Russia sanctions spark fire sale, asset freezes for UK-based oligarch

Roman Abramovich, owner of Chelsea, waves to fans after the UEFA Champions League Final between Manchester City and Chelsea FC at Estadio do Dragao on May 29, 2021, in Porto, Portugal.

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Billionaire Russian oligarch Roman Abramovich has embarked on a fire sale of his most valuable UK assets in the latest move by Vladimir Putin’s inner circle to distance themselves from their wealth as Western sanctions begin to bite.

The 55-year-old mogul on Wednesday announced the sale of his prized Chelsea soccer club in England, the crown jewel in a string of listings worth billions of dollars that have so far escaped the net of sanctions cast by Western governments in a bid to stem Putin’s war.

The club, which Abramovich bought for £140 million in 2003, is expected to sell for around £3 billion ($4 billion). The billionaire is said to be writing off £1.5 billion in debt owed to him by the club.

Meanwhile, a portfolio of London properties, including a Kensington mansion valued at £150 million and Chelsea Waterfront penthouse bought for £22 million in 2018, could reportedly fetch a combined £200 million.

The sale came a day before Western allies on Thursday added new names to their lists of sanctioned oligarchs, with both the US and the UK targeting Alisher Usmanov, among others with close ties to the Kremlin. The sanctions will see their assets frozen and travel restricted.

In a statement released Wednesday, Abramovich — who has thus far avoided taking a political stance on Russia’s invasion of Ukraine — said the move was in the “best interest of the club,” and added that all net proceeds from the sale would be donated to victims of the war. That follows his move last week to transfer stewardship of Chelsea to a charitable foundation.

The timing of the sale is notable, however, with British opposition Labor party lawmaker Chris Bryant saying that Abramovich is “terrified of being sanctioned,” and is liquidating his assets.

Going after oligarchs’ assets

Abramovich, whose $12.5 billion fortune originally derives from the sale of Russian state assets following the fall of the Soviet Union, has so far avoided the type of sanctions that have hit some of his peers.

But there are signs the tide may be turning as Western authorities strengthen their resolve to target Russia’s wealthy elite as the war enters its second week.

A property being sold by Russian billionaire Roman Abramovich in the Kensington district of London on March 2, 2022.

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On Thursday, French officials seized a yacht they say is linked to Rosneft boss Igor Sechin as part of Europe’s ongoing efforts to identify and capture luxury assets. The US has similarly launched a task force to seize the yachts, luxury apartments and private jets of wealthy Russians with ties to Putin.

Still, the clock is ticking as targeted oligarchs shift their assets to overseas territories and shore up their wealth in cryptocurrencies.

Vagit Alekperov, president of Russia-based Lukoil, is sailing his yacht to Montenegro, according to CNBC analysis, while at least three yachts owned by other Russian billionaires are getting closer to the Maldives.

Not moving quickly enough

The government in Britain—a country home to vast sums of Russian wealth—has come under pressure domestically for not acting quickly enough on sanctions.

Hours before the sale of Chelsea was announced, opposition Labor leader Keir Starmer called on Prime Minister Boris Johnson to impose sanctions on Abramovich.

“We must stand up to Putin and those who prop up his regime. He’s a person of interest to the Home Office because of his links to the Russian state and his public association with corrupt activity and practices,” Starmer said of Abramovich.

But officials from the Home Office and National Crime Agency have warned of the legal and investigative challenges of identifying Russian assets and then linking them to Putin, telling The Times newspaper that it could take “weeks and months.”

According to The Guardian’s analysis, oligarchs already under US and EU sanctions have links to almost £200 million worth of property across London and the surrounding home counties. Britain is currently seeking to fast track a new law that would make it harder for UK property to be used as a store for dirty money.

Viewings of Abramovich’s properties and talks with prospective Chelsea buyers are ongoing.

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