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Roman Abramovich as a protector of Russian wealth in the West

April 21, 2021

The role of Roman Abramovich in promoting modern Russian capitalism in the West cannot be overestimated. Since the acquisition of the famous Chelsea football club in 2003, his name has been strongly associated with Russian wealth in the UK. Unfortunately for Mr. Abramovich, the times when he was a symbol of the ‘new Russian generosity’ and positive role of the Russian wealth are gone. Highly likely, forever.

It should be remembered that Mr Abramovich was first recognised as a successful ‘crisis manager’ when he urged on the forceful de-merger of Yukos-Sibnef Oil Company just before the collapse of Yukos, obtaining his stake in Sibneft back. Later he successfully sold Sibneft to the state-owned giant Gazprom for some 13 bl dollars.

In the UK, Mr Abramovich became famous after purchasing Chelsea football club and investing several hundred million pounds in its development. His publicity even greatly increased after his unprecedented trial ‘of the decade’ with another famous Russian oligarch, now deceased, Boris Berezovsky. Mr Beresovsky claimed that for some years he was a senior partner to Mr Abramovich in their joint project for the acquisition and development of the Sibneft oil company and that Mr Abramovich owed him a fair share of the Sibneft sale price. Although not many lawyers believed that Mr Beresovsky had any firm evidence of his actual partnership with Mr Abramovich, the case was seen by the experts as representing a particular threat not only to Mr Abramovich and his team but to many Russian oligarchs who had dumped their former partners. Nevertheless, the custom of rich Russians not to document their arrangements (not to leave a paper trial) played against Mr Beresovky’s lawyers. He failed to substantiate his allegations in court and faced an enormous cost bill. This victory demonstrated that Mr Abramovich could manage cases of unprecedented complexity and uncertainty even in English courts which are famous for their independence and attention to tiny details.  

The problems of Mr Abramovich and his partners began emerging after the successful ‘return’ (or grab) of Crimea to Russia. Some public activists were claiming that Mr Abramovich was amongst the Russian oligarchs who supported the Kremlin in it aggressive actions. The activists demanded that the US and the EU should introduce sanctions against ‘Putin’s oligarchs’ preventing them from running their businesses and enjoying their lavish lifestyle in Europe and the US.  

Although only a handful of the alleged Putin’s friends, including Mr Rotenberg at the first place, were sanctioned, the aggressive anti-Kremlin PR campaign created an unfavourable and risky environment for Mr Abramovich and other Russian oligarchs. The UK government, using the opportunity that Mr Abramovich had to renew his UK investor visa, requested detailed confirmation of the sources of his wealth. Evidently, lawyers advised Mr Abramovich that counting the controversies of Russian privatisation, known as the ‘grab of the century’, the attempt to prove the legitimacy of his assets may last for years and result in unpredictable litigation with the Home Office. Mr Abramovich made a smart move and withdrew his renewal application. Several days later, he received an Israeli passport that guaranteed him freedom of movement around Europe and the US, and the UK lost one of its richest investors. That also can be counted as a small legal victory.

Most of the Russian oligarchs are now under a permanent PR attack from the Western press. Mr Abramovich is no exception, but he tries to settle his affairs with the media quietly.

At the beginning of 2021, several British newspapers apologised to the billionaire for publication about his proximity to President Putin and the need to impose sanctions against him. In its apology, the Independent (owned by the Russian-born British peer Evgeny Lebedev, now styled as Baron of Hampton and Siberia) said ‘In an article we published on 6 February 2021 headed “Vladimir Putin is a ‘monkey with a grenade’: Navalny aide says it is time to get tough with Russian leader” we wrongly reported claims by Mr Leonid Volkov that Mr Abramovich is a bag carrier for President Putin’s illicit presidential wealth and named him as an individual who should be sanctioned.’ Not all Russian opposition leaders should be believed.

Chelsea football club and Abramovich secured four media corrections after an apparent legal battle spurred by a lawsuit, with the Times forced to ‘apologise’ twice, as well as one each from the Mail and Independent. The Times suggested that Abramovich, who has owned the Blues since 2003 and brought a successful spell, was connected to ‘human rights abuse’. MailOnline in an article headed 'Roman Abramovich's £200million British property empire revealed' wrongly claimed that Mr Abramovich had lost his UK citizenship. The advantage of Mr Abramovich’s victory was that the public learned about it only when the apologies had been published.

The latest known case, launched by Mr Abramovich’s lawyers, does not promise to be as quiet as the previous ones. The Chelsea football club owner has filed a defamation suit against both publishers HarperCollins and author Catherine Belton. Belton’s book ‘Putin’s People: How the KGB Took Back Russia and Then Took on the West’ includes claims from Sergei Pugachev that Abramovich bought Chelsea in 2003 on the personal orders of Russia’s president Vladimir Putin.

Roman Abramovich said to the media that the false allegations made in Belton’s book were having a damaging effect on him and his family. Abramovich’s legal team said it issued legal proceedings for defamation on his behalf against Belton and publisher HarperCollins following efforts to “find an amicable resolution,” according to a statement on Chelsea’s website. They also claimed that similar statements from Pugachev were branded "self-serving" and "impossible to believe" by Mrs Justice Rose during a High Court action in 2018. This may transpire to be one more example how dangerous it can be to ‘follow the beaten track’ on the Kremlin and oligarchs and listen to the words of the disgraced Russian refugees who had previously been close allies of President Putin.

If Mr Abramovich and his team secure a victory and an apology from HarperCollins and Catherine Belton this time, it may mean that Russian oligarchs can successfully challenge even the most publicised and believed rumours about them in Western courts. It will definitely keep the European, US and UK governments from introducing new excessive sanctions against ‘Mr Putin’s rich friends’ under a threat of litigation. It is also important that many European and UK businesses may keep their business connections with companies from Russia.

If you would like to discuss any issues regarding CIS practice that your business might be facing, then please contact the head of our CIS desk Dmitry Gololobov at dmitry.gololobov@ilaw.co.uk.

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