Newsroom
A massive tax evasion scheme tied to Roman Abramovich’s superyachts has been uncovered, shedding light on how the Russian billionaire exploited Cyprus’ offshore business environment.
According to an article in Organized Crime and Corruption Reporting Project (OCCRP), leaked documents reveal that from 2005 to 2012, Abramovich’s companies set up a fake yacht-leasing business in Cyprus to dodge EU taxes on his luxury vessels.
The yachts, worth $1.2 billion, included the Eclipse, which was once the world’s longest yacht with two helipads and a pool-turned-dance floor. While operating these yachts in European waters, Abramovich’s team concocted a scheme to claim EU tax exemptions meant for commercial vessels. They leased the yachts to supposedly independent customers, but these “customers” turned out to be companies owned by Abramovich himself through offshore trusts based in the British Virgin Islands. Essentially, the yachts were only ever used by Abramovich, his family, and associates.
Cyprus played a pivotal role in this operation. Abramovich’s Cyprus-based company, Blue Ocean Yacht Management, was at the center of the leasing arrangement. On paper, Blue Ocean appeared to be a legitimate yacht management business in Limassol. But leaked emails from Abramovich’s staff openly discussed the need to make the operation look “independent” to avoid scrutiny. Despite this effort, Cypriot tax authorities eventually caught on. In 2012, they fined Abramovich’s company €14 million for unpaid VAT. The fine was unsuccessfully contested in court, with the appeal finally dismissed in 2024. It’s unclear whether Abramovich has settled the bill.
A “Smoking Gun” for Tax Evasion
The leaked documents, obtained from Cypriot service provider MeritServus, show Abramovich’s staff knew their setup was risky. In one 2005 email, a director openly acknowledged the scheme was vulnerable to investigators, saying, “a determined investigator could eventually discover this is an in-house structure.”
The leaks also included a spreadsheet revealing the yachts’ users, with Abramovich himself, referred to as “RA,” as the most frequent traveler. Despite being registered as “commercial vessels,” the yachts were used exclusively for private purposes, including by Abramovich’s friends and business associates.
Blue Ocean created backdated and even fictitious charter agreements to justify financial transactions. In one instance, a time charter was retroactively altered to fit the company’s cash flow needs. Another agreement listed a customer company that didn’t even exist at the time of the contract.
The Role of Cypriot Professionals
The scheme relied on Cyprus’ business-friendly offshore framework and local professionals. The leaked files implicated Cypriot accountant Demetris Ioannides, who was sanctioned by the U.K. in 2023 for helping Abramovich set up “murky offshore structures.” Ioannides declined to comment on the allegations.
Cypriot law firm Chrysses Demetriades was also involved, providing general tax advice to Blue Ocean and later defending the company in court. The firm denied any wrongdoing, claiming they were only involved after the tax dispute emerged.
Broader Implications
Abramovich’s yacht-leasing scheme isn’t just about avoiding taxes; it exposes how offshore jurisdictions like Cyprus are used to mask ownership and evade scrutiny. The secrecy provided by the British Virgin Islands and Cyprus allowed Abramovich’s trusts to hide their true beneficiaries. Experts say this lack of transparency creates a high risk for tax evasion.
The leaked emails and financial records make it clear that Abramovich’s operation was carefully designed to exploit legal loopholes. While Abramovich denies personal involvement, the evidence points to a coordinated effort by his team to avoid paying millions in taxes.
Read the full article here.
Source: Organized Crime and Corruption Reporting Project (OCCRP)
