OCCRP: Deloitte’s Cyprus Office Helped Abramovich Firms Relocate Billions in Assets in Apparent Bid to Sidestep Tax and Transparency

• Draft financial statements for 2003 show funds amounted to around $1.8 billion on December 31, 2003.
• Interest on Kravin’s income for the first six months of 2005 alone was $10 million, facing a 15% effective taxation.

Deloitte Cyprus, Millhouse, and MeritServus discussed ways to minimize tax exposure for Abramovich-linked companies after the Sibneft share sale, including relocating funds and altering financial statements. Emails show they considered paying out Kravin’s funds as an interim dividend to a BVI holding company to avoid Cypriot taxes.

Leaked correspondence from 2005 reveals plans to create documents indicating Kravin paid Sibneft proceeds as a dividend to Kelvedon Worldwide Limited, then retained the funds on Kelvedon’s behalf. Changes to financial statements and accounting records for 2003 and 2004 were proposed.

• $1.8 billion Funds held by Kravin on December 31, 2003
• $10 million Interest on Kravin’s income for first six months of 2005
• 15% Effective taxation on Kravin’s interest income

• Review financial statements and accounting records for Kravin and Kelvedon Worldwide Limited for 2003 and 2004 for signs of dividend payouts and fund retention.
• Scrutinize email exchanges between Deloitte Cyprus, Millhouse, and MeritServus regarding tax risk mitigation and disclosure options for the Sibneft/Yukos deal.
• Assess the legitimacy of interim dividend payments to BVI holding companies and subsequent investments on their behalf, as described in the leaked correspondence.

This story highlights how professional advisers and offshore structures can be used to relocate large sums and potentially sidestep tax and transparency requirements. Compliance officers must be alert to complex arrangements involving interim dividends, changes to financial statements, and cross-border fund movements, especially when high-risk clients and jurisdictions are involved. The case underscores the importance of scrutinizing documentation and correspondence for evidence of tax avoidance or obfuscation of beneficial ownership.