One of the companies in the network, Netherfield, was involved in a complex offshore transaction that raised $50 million for a company controlled by Igor Shuvalov, one of Putin’s top advisers. The case was reported in Barrons in 2011. The story did not name Abramovich as the owner of Netherfield, but State Street investigators eventually discovered it belonged to him. Within months of the story’s publication, Netherfield was shut down and its investments transferred to a newly formed company in the British Virgin Islands, State Street investigators have found.
The money used for network investments came from the accounts of a small commercial bank in Austria called Kathrein. But when certain investor accounts were created, Kathrein did not name Abramovich as the ultimate owner of the money on any documentation. Kathrein has not commented on this story, citing Austrian bank secrecy laws.
A company called Concord Management appears to have been set up to oversee the investments. Still, State Street struggled to find basic details about Concord — including whether he even existed.
Investigators were “unable to identify or verify the existence of CONCORD and the entity has a non-functional website”, they wrote in a suspicious activity report. “Several of the people named as contacts have a limited internet presence.”
“Furthermore, the address provided for CONCORD…is a commercial office park.”
In a statement sent to BuzzFeed News, a spokesperson for Concord Management said the company “provides independent third-party research, diligence and investment monitoring, but does not invest in any funds.”
Ultimately, State Street investigators reported Abramovich, his offshore companies, Concord Management and Kathrein Bank to the Treasury for suspicious activity in December 2015.
They also noted that Och-Ziff and several other US investment funds, including BlackRock, had counted Abramovich’s offshore companies among their clients. State Street has not named these funds for suspicious or criminal activity, and there is no evidence that they acted against financial regulations or laws.
Representatives for BlackRock and Och-Ziff, now renamed Sculptor Capital Management, declined to comment on Abramovich. “BlackRock has a robust compliance program, adheres to all applicable regulations, and takes necessary steps to ensure compliance with relevant sanctions,” a spokesperson said. None of the funds said whether Abramovich remained a client, although some U.S. investment firms having frozen his money.
A fund employee who worked with Abramovich said that all transactions were legal at the time and that it was no secret in financial circles that Abramovich was investing in the United States. “People knew who Concord was and they knew he was a part of it, and there may be cases where his name is on papers,” the employee said. “There’s a dynamic where he’s retroactively toxic in some people’s minds.”
In March 2016, State Street followed up with a series of additional suspicious activity reports offering further details of the bank’s ongoing investigation. The bank said it had halted a number of transactions related to Abramovich’s offshore network until investigators received documents showing how the companies were linked to Abramovich. The bank had asked Abramovich’s advisers in the UK for documents detailing how he owned the businesses.
Once these documents arrived, the money continued to flow. Investigators observed Abramovich restructure his investments in new companies held by an offshore trust which, they wrote, “allows RA to anonymously own/control the entities.” The bank expressed concern that these measures “serve more to alienate RA as a source of wealth and beneficiary of assets.”
In the UK, Abramovich’s assets are now frozen. His properties, including a £125million mansion in Kensington Palace Gardens, are in limbo.
The same goes for Chelsea Football Club, which must operate under strict government controls to ensure that Abramovich does not receive any revenue from the club. Season ticket holders can still attend matches, but the club is not allowed to sell new tickets. Its millionaire football stars may have to stay in budget hotels for away games. Business owners around the world are preparing bids for Chelsea, which was once Abramovich’s most valuable western asset. The British government reportedly said that proceeds from any sale would not go to Abramovich.
When and how US authorities might act remains unclear. The political pressure has intensified: last week, three congressional Democrats sent a letter to President Joe Biden urging him to sanction Abramovich, saying “US sanctions against Abramovich are conspicuous by their absence.”
“I don’t know why the United States hasn’t acted yet,” Rep. Steve Cohen, a Tennessee Democrat, told BuzzFeed News. “I understand that we may need to act in concert with our allies, but in this case, we seem to have been late to the table.”
Meanwhile, Abramovich’s most mobile assets moved away from the West. His yachts left European ports for the deep seaand his jets flew to Russia and Istanbul.
Abramovich was once a familiar figure in the director’s box at Chelsea, but at this time the whereabouts of the enigmatic oligarch are unknown. It was last seen in the luxury lounge at Ben Gurion Airport in Tel Aviv with a mask on his chin. He would have flew to Turkey, or maybe to Moscow. ●