With billions of pounds frozen by the UK left in limbo, a softening stance from the White House could allow sanctioned oligarchs to discreetly sell off their British assets
A week after Russia’s invasion of Ukraine, Roman Abramovich bid farewell to Chelsea FC – and in so doing the rest of his glittering assets in Britain – with a parting wish. He said: “I hope that I will be able to visit Stamford Bridge one last time to say goodbye to all of you in person.”
Almost exactly three years later, the famously reticent plutocrat – widely regarded as perhaps Russia’s most high-profile oligarch – remains an elusive figure and a name at the heart of the debate the effectiveness of efforts to slam Britain’s doors in the face of those regarded as close to Vladimir Putin with repeated salvoes of sanctions.
The sanctioned billionaire (described by the UK government as a “pro-Kremlin oligarch”) this week once more found himself in the headlines following the insistence of ministers that – despite nearly three years of deadlock – they were proceeding “at pace” with efforts to secure an agreement to deploy the net proceeds of Abramovich’s sale of Chelsea FC in a charitable fund to help victims of the Ukraine war.
Despite Abramovich’s pledge in March 2022 to put the £2.5bn he netted from his disposal of the Premiership side into an independently-administered fund to help “all victims of the war”, the money remains stranded in a Barclays bank account amid wrangling between the Government and the administrators of the putative foundation over where it can operate.
The 58-year-old oligarch, who famously almost never gives interviews and is now thought to spend his time moving between Russia, Turkey and Israel, has long vigorously disputed his designation by the UK and other Western governments as an ally of Vladimir Putin and has fought unsuccessfully to have the sanctions against him removed. After losing one such case a year ago, he released a statement insisting he “does not have the ability” to influence the Kremlin and has not benefited from the Ukraine war.
Billions left in limbo
Campaigners told The i Paper it was baffling that the funds, which could help Ukrainians enduring their third winter of Russian attacks and privation, remain in limbo.
Lyra Nightingale, a legal expert with Redress, a charity campaigning for reparations for victims of war and holding those responsible to account, said: “It has been committed for humanitarian purposes in Ukraine and yet three years later we’re still waiting for its deployment. And there is no clarity as to why it is stuck. There is a very real lack of transparency.”
It is a high-profile dispute which, however, relates to just one part of a vast array of assets – from the Westminster penthouses and Mayfair mansions of oligarchs to bank accounts owned by the Russian state – currently being held in limbo in Britain as a result of the international sanctions regime designed to hobble the Russian economy and interfere with the globetrotting lives of the Kremlin’s gold-plated allies.
Figures shared with The i Paper by Redress suggest that some £49bn of Russian assets – consisting of £26bn belonging to the Russian state and £22.7bn in property, cash and other holdings belonging to private individuals and their proxies – is currently the subject of UK freezing orders.
Various attempt to bring further pressure on around 1,800 Russia-linked individuals who are the subject of UK sanctions remain under consideration but have mounted to little.
The Government pledged last month to re-consider a suggestion that vacant properties, among them a £30m penthouse overlooking the River Thames owned by Abramovich, could be used to house Ukrainian refugees. However, similar moves under the Conservatives did not come to fruition.
Similarly, proposals to introduce a voluntary scheme for those subject to sanctions to surrender their assets in return for removal from the proscribed lists have not progressed.
It is a quirk of the sanctions regime that while the assets of oligarchs can be frozen, it is extremely difficult under British law to confiscate them, meaning that while various mansions in London and the Home Counties gather dust, they remain formally under Russian ownership. The Chelsea money is an unusual exception because Abramovich voluntarily agreed to its surrender as part of a deal with the UK government to ensure the club could survive.
Lord Hermer, the attorney-general, has been criticised by some in government for allegedly holding up plans to seize Russian assets by warning ministers it could leave the UK at risk of breaching international agreements on property rights and Russia’s sovereign immunity.
But even as the UK lobbies for moving towards the direct seizure some of the $320bn (£249bn) of Russian state funds to pay for the rebuilding of Ukraine, the sanctions landscape is shifting, perhaps dramatically.
US sanctions easing could put pressure on UK
It is already the case that behind the scenes, Britain has continued to trade legally with Russia, albeit at a fraction of the level prior to the Ukraine invasion in February 2022. Last year, the UK exported goods and services worth £1.4bn to Russia, while imports coming in the opposite direction were worth £467m.
But as Donald Trump pursues his agenda of striking a peace deal with Putin, there is increasing evidence that the White House is contemplating lifting at least some of the sanctions currently imposed on Moscow.
