Guardian reports link Abramovich, Chelsea and Cyprus, President says sanction evasion will not be tolerated (Update)

What do Russian oligarch Abramovich and Chelsea football club have in common? Links to Cyprus apparently.

In a series of exclusive reports dubbed ‘Oligarch files’ published by The Guardian on Tuesday, the newspaper obtained access to more than 300,000 leaked documents from offshore service provider Meritservus and affiliated companies. The company, based in Cyprus, was sanctioned by the UK last week as was its managing director Demetris Ioannides.

They are believed to have acted on behalf of – or in the direction presented by – Russian oligarch Roman Abramovich. The sanctions charge “Ioannides is responsible for crafting the murky offshore structures which Abramovich used to hide over £760 million assets ahead of being sanctioned following Putin’s illegal invasion of Ukraine.”

Questions raised over sanction evasion

The articles published by The Guardian which partnered with the Organized Crime and Corruption Reporting Project (OCCRP) reveal a web of connections linking Ioannides, Meritservus and Abramovich. It suggests the company continued to assist Russian Konstantin Malofeyev for around three years despite EU sanctions against him, helping with over US$35 million in transactions.

Asked to comment about the revelations amid increasing concerns of Cyprus’ international reputation, President Nikos Christodoulides said “we will not tolerate such phenomena – phenomena of sanction evasions, particularly those of which have been decided from the EU.

“Under no circumstances should we allow or enable anyone to tarnish the name of our country. There is an effort on our part and clear political will so that there is no shadow of any kind on this issue.”

Eye on ‘Orthodox Oligarch’

The Guardian also names Cyprus-based company Kravin Investments, reporting it received a US$1 billion installment from a deal between the oligarch’s oil and gas business Sibneft and its rival Yukos.

The deal eventually sank but Yukos had agreed to pay $3bn for 20 per cent of Sibneft. A first instalment of $1.25bn was paid in May 2023 to Kravin Investments, The Guardian reported. It said Kravin was owned by the Cyprus-based Sara Trust, of which Abramovich was the beneficiary.

Furthermore, the newspaper revealed staff at MeritServus codenamed Abramovich as “Mr Blue” seen as reference to Chelsea’s team colours.

Malofeyev, dubbed as “the Orthodox oligarch” for his connections to Russia’s church was also a client at MeritServus, according to The Guardian.

Though Malofeyev was sanctioned in 2014, the newspaper says he continued to be a client until 2017 with the company carrying out multi-million transactions on his behalf. MeritServus told the British paper it had “inadvertently not identified” him as being on the sanctions list.

Once it became aware of the development – three years later – it informed the accountancy regulator and the government department responsible for combating money laundering.

The matter was then “resolved” the report outlines and cites the company response that it did not breach sanctions laws nor was it involved in money laundering.

A web linking Deloitte Cyprus’ founder

The Guardian also cites a 2008 UK high court ruling showing the history between Abramovich and Ioannides.

“The upshot is that there appears to be a web of companies, largely in the British Virgin Islands and Cyprus, which hold various interests, personal and business, some very sizeable, of which Mr Abramovich is, or would appear to be, the ultimate owner. The Cypriot companies are ultimately owned, so far as the legal title is concerned, by Deloitte or Mr Demetris Ioannides, who was a director of Meritservus Ltd and Meritservus (Trustees) Ltd, two Deloitte Cypriot service companies, or by other Meritservus personnel.”

The link with Deloitte stems from the fact that Ioannides founded the Cyprus branch of the group. Though he led a management buyout in 2005, The Guardian reported he retained ties to the firm where he claimed on his website to be chairman emeritus of Deloitte in Cyprus, and to be a “preferred service provider.”

Since then, Meritservus has removed the description of Ioannides depicting him as chairman emeritus of Deloitte Cyprus. Ioannides has also previously referred to his company as an “offshoot” of Deloitte in an advertorial that has since been removed, according to the article.

Christodoulides said he would continue being in touch with US authorities and pointed to the US Ambassador to Cyprus Julie Fisher’s recent comments, welcoming Cyprus’ cooperation on sanctioned individuals. He noted this was “the best response” to The Guardian’s revelations.

Christodoulides added he would have a meeting with the finance ministry in the coming days “so that everything that has to be done is done.”