Commentary on Political Economy

Thursday, 10 March 2022

 

Why has Roman Abramovich not been hit with UK sanctions before?

Analysis: The oligarch’s wealth was questioned by some from the moment he arrived at Chelsea – but officialdom moves slowly

Roman Abramovich with then Chelsea chairman Ken Bates in 2003

Roman Abramovich has been a prominent and controversial figure since 2003, when he bought Chelsea football club, and the document imposing sanctions on him cites contracts he received before the 2018 World Cup. So why has nothing happened before now?

There are various reasons, but much it boils down to one key factor: such things take time, especially when compiling what officials stress has to be a “legally watertight” case against someone with access to extremely expensive lawyers.

“You need an exceptionally high bar for these sorts of things,” one UK official connected to the process said. “Government lawyers are naturally a bit reticent, even if it is a very small risk.”

Reading the entry for Abramovich on the list of new sanctions prepared by the Treasury’s Office of Financial Sanctions Implementation, it is nonetheless notable that none of the justifications for the asset freeze against the 55-year-old billionaire involve new developments.

As a means of demonstrating Abramovich’s close links to Vladimir Putin, the document lists benefits he has received via the Russian president, including tax breaks for his companies, and contracts before the 2018 World Cup, held in Russia.

Similarly, his links to other Russian figures who have now had sanctions placed on them, and his controlling shareholding in steel company Evraz, which the UK government said potentially supplies material for Russian tanks, are both longstanding.

UK officials dispute the idea that there has been an excessive delay in placing sanctions on Abramovich, pointing out that they have done so before he has faced any similar restrictions via the EU or US.

While it is known that the UK government has been compiling information on Abramovich’s links to Putin for some time, one reason for delay cited by officials is the concern that human rights-based amendments to a 2018 sanctions law made the process more difficult – although legal experts, including crossbench peer Lord Pannick, who tabled the amendments, dispute this.

One definite issue has been government capacity, particularly building up a post-Brexit independent sanctions system, something which had in the past been done as part of the EU.

This capacity has been increasing gradually, particularly after the new regime of Magnitsky sanctions imposed in 2020 against individuals accused of human rights abuses, and there are now notably more officials and government lawyers working on the issues.

What has been imposed against Abramovich and six more Russian figures on Thursday is nonetheless comprehensive, banning those named from any sort of financial transaction in the UK and freezing all their assets.

Abramovich is believed to own properties in the UK worth hundreds of millions of pounds, including a Kensington Palace Gardens mansion in central London.

For properties that can be definitively traced to his ownership, not only will he not be able to sell or rent them, but he cannot employ any staff, whether a cleaner or gardener, or even have an electricity supply.

It is undoubtedly the case that whatever the prior investigations into Abramovich’s connections, Russia’s invasion of Ukraine gave UK officials additional impetus in trying to get something done.

It is also true that the source of Abramovich’s enormous wealth, amassed by taking control of various Russian oil assets in the 1990s, was questioned by some from the moment he arrived at Chelsea as a beaming if slightly reticent 36-year-old, one who would transform the club by pumping in an estimated £1.5bn of his own money.

His once ubiquitous presence at Chelsea games, glad-handing the players as they lifted trophies, dried up after he experienced difficulties renewing his UK visa in 2018, although he was able to visit subsequently using his Israeli passport.

If Abramovich were to try to see one last match at Stamford Bridge, the private plane on which he arrived would face being impounded. If he wants to see a future for the club he loves, his only apparent option is to sell it and forfeit any of the resultant money. It may have taken time, but barring unexpected legal challenges, it seems as if officials have made their watertight case.

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