The BBC and the Bureau of Investigative Journalism* have uncovered an elaborate decade-long scheme suggesting Russian oligarch Roman Abramovich managed to avoid paying tens of millions in taxes related to his superyacht fleet's purchase and running costs.
The scheme reportedly involved five yachts that Abramovich bought throughout the 2000s, including the 162.5-metre Eclipse, 114.5-metre Pelorus, 86-metre Ecstasea, 115-metre Luna and 112.8-metre Le Grand Bleu.
According to the 400,000 files and 72,000 emails leaked from Cypriot corporate service provider MeritServus, each of these vessels was leased to a company in Cyprus called Blue Ocean Yacht Management, which chartered them to a handful of companies that were ultimately controlled by Abramovich.
Among the leaked material was a 2005 memorandum from Jonathan Holloway, then a director of Blue Ocean, laying out a proposed operating structure for the management of Abramovich's fleet.
"We want to avoid paying VAT on the purchase price of the yachts and where possible to avoid paying VAT on goods and services provided to the yachts," the memo read, highlighting the need to make Blue Ocean and the companies hiring the yachts appear "separate" so that potential investigators would view it as a "legitimate structure".
The memo continued: "But we all have to recognise that a determined investigator could eventually discover this is an in-house structure with the possible consequences that would entail."
Under the pretence of a commercial operation, the files suggest Abramovich managed to avoid paying large tax bills on the yachts' running costs in EU waters while enjoying them for personal use. Additional evidence shows certain charter agreements were backdated, including one instance where a director of Blue Ocean requested a backdated signed time charter (an agreement between an owner and a charterer to hire a vessel for a set period) to obtain duty-free fuel for Ecstasea. According to the BBC, this would have saved approximately £35,000 in tax.
Andres Knobel, lead researcher on beneficial ownership at tax transparency group Tax Justice Network, told The Bureau of Investigative Journalism: “When you have intent to escape taxation and you create a scheme to create deception, it looks like tax fraud." Speaking to the BBC, Italian tax lawyer and professor Tommaso Di Tanno suggested that the nature of the "artificial structure" enacted within the scheme could even be considered a criminal offence. "My conclusion is that in the case, there has been a tax evasion… because all the parties know exactly what to do in order to hide the reality," said Di Tanno.
According to reports, this is not the first time Abramovich's yachts have come under legal scrutiny. Italian prosecutors initiated proceedings against three of Abramovich's captains for "unpaid excise duties" on refuelling and tax evasion, though the case was later dropped. Meanwhile, tax officials in Cyprus had opened a separate investigation into Blue Ocean over up to £14.3 million in unpaid VAT, disputing the company's claim to be "zero-rated" because it was a commercial operation.
In both instances, Blue Ocean held that the yachts were being hired out to clients that have now been revealed as companies linked to Abramovich.
Blue Ocean contested the findings of the Cyprus investigation, with the matter eventually making its way up to Cyprus' Supreme Court. However, the company's most recent appeal was dismissed in March 2024 after its attorney said she had "lost contact" with the firm and sought permission to withdraw the case, according to court records obtained by Cyprus investigative reporting network CIReN.
Blue Ocean was officially dissolved four months later, though it is unclear whether they ever paid the money owed to the tax authority in Cyprus.
*The BBC and the Bureau of Investigative Journalism were supported by media partners The Guardian, the investigative newsroom Paper Trail Media, the Italian newspaper L'Espresso, the Organised Crime and Corruption Reporting Project (OCCRP) and the Bureau of Investigative Journalism (TBIJ).