It was reported this week that the Trump administration has instructed officials to draw up a list of sanctions that could be eased unilaterally as part of the US engagement with the Kremlin. Sources told Reuters that these include curbs on entities and individuals, including some oligarchs.
The result is a make-or-break moment in the West’s attempts to hem in Russia using its economic levers. On the one hand there are suggestions that the vast amount of Russian state wealth being held in the West, largely in a Brussels-based clearing house called Euroclear, could be used as a bargaining chip to hold Moscow to the terms of any peace deal
But the question is also being raised – quietly – of whether oligarchs like Abramovich and others considered by the UK authorities considered to be close to the Kremlin, including aluminium magnate Oleg Deripaska, who once entertained George Osborne and Peter Mandelson on his yacht, could be allowed to discretely sell off their British assets – if not return outright to the streets of Knightsbridge and beyond.
A senior London-based legal source working within sanctions law told The i Paper that Moscow could press Washington for restrictions on its wealthiest supporters to be included in any early relaxation of wealth orders and travel bans. Consequently, London could find itself under pressure to follow suit.
The source said: “I think Moscow will be most interested in relief from sanctions targeting energy and banking. But it may well be that there are some within the oligarch class who are close to Putin and are in Russia that they may be lobbying the Russian government to have their Western assets included in any fall-out from a peace deal.”
Despite the historic ties between the US and the UK, Trump’s foreign policy stance has placed the ‘special relationship’ in unchartered waters, with Sir Keir Starmer accepting the UK and Europe can no longer rely on the US for security and recently announcing a new raft of sanctions against Kremlin-linked officials despite White House efforts to smooth relations with Putin.
The source added: “Where the UK sits in this is super interesting. Historically of course it has been the UK position to align itself closely with Washington and, by and large, I think we can expect the British government to act consistently with the United States. But it is very difficult indeed to predict how that might play out.
“At the end of the day, I think the only real leverage that the Europeans have is through sanctions and any relaxation may come slowly and as a means of extracting concessions from the Russians.”
‘Londongrad is finished’
Campaigners agree the UK may come under pressure from the Trump administration to follow suit should it offer to ease the economic noose around Moscow – but that any such move would have disastrous implications.
Dr Helen Taylor, senior legal advisor at Spotlight on Corruption, argues the sanctions regime has been quietly effective in disrupting the Westernised lives of those who benefited from “kleptocratic wealth” amassed under the Putin regime. But the system relies on unity and uniformity across the West.
She said: “It would be a real mistake if the US, UK and allies lifted sanctions, whether it be the embargoes on oligarchs or on central banks, in a way that ends up giving some sort of free pass to Putin.
“If the US pulls back on sanctions there is going to be huge pressure for the UK and European Union to follow suit. But even if they don’t, the impact of those sanctions is going to be hugely diluted. The one thing we have learned from the last three years is that the whole point and the whole effect of sanctions arises from co-ordination and the pincer effect of everyone moving together at the same time.”
Despite the prospect of a softening sanctions regime, Abramovich’s chances of making good on his desire for one last visit to Stamford Bridge continue to look remote.
A separate London-based legal source, who has previously worked with wealthy Russians, said: “Londongrad is finished. That lesson has been learned the hard way.
“I think it’s fairly sure you won’t hear much Russian being spoken in the Chelsea boardroom, or anywhere else, any time soon.”
Frustrations over frozen assets
The Chelsea billions offer a glimpse of the challenges that surround putting funds surrendered or seized to work in aid of Ukrainian victims.
Speaking almost a year ago, then Foreign Secretary Lord Cameron, told Parliament that the failure to enact the desire of Abramovich, whose mother’s family originated from Ukraine, for a “foundation for all the victims of the war in Ukraine” was “immensely frustrating”.
It is understood the sticking point remains a desire on the part of those setting up the foundation for part of the funds to be spent outside Ukraine in places such as African countries impacted by fluctuating grain prices as a result of the war. The UK government, which is required to grant a licence before the foundation can be established, is clear that all the money must be spent in Ukraine.
The Foreign Commonwealth and Development Office did not respond to a question about when it had last engaged directly with Abramovich or his representatives over the fund.
A spokesperson said: “This government is working hard to ensure the proceeds from the sale of Chelsea FC reach humanitarian causes in Ukraine as quickly as possible… UK officials continue to hold discussions with Mr Abramovich’s representatives, experts and international partners, and we will double down on our efforts to reach a resolution.”
Neither those in charge of setting up the foundation nor Abramovich’s representatives responded to questions about the impasse over the establishment of the charity.