Oligarch claimed no financial ties to Abramovich despite over $500m in loans

Both Eugene Shvidler and Roman Abramovich have been sanctioned for their links to Putin’s regime

In a landmark legal challenge to overturn his sanctioning by the UK, a billionaire businessman told the High Court he’d never received financial benefit from the oligarch Roman Abramovich.

But a joint investigation by the Bureau of Investigative Journalism and the Organized Crime and Corruption Reporting Project (OCCRP) can reveal that the oil and steel tycoon Eugene Shvidler personally borrowed at least $637m from Abramovich, of which at least $545m appears to have been essentially gifted to his family.

One loan appears to have paid for Shvidler’s $300m investment in the steel giant Evraz, which is listed (but currently suspended) on the London Stock Exchange and has significant operations in Russia. Another appears to have been used to help fund a post-nuptial agreement.

The loans can be revealed thanks to the Cyprus Confidential files, a cache of 3.6m leaked offshore records shared by the International Consortium of Investigative Journalists (ICIJ) and Paper Trail Media.

Pivotal court case

Shvidler is a long-standing associate of Abramovich, the pair having been in business together for decades. He served as president of Abramovich’s oil company Sibneft when it was sold to Russian state-owned Gazprom for $13bn in 2005.

Since then, he has held several roles at other Abramovich-linked companies, including Evraz and the asset management firm Millhouse LLC. After Abramovich bought Chelsea FC in 2003, Shvidler briefly became a director at the club and later obtained UK citizenship.

Earlier this year, he brought what is being seen as a pivotal case against the foreign secretary over sanctions imposed on him after Russia’s invasion of Ukraine.

His case was dismissed after a one-day hearing in July, but last month the Court of Appeal approved Shvidler’s application to appeal.

If his lawsuit succeeds, it could open the door to similar challenges by other sanctioned oligarchs. At stake are billions of pounds worth of assets frozen by the UK government, some of which the west wants to seize to fund Ukraine’s reconstruction.

Helen Taylor, a senior legal researcher for the campaign group Spotlight on Corruption, told OCCRP: “If Shvidler wins on appeal, then I think it means there is everything to play for and we’ll see a lot of oligarchs trying to bring challenges … People are watching for indications of how the courts will handle this area of policy.”

If the appeal fails, however, Shvidler’s lawyer said it would be “virtually impossible for any person sanctioned by the foreign secretary to bring a successful court challenge”.

“Given the very important issues raised in this case and the ongoing impact of sanctions on him and his family, he hopes to have a hearing before the Court of Appeal at the earliest opportunity,” the lawyer added.

Denial of links to Abramovich

When it sanctioned Shvidler in March 2022, the Foreign Office cited grounds including his financial ties to Abramovich, as well as his former non-executive directorship of Evraz.

Evraz itself is majority owned by Abramovich and two other now-sanctioned Russian oligarchs, Alexander Abramov and Alexander Frolov.

Through these two avenues, it argued, Shvidler may have been supporting or benefiting from the Russian government. The sanctions scheme is intended to ratchet up pressure on Putin and his circle.

As a result, Shvidler – a US-UK dual national, though he was born in the former Soviet Union – is subject to travel restrictions in the UK. His UK assets have been frozen and UK citizens and companies are banned from doing business with him. He claims the sanctions are disproportionate and discriminatory.

At a hearing on July 20, Shvidler argued he’d received no “financial or material benefit” from Abramovich, saying any payment he received was from companies he worked with, such as Evraz, and not from the former Chelsea football club owner.

Good accounting makes good friends

But material reviewed by reporters shows close financial ties between the two men. The documents, from Cyprus Confidential, a leak from several Cyprus-based financial services providers, show Shvidler appears to have borrowed at least $637m from Abramovich.

Shvidler, who is thought to be worth more than £1bn himself, received large loans from companies owned by Abramovich on several occasions, starting in 2006.

In 2021, rather than make Shvidler repay $545m in accrued debts, Abramovich bundled them together as “promissory notes” – financial instruments that act like IOUs, with a debtor agreeing to repay a specific amount of money by a certain date.

