich had accumulated his fortune through a corrupt deal in which he acquired a Russian state-owned oil company in the 1990s and sold it back to the government about a decade later for a multibillion-dollar profit. He has previously denied allegations of corruption surrounding the transaction.
Profits from the oil deals were transferred to a network of companies outside Russia, managed from Limassol, Cyprus' second-largest city, by a corporate services firm called MeritServus.
Until 2005, MeritServus was owned by Deloitte. After the companies separated, they continued working closely with Abramovich's associates to manage his global wealth. Leaked MeritServus documents reveal how those arrangements operated.
The first example of allegedly backdated documents dates to 2006, following the introduction of a new law in Cyprus requiring companies to publish their financial statements. The transparency legislation threatened to expose details of Abramovich's vast fortune.
At the time, Deloitte Cyprus had prepared draft financial statements for 2003 for one of Abramovich's Cypriot companies, Amiscan Investments, but had not yet finalized them.
The draft listed luxury assets worth $672 million, including a mansion in West Sussex, a luxury apartment in London and an estate in southern France. It also included helicopters, private jets and a small fleet of boats, among them the $147.5 million yacht Pelorus.
According to the investigation, Abramovich's associates and MeritServus decided to "rewrite history" to conceal the assets.
They allegedly planned to circumvent the transparency law by transferring the assets to Amiscan's parent company in the British Virgin Islands, where they could be kept out of public view, and backdating the transfer by three years to make it appear as though it had taken place in 2003.
Deloitte Cyprus reviewed the backdated documents and determined that they were "adequate" to remove the assets from Amiscan's financial statements.
When Deloitte signed off on the company's 2003 accounts in 2006, the homes, aircraft and yachts had effectively disappeared from the books, leaving reported assets worth just $75,000.
According to the leaked documents, Deloitte approved the statements despite knowing they were entirely misleading.
Deloitte
(Photo: Rod McGuirk/AP)
Panorama also uncovered evidence that backdated documents were used in an alleged tax evasion scheme.
That case involved another of Abramovich's Cypriot companies, Kravin Investments, which held nearly $2 billion in a bank in 2003. The money generated substantial interest, on which the company was supposed to pay taxes to the Cypriot authorities.
Abramovich's advisers allegedly proposed rewriting the financial history once again.
In an August 2005 email from MeritServus to Abramovich's Russian associates, the firm described a plan developed after a meeting with Deloitte.
"If you agree, it will be necessary to change the financial statements and the accounting records accordingly for 2003 and 2004," the email said.
MeritServus also stated that Kravin's provisional tax assessments for 2005 would be submitted on the basis that the company had earned no income from the funds.
A month later, an associate in Russia replied: "I agree."
MeritServus then created a series of allegedly backdated documents falsely presenting Kravin as holding and investing the funds on behalf of its parent company in the British Virgin Islands.
The arrangement made it appear that Kravin did not own the money and therefore had no tax liability in Cyprus.
'Professionals who are prepared to bend and break the rules'
In a September 2005 email, Deloitte wrote that "certain changes will have to be made to the accounts (bank account balances, interest income, profit and loss account)" following the backdated changes to Kravin's assets.
The correspondence appears to show Deloitte advising on the falsification of financial records, while the evidence suggests the firm enabled Abramovich's company to evade millions of dollars in taxes.
Mitchell, the British financial law expert, described the arrangement as "straightforward tax evasion."
"If it happened in England and it was in the millions, His Majesty's Revenue and Customs would be thinking about a prosecution," he said.
Cypriot lawmaker Christos Christofides said that if tax evasion had occurred, authorities should seek to recover the money. "We have to see how we can get our money back and how, if some people are guilty, they have to pay the price according to our law," he said.
Beyond the documents that Deloitte allegedly helped backdate, MeritServus staff are suspected of falsifying a third set of records involving Abramovich's vast business assets.
Those assets, worth more than $10 billion, were held through a Cypriot company called Electus Investments.
MeritServus allegedly backdated documents to make it appear that Electus did not own the wealth. To accomplish this, it used another Abramovich company with the same name, Electus, incorporated in the British Virgin Islands, where financial statements are not required to be made public.
Emails from 2006 show that MeritServus acknowledged the assets belonged to the Cypriot Electus company but nevertheless proposed rewriting the past once again, this time to "transfer the beneficial ownership" to the British Virgin Islands entity and make it appear that the change had occurred three years earlier.
The firm signed documents backdated to Nov. 20, 2003, indicating that the British Virgin Islands company had owned the assets since that date.
When the financial statements of the Cypriot company bearing the same name were published, they showed assets worth just $145,000.
"Roman Abramovich's billions had been made to disappear," the investigation said.
Mitchell told Panorama that the documents revealed the willingness of some professionals to disregard their obligations.
"What you take away from it is there are professionals who are prepared to bend and break the rules of their profession and therefore the law," he said. "And it looks that they will stop literally at nothing in terms of creating documents."
Vladimir Milov, who served as Russia's deputy energy minister during the period when Abramovich built his business empire and is now a critic of the Russian government, also criticized the role of Western professional services firms.
"For each Russian oligarch or Middle Eastern or African corrupt oligarch, there's an army of Western financial and legal services and PR services providers, who is easily taking money for whitewashing their reputation and making them look normal," he said.
Abramovich's lawyers denied any wrongdoing on his part and said he was not involved in the day-to-day management of the companies.
Deloitte Cyprus said it could not comment on the specific allegations because the documents were more than 20 years old and were no longer accessible. MeritServus has since closed.