There are growing concerns that £2.3billion from the sale of Chelsea which has been frozen for nearly three years may not reach Ukraine war victims because of a dispute between the government and Roman Abramovich.
The government has admitted in a new statement that the dispute is a “complex legal issue” and the delay raises questions about what will happen to the money if Abramovich, the former Chelsea owner, refuses to budge — or if there is a peace deal between Ukraine and Russia and sanctions are lifted.
Richard Caborn, the former sports minister, has written to Keir Starmer asking for the prime minister to intervene in the case.
The Labour government has followed its Tory predecessor by insisting it will only license the release of the £2billion for humanitarian projects inside Ukraine, while Abramovich is adamant he wants it to be spent on victims of the war outside Ukraine too. It has been suggested the government could take legal action against Abramovich, 58, but that would mean potentially many more years of delay.
A statement to The Times from the Office of Financial Sanctions Implementation read: “This is a complex legal issue, but the UK is working with international partners, has engaged with Abramovich’s team, and is exploring all options to ensure the proceeds reach vulnerable people in Ukraine who are most in need.
“We are determined to see the proceeds reach humanitarian causes in Ukraine as soon as possible. We are doing everything we can to bring that about quickly.”
In May 2022 the government confirmed that the net proceeds from the sale of Chelsea would be transferred to a frozen UK bank account belonging to Fordstam Ltd, Abramovich’s holding company. The Russian-born billionaire remains the person with significant control of the company despite being sanctioned along with other oligarchs after the invasion of Ukraine.
Abramovich agreed a “deed of undertaking” in which he pledged to hand over the proceeds of the Chelsea sale to a charity “for the purposes of helping victims of the war in Ukraine”. It now seems apparent that there was no mechanism included which obliged Abramovich to agree to release the money, and for someone with as close links as he has had to Vladimir Putin it may be difficult to allow only Ukraine to benefit.
There also appears to be considerable uncertainty about what could happen to the money if it is still in Fordstam’s bank account and peace is declared and sanctions are lifted.
Caborn told The Times: “I have written to Keir Starmer to express my concern and ask him to get the Foreign Office to look at this as a matter of urgency, as we are now in a potentially fast-moving situation.
“This is more than £2billion from the sale of Chelsea which could do a huge amount of good in Ukraine but it is nearly three years now and not a penny has reached there.
“This money must be made available as soon as possible and we also need to know what would happen to it if there is a peace agreement and sanctions are lifted on Roman Abramovich.”
Dame Caroline Dinenage, the chairwoman of the DCMS select committee, added: “What it needs for everyone’s certainty and peace of mind is for this issue to be brought to a swift conclusion as soon as possible.”
A foundation is ready to distribute the money, headed by Mike Penrose, a former chief executive of Unicef UK who has previously called on the government to relax restrictions on where it is spent.
“All we are asking the government to do is release the funds to us, without applying political conditions that would limit our ability to help all Ukrainians, the communities and people hosting them, and the most vulnerable people directly affected by this conflict,” Penrose said in a column for The Times’ Red Box newsletter 20 months ago.
Fordstam has not filed any accounts since 2021. Its only director is Abramovich’s close associate Eugene Tenenbaum, who has also been sanctioned. The company’s secretary is Paul Heagren, an accountant who has worked with Abramovich for more than 20 years.
Heagren told The Times: “I do the administration and the accounts but I have nothing to do with those decisions [relating to the release of the £2billion].”
Companies are normally struck off if they do not file accounts for several years but the difficulties in Fordstam doing so owing to the sanctioning restrictions mean that it has been allowed some leeway.
Heagren is also the sole remaining director of Abramovich’s Chelsea-based management firm MHC (Services) Ltd, which managed his personal life and travel and has still not been wound up despite appointing a voluntary liquidator in July 2022.
MHC Services owes nearly £2milion to creditors, including £262,000 to HMRC, and has net assets of more than £6million, but the liquidator has not been permitted to settle those debts.
The liquidator’s most recent report states: “The company’s assets are currently subject to an order of seizure imposed by the British government, in line with sanctions imposed against organisations that are deemed to have Russian associations. Unfortunately the company’s main client was sanctioned on 10 March 2022. The company’s bank reacted by freezing its account.
“The joint liquidators have had to apply to the Office of Financial Sanctions Implementation for authorisation to not only realise the company’s assets but to then distribute realisations made in due order of priority.
“Unfortunately, OFSI has recently refused the licence we have sought on the basis that the application does not satisfy them within the relevant grounds.”
MHC Services used to be run by three of Abramovich’s closest aides, but they all left the firm on the day that Russia invaded Ukraine.
The trio were Christian Sponring, a 49-year-old Austrian who was the oligarch’s former chef and then became his chief steward in charge of his personal arrangements, Demetris Ioannides, an 81-year-old Cypriot lawyer who according to a 2012 High Court case is the trustee of a Cyprus-registered trust of which Abramovich is the beneficiary, and Anna Haykin, a 58-year-old who has her main residence in Israel.
They were replaced by David Davidovich, who, like Abramovich, is a Russian-born Israeli and worked as a senior adviser at his former company Sibneft before it was sold to Gazprom. The 62-year-old has been described as a close ally of Abramovich and was also later sanctioned by the government.
Abramovich’s representatives have been approached for comment.
