Tuesday 17 January 2017

Abramovich hired disabled workers to qualify for tax breaks, court hears

Brian Farmer in London

Published 03/11/2011 | 05:00

CHELSEA Football Club owner Roman Abramovich set up companies with primarily disabled staff to take advantage of tax exemptions, a lawyer suggested in London's High Court yesterday.

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The Russian billionaire businessman told the lawyer: "We've done it," but said he did not recall why. He said the disabled workers were "real people" who were "paid salaries".

Mr Abramovich (45) is being sued for billions of pounds by exiled Russian oligarch Boris Berezovsky (65) in a trial before Mrs Justice Gloster at the Commercial Court in London.

Mr Berezovsky says Mr Abramovich "betrayed" him and "intimidated" him into selling shares in Russian oil company Sibneft for a "mere $1.3bn" (€950m) -- "a fraction of their true worth".

He alleges breach of trust and breach of contract, and is claiming more than £3bn (€3.5bn) in damages.

Mr Abramovich denies the allegations and denies that Mr Berezovsky is entitled to damages. He says Mr Berezovsky was paid millions of pounds for his services as a "political godfather" but was not a business partner.

The court has heard that Mr Berezovsky "fled Russia, never to return" in late 2000, following a fall-out with then president Vladimir Putin.

Mr Abramovich was giving evidence for a third day and is expected to be in the witness box for the rest of the week.

Management

Laurence Rabinowitz, for Mr Berezovsky, raised the issue of disabled workers as he questioned Mr Abramovich about his management of oil companies in Russia nearly a decade ago.

He asked: "Do you dispute that you established oil trading companies with primarily disabled staff in order to take advantage of certain tax exemptions?" Mr Abramovich replied: "We've done it. I don't recall why it was done. But these were real people, we've paid them salaries."

The court heard how Mr Abramovich employed a company called Valmet to set up a "complex and opaque" web of offshore companies and trusts, which he used to remove hundreds of millions of dollars from Sibneft, the oil firm he bought and set up for $100m (€73m) in 1995 with the assistance of Boris Berezovsky, and sold in 2005 for $13bn (€9.5bn).

By the time of the sale, Mr Berezovsky and Mr Abramovich had fallen out. Mr Berezovsky claims Mr Abramovich forced him to sell his share at a knockdown price.

At the heart of the matter is the practice of "transfer pricing". Mr Berezovsky's lawyer accused Mr Abramovich of selling Sibneft's oil to his own offshore oil trading companies, then buying it back for three times the price.

It is a scheme highly similar to that for which fellow oligarch Mikhail Khodorkovsky was imprisoned late last year, in a case which drew global criticism of the impartiality of the Russian legal system. Vladimir Putin, Russia's Prime Minister, claimed at the time that "a thief must stay in jail".

Irish Independent

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