Safe haven to sanctions: how Jersey sheltered Roman Abramovich’s billions | Roman Abramovich

FFor decades, Jersey, the Channel Islands’ tax haven, has played a major role in moving westwards fortunes made in some of the world’s most despotic countries, attracting overseas oligarchs with its mix of low taxes and high financial secrecy.

It’s a secret that goes back to Jersey’s relationship with the UK government. Jersey, which is a Crown dependency, has its own parliament, but it belongs to the king. The relationship between the two jurisdictions remains something of a black box, with little public information about how major decisions are made or the extent to which Westminster is consulted.

That changed last week when Jersey revealed details of its two-year legal battle with Russian billionaire and former Chelsea football club owner Roman Abramovich. On Monday, after the speech ban was lifted, the Jersey crown courts began publishing a series of previously published news stories. undisclosed decisions. Fifteen of them have been published so far, totaling 370 pages.

They reveal for the first time how Abramovich and four of his closest associates were provided a safe haven by the tax haven in 2016 and 2017 and were granted residence permits under a special program for ultra-high net worth individuals. According to the files, Abramovich’s application was approved in September 2017.

He apparently applied for a specialist leave in Jersey in the summer of that year.

The oligarch was also given permission by the Jersey government to move the companies that control the bulk of his wealth to the crown dependency, a five-mile by nine-mile green space just off the north coast of France. According to the rulings, asset transfers from the offshore network to Jersey occurred in 2017 and again in 2021, months before Russia’s full-scale invasion of Ukraine. Assets worth $7bn (£5.3bn) were moved elsewhere during this period. In 2016, a company in which Abramovich is the ultimate beneficial owner was also granted a license to operate in Jersey. The name of the company has been anonymized but it appears to be a family office set up to manage his wealth. He advised on “philanthropic activities”, the purchase of planes, yachts and cars, and investments in Europe and North America.

According to the decisions, this move was tacitly approved by the British government. The records show, in rarely shared details, how London was consulted extensively on a matter deemed politically sensitive involving a high-profile figure known for his close ties to Vladimir Putin’s regime.

The rulings record at least seven background checks and four face-to-face meetings over several years between officials in Jersey and London.

Despite increased sensitivity about Kremlin-linked figures after Russia’s annexation of Crimea in 2014, UK officials did not object to any of these communications.

Even after the diplomatic storm triggered by the 2018 Salisbury poisonings, the door remained open; A failed assassination attempt by Russian agents on a double agent and his daughter.

According to the decisions, the tide did not turn against Abramovich until Russia’s attack on Kiev. In April 2022, Jersey authorities froze $7 billion in assets suspected to be linked to him and searched some properties on the island. The oligarch had by then been placed on the UK and Jersey sanctions lists. in january A court ruling in 2023 revealed that the raids were part of a criminal investigation by the Jersey attorney general’s office into suspected money laundering and sanctions violations.

The money laundering investigation was revealed to be focusing on whether Abramovich made his fortune through corruption when he founded oil and gas company Sibneft in the 1990s in Russia’s newly privatized economy. The allegations are based on evidence given by Abramovich himself at a trial in London in 2012.

His lawyers denied that he was involved in corruption and claimed that the decision to investigate him was politically motivated. A lawyer from one of the corporate bodies set up to manage his wealth said the oligarch was “encouraged” to bring his assets to Jersey and that what happened after the invasion of Ukraine was a case of “state entrapment”.

The decisions show that Abramovich and related parties are trying to cancel the freezing of their assets in the legal battle that begins in 2023. Jersey’s appeals court ruled against them this summer.

In a second, more unusual case that was also rejected by the island’s appeals court, Abramovich filed a lawsuit seeking judicial review of the attorney general’s decision to investigate him. This move was an attempt to stop the investigation before any charges could be brought.

The verdicts were anonymised and redacted to protect the identity of Abramovich’s business associates after the judges ruled they had a right to privacy. The names of the companies they manage have also been removed to prevent identification.

The main cases and other related disputes were initially heard in private, and decisions were not published until all avenues of appeal had been exhausted. Last week, Abramovich’s bid to overturn the Jersey court decisions was rejected by the privacy council’s judiciary committee, putting an end to this private fight.

