22 May 2004 19:01
Chelsea owner in Kremlins sights over tax: Investigation into Abramovich governorship finds
discrepancies
ByLine: NICK PATON WALSH IN MOSCOW
Roman Abramovich, the billionaire owner of Chelsea football club, yesterday came under renewed scrutiny from Russian
officials when a government watchdog said the authorities in the remote region he governs "misappropriated"
pounds 28m and allowed the oil company he controls to legally evade pounds 263m in tax.
The Audit Chamber, the accounting watchdog of the Russian parliament, yesterday made public the conclusions of a
long-awaited investigation into the billionaire's governorship of the far-eastern region of Chukotka.
The report's conclusions reawakened fears that Mr Abramovich, Russia's second richest man, is the next of
the oligarchs the Kremlin seeks to humble.
Mikhail Khodorkovsky, Russia's richest man and the former chief executive officer of the big Yukos oil company,
has been in jail since October, and will face preliminary hearings next week for his trial over tax evasion charges. The
report declared Chukotka was technically "bankrupt", as its 9.3bn rouble debts were more than double its
annual revenues. Sergei Ryabukin, the report's author, told reporters that the region's officials had
"misappropriated" 1.5bn roubles (pounds 28m) through the "nonobservance by the Chukotka government of
budget legislation and [system] errors in budget planning in the region". The Audit Chamber subsequently asked the
federal government to reduce financial aid to the region next year by 104m roubles (pounds 2m) in response.
Mr Ryabukhin added that 22 companies, most of which were related to Sibneft, the oil giant in which Mr Abramovich
holds a large stake, were registered in Chukotka yet had no apparent business activities there. "They received tax
breaks on property and profits," he said, according to Interfax, adding that these amounted to 13.7bn roubles
(pounds 263m).
Asked by journalists if Mr Abramovich could sleep soundly after the report, Mr Ryabukhin said: "The prosecutor
will make the final conclusions, on receiving our material." The prosecutor's office said they had yet to
receive the material, but routinely investigate claims that are based on solid evidence. The report did not in itself
implicate Mr Abramovich, or his officials, in a criminal breach of the law.
A spokesman for Mr Abramovich said the report was based on "minor technical issues" and that no money was
claimed to be "missing". He said it was "improper" to call Chukotka bankrupt as "the debt was
inherited, and since then 10% has been paid off and 13% has been restructured". He said the "improper
utilisation" of funds was based on late payments and technical issues.
The findings come at a crucial time in the Kremlin's attempts to consolidate their grip on Russia's
powerful regional governors and businessmen two weeks after Mr Putin's reinauguration as president. While few
believe that the Kremlin seeks to publicly arrest and humiliate another oligarch with the same ferocity as they pursued
Mr Khodorkovsky, many analysts consider the attack to be aimed at expediting Mr Abramovich's withdrawal from
Russian big business.
He became governor of the region in December 2000, a position that granted him immunity from prosecution, and, after
investing considerably in the region's infrastructure, has said he does not intend to run again for election in
2005. Speculation has been rife that he is looking to sell off his Sibneft assets and spend more time in London.
Some analysts suggest that the head of the Audit Chamber, Sergei Stepashin, has a grudge against Mr Abramovich, the
official offering to send his own airplane to bring Mr Abramovich back from London to hear the Audit Chamber's
findings. Yet others said the report was a clear sign that the Chelsea billionaire was now in the Kremlin's
crosshairs.
Lilia Shevtsova, a senior associate with the Moscow Carnegie centre, said: "The fact that Stepashin has started
to follow Abramovich suggests that Putin is keen to cut his links with the old Yeltsin era [of which Mr Abramovich was a
key player]. It also shows that Putin is serious about striking a new relationship with Russia's oligarchs,"
under which they could be asked, among other things, to increase tax payments.
She said it would appear "illogical" for the Kremlin to prosecute Mr Khodorkovsky if Mr Abramovich was not
pursued in some way.
[The Guardian] |
RUSSIA IN FACTS
