Deloitte, one of the world’s largest consulting and auditing firms, helped falsify documents to conceal Russian billionaire Roman Abramovich’s wealth and enable him to evade taxes, according to a joint investigation by the BBC and the Bureau of Investigative Journalism (TBIJ). The Guardian published a separate report on the same case.
The investigations draw on leaked documents and emails from MeritServus, a Cyprus-based corporate services provider previously reported to have managed Abramovich’s businesses. One episode dates to 2006, when Cyprus passed a law requiring companies to publish their financial statements. At the time, Abramovich’s assets were held by the Cypriot company Amiscan Investments. Its balance sheet listed $672 million in assets: a mansion in the English county of West Sussex, an apartment in London, an estate in southern France, helicopters, private jets, and yachts, including the 115-meter (377-foot) Pelorus. Abramovich reportedly owned all these assets at the time.
Abramovich’s aides and MeritServus decided to transfer the assets to Amiscan’s parent company in the British Virgin Islands, where companies did not have to disclose their financial statements. According to the investigation, they backdated the paperwork to make it appear that the transfer had taken place in 2003.
Deloitte’s Cyprus office reviewed the documents and deemed them sufficient to remove the assets from Amiscan’s financial statements, leaving it with just $75,000 in assets. The Guardian reported that emails in the leaked files show Deloitte Cyprus employees took part in discussions about this scheme to make the assets “disappear.” Deloitte signed off on Amiscan’s financial statements with the valuable assets removed.
Another episode described in the investigations involves the Cypriot company Kravin Investments. In May 2003, its accounts held about $2 billion that Abramovich had received from selling assets in Russia. Some of the money was lent to other companies. All these funds should have been subject to tax in Cyprus. But documents show that Abramovich’s advisers soon began devising a plan to “eliminate” tax liabilities that could be “very large.”
They decided to alter Kravin’s financial statements and accounting records for 2003 and 2004 retroactively. The documents made it appear that Kravin did not own the funds but merely managed them on behalf of its parent company in the British Virgin Islands. This allowed the advisers to claim that the Cypriot company had no taxable income.
Citing the leaked correspondence, the BBC reported that Abramovich’s advisers devised the tax evasion plan after meeting with Deloitte representatives.
Another scheme concerns Electus Investments, a Cypriot company linked to Abramovich. Its accounts held $10 billion. Leaked emails show that in 2006, MeritServus proposed backdating documents to make it appear that a company with the same name in the British Virgin Islands had owned these assets since 2003. As a result, when the Cypriot company’s financial statements became public, its accounts showed just $145,000.
Abramovich’s lawyers denied any wrongdoing and said he had relied on advice from his advisers and Deloitte’s Cyprus office. Deloitte Cyprus said it had always complied with local law. It said it could not comment on the specific allegations because the documents and correspondence cited by the journalists concerned events from 20 years ago and were “no longer accessible.”
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