These notes were then promptly transferred to a new company, called Brick Lane Holdings Ltd, incorporated in the British Virgin Islands. This was in turn controlled by one of Abramovich’s Cypriot trusts, called the Zeus Trust. He then agreed to donate the shares in this new company to Shvidler's children.

According to the documents, the shares are due to be transferred to the children either 29 years after the document was signed, or 30 days after Shvidler’s death. In the meantime the Zeus Trust appointed a Shvidler-managed company as its representative in the company’s affairs, with the power to act on its behalf.

The effect was to move much of Shvidler’s vast debt, amassed over more than a decade, into a company that had been promised to his own children, effectively gifting the sums to the Shvidler family. Asked by reporters by email if this meant the loans from Abramovich will effectively never have to be repaid, Shvidler did not respond.

How he spent it

One of the loans for $300m, offered by Abramovich-owned company Cantley Investments in 2006, appears to have been used to purchase shares in Evraz.

The loan agreement was struck on the same day Shvidler paid $300m to Greenleas International Holdings Limited, another Abramovich-owned company also based in the British Virgin Islands, for 1,056 shares in Lanebrook, the company that owned the majority of Evraz’s shares.

According to company accounts for Lanebrook, it paid out nearly $4bn in dividends to its shareholders between 2006 and 2017. As the owner of nearly 5% of these shares, Shvidler would have been entitled to almost $200m. As a result, these profits could have derived entirely from the $300m loan from Abramovich.

In his witness statement submitted to the High Court in June, Shvidler claimed to have purchased his shareholding in Evraz with his own funds.

Another $100m loan was extended – interest-free and unsecured – by the Abramovich-owned Farleigh International, another British Virgin Islands company. The loan agreement states that the money is for the purpose of “financing post-nuptial agreement”.

‘Relationship of trust and confidence’

The leaked files appear to contradict Shvidler’s claim in court that he did not financially benefit from his relationship with Abramovich. However, Taylor, the legal expert from Spotlight on Corruption, said Shvidler was not legally required to present information to the court about the loans he took from Abramovich.

Shvidler was only obligated to address the specific allegations documented in the sanctions about his association with Abramovich, she said. The loans were outside the scope of those allegations.

Shvidler’s legal team have argued that the sanctions against him would still be unwarranted, even if it could be shown that he had a close association with Abramovich.

They say Shvidler has no influence over the actions of the Russian government and there’s therefore no point sanctioning him, particularly given the impact on his family life.

Two of his children were forced to leave expensive private schools, Harrow and Marlborough, and continue their education in the US, his lawyers claim, because the schools would not accept fees from Shvidler after the sanctions.

Lawyers for Shvidler also say the sanctions are discriminatory because they rely partly on his role at Evraz. Other directors who are not ethnically Russian went unsanctioned despite also working for the company, they say.

Mr Justice Garnham dismissed the claim in a verdict handed down on August 18. In it, he said the issue of financial benefit was one of five key matters informing his decision.

He concluded that the benefit did exist because Shvidler’s roles at Evraz and Sibneft were effectively in Abramovich’s patronage. The sanctions against him remain –– unless he succeeds in his ongoing appeal.

“In my judgment, the secretary of state was plainly entitled on all the material to which he refers to conclude that there was a continuing relationship of trust and confidence between President Putin and Mr Abramovich,” Garnham wrote in his decision.

Abramovich and Shvidler did not respond to requests for comment.

This copy was amended on 29 April 2024 to correct the company name of Farleigh International

Header image by Klawe Rzeczy

Reporters: Simon Lock and Tom Stocks
Impact Producer: Lucy Nash
Enablers editor: Eleanor Rose
Deputy editors: Chrissie Giles and Katie Mark
Editor: Franz Wild
Production editor: Frankie Goodway
Fact checker: Alice Milliken

Our Enablers project is funded by Open Society Foundations, the Hollick Family Foundation, Sigrid Rausing Trust, the Joffe Trust and out of Bureau core funds. None of our funders have any influence over the Bureau’s editorial decisions or output.