One of the main tools by which the British government maintains influence over its colonies, the committee, normally located in Parliament Square in London, acts as the supreme court for the United Kingdom’s overseas territories, crown dependencies and some Commonwealth countries.

‘Reputation risk’ for Jersey

The decision to allow Abramovich to move his fortune to Jersey was not taken lightly. Barry Faudemer, the former chief executive of the Jersey Financial Services Commission, clearly had concerns.

A report he prepared for ministers in late 2016, cited in the resolutions, claimed: “Abramovich’s close relationship with Putin jeopardizes the island’s reputation, especially given the growing perception of Russia as a rogue state intent on resorting to military action to achieve its goals.”

He also expressed fears that Abramovich could use a Jersey-registered company “to launder corruption proceeds on behalf of third parties, including Putin.” The island will have no control over the company’s (unregulated) activities.

On the other hand, Faudemer said that Abramovich already has “extensive business interests on the island”, already owns homes in the UK and the US, and has “operated successfully in the UK for many years without any problems as the owner of the Chelsea football club”.

“Identifying sufficient evidence to support a refusal to license is likely to be problematic,” he concluded.

The first approach to specialization in May 2016 was made by an associate of Abramovich, who was anonymised in the decisions as XB. It became clear that Jersey had a lot to gain. “These approvals, if granted, are given with the following information: [Abramovich’s] “Substantial wealth will migrate to Jersey, with all the financial benefits it will bring to the island,” reads one ruling, summarizing the oligarch’s case.

Ministers in Jersey wanted this to work, but they wanted to proceed with caution. A back channel has been opened between St Helier and London.

The then attorney general for Jersey, Robert MacRae, approached a contact in the national security directorate at the UK Foreign and Commonwealth Office (FCO), as it was then known.. In the following months, each time a residence application was filed, UK authorities checked Abramovich and all but one of his associates to ensure that they were not under investigation by any law enforcement agency.

After the Salisbury poisonings, all checks were carried out again through the FCO. Checks on Abramovich were repeated in February 2019, and Jersey authorities were concerned about “a hardening of attitudes towards those with Russia links”.

There are records of four face-to-face meetings between UK and Jersey officials, including a meeting between Faudermer and the UK regulator, the Financial Conduct Authority (FCA).

Following each of the checks detailed in the decision, the FCO official stated that everything was clear. They also expressed interest in continuing to receive information about those wishing to reside in Jersey. An FCO official email about Abramovich said: “We have no significant concerns, issues or negative imprint on RA [redacted]. It has a particularly large footprint, but is not a major concern or investigation. But the information itself is very useful in building a broader picture of activity in this area and on the subject.”

No political objection from London

MacRae also told officials in his own government that London had no political objection to opening the door to Abramovich and his billions of dollars. In a memo to the attorney general, a Jersey government official noted:

“From our brief conversation I noted the following:

You have done appropriate and thorough research.
As a result, you have confirmed that there is insufficient evidence to prevent this application from proceeding; and if there was sufficient evidence the matter would be referred to senior ministerial level within the UK government.”

According to the rulings, Abramovich never resided in Jersey. He received Israeli citizenship in 2018.

Abramovich is currently pursuing a “conspiracy” claim against the Jersey government. No charges have been brought against Abramovich since the Jersey investigation began three years ago and there are no criminal cases involving him in the jurisdiction, his lawyers said. They said in a statement last week that, to their knowledge, “no progress has been made” in the attorney general’s office’s investigation.

His lawyers emphasized that in the published decisions, the judges were not required to decide whether there was any corruption in Abramovich’s transactions at Sibneft or whether he admitted to corruption, and that they could not reach any conclusion on this issue. They said British courts had made no finding in 2012 that Abramovich had broken any laws in his business dealings. “There is no allegation in our client’s defense that he acquired the relevant institution through corruption, and our client denies these allegations.”

A spokesman for Jersey’s attorney general welcomed the privy council’s decision, adding: “The investigation into Mr Abramovich and others by the Economic Crime and Confiscation Unit in the Law Enforcement Division continues.”