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The Cyprus connection: the household agency that helped pour Abramovich’s thousands and thousands into Chelsea | Russia


The invitation was for dinner and dancing, at a mansion on St George’s Hill, a gated property in Surrey that has turn into an enclave for rich Russians. The Chelsea Soccer Membership director Eugene Tenenbaum was celebrating his fiftieth birthday, in “disco apparel”. On the flyer emailed to visitors, an previous picture confirmed a small boy standing barefoot, in entrance of what seems to be a pile of hay. The caption beneath learn: “You’ve come a great distance child!”

Tenenbaum had loads to have fun – as an in depth affiliate of Roman Abramovich, he helped handle an empire that ranged from the oilfields of Siberia to the Premier League in England – and he wished to thank those that had helped alongside that journey. Among the many visitors on that September night time in 2009 was Demetris Ioannides. He had flown in from Cyprus, staying at Surrey’s four-star Oatlands Park lodge.

A chartered accountant who opened his personal observe in 1988, Ioannides based the Cyprus department of the accounting group Deloitte. In 2005, he led a administration buyout, organising his personal agency, MeritServus.

However Ioannides retained ties to the London-headquartered group. On his web site, he claimed to be chairman emeritus of Deloitte in Cyprus, and to be a “most popular service supplier”.

For his shoppers, he seemed to Russia and past. “A Cyprus holding firm offers the right gateway to the EU,” the MeritServus web site defined, noting that “Cyprus has double tax treaties with over 40 nations together with Russia, Ukraine, Iran and China”.

For the previous twenty years, Ioannides has been a part of a circle of Cypriot attorneys, accountants and banks targeted on bringing among the largest fortunes out of Russia and into Europe and past.

Final week, a yr after western governments unleashed a barrage of monetary embargos towards Russia in retaliation for the invasion of Ukraine, the music stopped. The UK authorities added Ioannides and his agency to its sanctions listing, alongside a outstanding Cypriot lawyer, signalling rising issues over what the Overseas Workplace calls “oligarch enablers” working within the Mediterranean island state. The Financial institution of Cyprus, adopting the UK measures, froze the related accounts.

Contact Guardian Enterprise

The sanctions got here after the Guardian’s reporting of the Oligarch information, a cache of greater than 300,000 paperwork from the archives of MeritServus and affiliated firms. Materials from the information suggests the agency final yr helped Abramovich hurriedly reshuffle the trusts he used to handle his wealth, elevating questions on whether or not the reorganisation was designed to keep away from asset freezes.

Attorneys appearing for Ioannides and MeritServus stated: “Our consumer has no involvement in any Abramovich household trusts.”

Abramovich has not responded to questions relating to the administration of his funds by MeritServus.

Chelsea FC director Eugene Tenenbaum with former owner Roman Abramovi
Chelsea FC director Eugene Tenenbaum with former proprietor Roman Abramovich. {Photograph}: Leicester/BPI/Rex

Attorneys appearing for Tenenbaum stated he had a “skilled and pleasant relationship” with Ioannides “over a few years”.

All three males are actually topic to sanctions by the UK authorities.


Some name it Moscow on the Med. Russian cash accounted for greater than €1bn held in Cypriot banks in 2021, and Russia is crucial single accomplice for inward and outward funding in Cyprus, in accordance with the newest knowledge from its central financial institution. The second largest metropolis, Limassol, is house to about 50,000 Russian audio system. When the nation opened a “golden passports” scheme in 2013, to promote citizenship in return for funding, a lot of the €7bn raised got here from Russian households.

“You’ll be able to ask questions on whether or not Cyprus has been completely corrupted now by Russian capital. Russian cash is so ingrained in Cyprus, so most of the elite have purchased citizenship there,” says Timothy Ash, an affiliate fellow on the Chatham Home thinktank.

These accountable for imposing sanctions are rising more and more involved in regards to the position Cyprus has performed – and should be taking part in – in facilitating the motion of Russian capital.

“There’s an effort now to be extra environment friendly, to comply with by on political commitments to implement these sanctions EU-wide”, says Dionis Cenusa, an affiliate of the Jap Europe Research Centre, a Lithuanian thinktank. “Cyprus’ Russian ties flew underneath the radar for a very long time, it didn’t get the identical focus from the EU Fee as firms working in Hungary, as an example. That’s shifted,” he provides.

The Oligarch information, which have been shared with the Guardian by an nameless third celebration, shine a lightweight on the sort of providers Cyprus provided Russia’s wealthiest residents.

Whereas MeritServus and its associates advise on tax and accounting, a lot of its work entails the creation and administration of offshore firms and trusts. It handles the paperwork to set them up, offers administrators for them, and even holds their shares. MeritServus is paid to supply a display, a public face as shareholder and director of firms that basically belong to its shoppers, in order that the final word homeowners of beneficial property reminiscent of shareholdings, mansions and yachts can stay hidden from public view. Finservus, the corporate MeritServus used most frequently for this objective, held shares in a whole lot of firms on behalf of its shoppers.

The top workplace is a cream-coloured block in Limassol overlooking the district courtroom. Right here, Demetris works in the identical constructing as his son and daughter, neither of whom are underneath sanctions as people. Panos Ioannides, a Yale graduate, is a director of MeritServus and specialises in funding schemes for these searching for Cypriot citizenship; Persella, who studied on the College of Bristol earlier than taking an MBA at Columbia in New York, manages what seems to be an affiliated firm, MeritKapital, a Cyprus funding agency with a London firm that’s licensed by the UK’s monetary regulator.

Office buildings and a roundabout
A view in central Limassol, with the places of work of MeritServus on the left of the image. {Photograph}: Hernandez Jose Maria/Alamy

Persella stated in response to a request for remark:“MeritKapital Restricted is a definite and separate authorized entity to the opposite “Advantage” firms and it’s run and operated by me, Persella Ioannides, not Demetris or Panos Ioannides.”

