Report: Russian Oligarch Leased His Yachts to His Own Firms to Duck Taxes

Documents uncovered by a consortium of investigative journalists appear to show that Russian oligarch Roman Abramovich - one of the world's wealthiest people - leased his five superyachts out to shell companies that he controlled in order to create the appearance of commercial chartering activity, thereby avoiding millions of dollars in EU value added tax. In a statement, his lawyers told the BBC that Abramovich "always obtained independent expert professional tax and legal advice" and followed it. 

The yachts in question include the 160-meter Eclipse, 115-meter Pelorus, 86-meter Ecstasea, 115-meter Luna and 110-meter Le Grand Bleu, all associated with Abramovich at various points in the 2000s and 2010s. 

BBC obtained leaked emails and files from the Cypriot corporate services provider that handled Abramovich's holding companies. All five yachts were leased to Abramovich's Blue Ocean Yacht Management, which then chartered them out to a variety of other companies, all controlled by a different Abbramovich trust. 

Blue Ocean's director laid out the arrangement in a 2005 memo, obtained by BBC. "We want to avoid paying VAT on the purchase price of the yachts and where possible to avoid paying VAT on goods and services," he wrote, and explained that the owning company and chartering companies should be separated as much as possible "so that an investigator checking on our operation would see it as a legitimate structure." 

He noted that a "determined investigator could eventually discover this is an in-house structure with the possible consequences that would entail."

At least one charter period lined up with a date when Abramovich was photographed aboard the yacht. During at least one other, the yacht in question was nowhere near the described location in the charter party. Cyprus - where Blue Ocean was based - ended up pursuing the company for $15 million in unpaid VAT. 

According to the Guardian, Abramovich may also owe UK authorities up to $1.2 billion in back taxes and interest on profits from some of his investments. The money was routed through a complex holding company structure in Cyprus and the British Virgin Islands, managed by an executive in Britain. 

Top image: Eclipse in Gibraltar, 2012  (Moshi Anahory / CC BY SA 2.0)