Individually, a spokesperson for Persella Ioannides stated that MeritKapital had a “totally different consumer pool” to MeritServus.

Mr Blue

The workers at MeritServus had a codename for his or her largest consumer, which regularly appeared in electronic mail exchanges. In a possible nod to the Chelsea group colors, they known as Abramovich “Mr Blue”.

Data recommend the connection started in 2001, the yr Abramovich arrange Millhouse Capital, which managed his stakes in firms starting from oil and fuel to aluminium and banking. Initially offering officers for Millhouse, over the subsequent twenty years MeritServus would assist transfer the oligarch’s billions into European economies. Emails, banking data, mortgage agreements, firm filings and belief paperwork file the acquisition of trophy property – property, artwork, soccer golf equipment, yachts and jets – alongside investments in startups and extra established companies. MeritServus was there when Abramovich purchased Chelsea, it managed the belief that owns his former £150m house in Kensington Palace Gardens, and one other that holds an $800m artwork assortment.

It didn’t simply deal with transactions for Abramovich. The fabric seen by the Guardian suggests MeritServus undertook work for his associates, together with Tenenbaum. And it acted for Russian businessmen unrelated to their affairs.

One among them was Konstantin Malofeyev, referred to as “the Orthodox oligarch” for his hyperlinks to Russia’s state church system. He seems to have turn into a consumer from 2005, the yr he arrange his non-public fairness group Marshall Capital Companions. A banker turned propagandist, Maloveyev was positioned underneath sanctions by the EU and the US in 2014, after Russia’s annexation of Crimea. The Individuals described him as “one of many important sources of financing for Russians selling separatism in Crimea”. MeritServus seems to have saved him as a consumer till Could 2017, finishing up numerous transactions involving thousands and thousands of {dollars} and euros in 2015 and 2016, whereas he was underneath sanctions, in an obvious breach of Cypriot legal legislation.

MeritServus says it had “inadvertently not recognized” Malofeyev as being on the sanctions listing. As quickly because it turned conscious of its error, in 2017, the agency says it knowledgeable the accountancy regulator and the federal government division accountable for combating cash laundering, and “the place was resolved” with each our bodies.

Previous to being positioned underneath UK sanctions, MeritServus additionally stated it carried out regular providers with correct permissions from regulators.

It added that it was not concerned in “cash laundering or breaches of sanctions legal guidelines, nor has it facilitated, condoned or turned a blind eye to the identical”.

An extended historical past

The ties between Cyprus and Russia are extra than simply industrial. They stretch again over centuries, with a shared alphabet and non secular bonds solid inside the Orthodox Church. After independence from the UK in 1960, the USSR was fast to arrange diplomatic hyperlinks with the newly established Republic of Cyprus.

When the Soviet Union collapsed, the ties solely deepened. Help from Russia got here within the type of arms offers that heightened the long-running tensions between the Republic of Cyprus and Turkey. In 1998, a double taxation treaty between the 2 nations took the connection to a brand new degree.

Limassol in Cyprus
Limassol is house to about 50,000 Russian audio system. {Photograph}: Danil Shamkin/NurPhoto/Rex

By routeing their money by company buildings spanning Cyprus and different tax havens such because the British Virgin Islands, the businessmen who made their fortunes within the chaotic privatisations of the Nineties may slash their tax payments and keep away from public scrutiny of their monetary affairs.

In October 2010, Russia’s then president Dmitry Medvedev acknowledged the significance of the connection throughout an official go to to Cyprus: “We now have superb relations, we now have a mutual understanding on almost all worldwide points, we now have a shared historical past, we now have religious kinship, and we now have the current day.”

It was round this time that annual Russian capital flows by the Mediterranean island started to achieve into the billions. They peaked at over €21bn in 2012, in accordance with the ranking company Moody’s, when it was estimated a 3rd of all deposits have been of Russian origin. A banking disaster, triggered by Greece’s nationwide debt debacle, led to these sums decreasing very considerably within the years that adopted.

A few of the billions that flowed by Cyprus belonged to Abramovich.

Dig again by the oligarch’s lengthy historical past of courtroom disputes in London, and it’s in a 2008 excessive courtroom ruling that his relationship with Ioannides first emerges. The choose, who seems to have been considerably bewildered by the complexity of the offshore preparations utilized by the oligarch, described what he had discovered in the course of the course of the hearings.

portrait
Demetris Ioannides, the managing director of Meritservus.

“The upshot is that there seems to be an internet of firms, largely within the BVI and Cyprus, which maintain numerous pursuits, private and enterprise, some very sizeable, of which Mr Abramovich is, or would seem like, the final word proprietor. The Cypriot firms are in the end owned, as far as the authorized title is anxious, by Deloittes or Mr Demetris Ioannides, who was a director of Meritservus Ltd and Meritservus (Trustees) Ltd, two Deloitte Cypriot service firms, or by different Meritservus personnel.”

After a request for remark from the Guardian, Deloitte requested MeritServus to “stop and desist” from claiming any hyperlinks or utilizing the Deloitte identify in its publicity. MeritServus has since modified the language on its web site, eradicating the outline of Ioannides as chairman emeritus of Deloitte Cyprus. An advertorial from the web site of a Cypriot enterprise publication that described MeritServus as an “offshoot” of Deloitte was additionally taken down.

With its financial institution accounts frozen and its operations now underneath UK sanctions, the longer term for MeritServus is unclear. Cyprus itself is confronted with a troublesome selection: flip away from Russia, or wait patiently for a decision to the battle in Ukraine.

Further reporting by Rob Davies and Harry Davies



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