Members of the Parliament have asked if authorities managed to reclaim millions in taxes from the now-defunct company that was owned by the Russian billionaire. Previous reporting by CIReN and OCCRP revealed the company’s involvement in a fake superyacht-leasing scheme.
A Cypriot MP is demanding that a parliamentary committee follow up on the tax obligations of the Cypriot company ultimately owned by Russian billionaire Roman Abramovich, after authorities failed to clarify whether the millions of euros worth of tax owed have been paid.
An investigation in January had revealed that the company Blue Ocean had set up a fake superyacht-leasing business in an apparent attempt to evade millions of euros in tax.
The findings were based on leaked emails from people working for Abramovich, which reveal an explicit intention to deceive Cypriot tax inspectors. The emails were obtained by the whistleblower group Distributed Denial of Secrets and initially shared with OCCRP and The Guardian.
Lawyers for Abramovich told reporters at the time that they reject “any allegation that [Abramovich] had or ought to have any knowledge of, is personally responsible for and/or is personally liable for any alleged deception of any government authority in order to evade payment of taxes which were lawfully due or for any other purpose.”
The scheme that began in 2005 lasted till 2012 when Cypriot tax officials found that the yachts were not in fact used commercially and ordered Blue Ocean to pay 14 million euros (18.5 million dollars) to cover the unpaid tax. Lawyers for the company tried to overturn the order in courts for 12 years, but their appeal was dismissed in March 2024.
The Supreme Court dismissed the company’s arguments against paying the outstanding VAT after they didn’t show up to the court hearing.
Blue Ocean was dissolved in July 2024, however such a development could not have legally taken place unless the unpaid tax had been settled, which authorities have failed to confirm.
Referencing CIReN’s story in her letter, Cypriot MP Alexandra Attalides of Volt party has formally requested to include the issue on the agenda of the Committee of Ethics (the Standing Committee on Institutions, Merit and the Commissioner for Administration – Ombudsman). The request was accepted but it is yet to be decided whether the Ethics or the Public Control committee will discuss the issue.
On January 30, Attalides and another opposition MP, Christos Christofides of AKEL, had submitted written questions to the Minister of Finance Makis Keravnos requesting information on whether Blue Ocean had met its tax obligations to the Republic of Cyprus.
Attalides had asked the minister to inform the House of Representatives “as to whether the specific company has settled its debts to the state, and in the event that this has not occurred, what actions were taken by the competent authority prior to the company’s dissolution in order to ensure the repayment of the aforementioned debt”.
Christofides had raised questions to the minister “as to whether the outstanding tax was paid before the company was dissolved, or whether another settlement was reached — and, if so, what that settlement entailed”.
The minister has not responded in the two months that have passed.
“Unfortunately until today there is no reply to this question” Attalides told CIReN. “I submitted a request to the Committee of Ethics to debate the issue so that we get the necessary answers to the handling of this case by the government” she added.
Under Cypriot law, the VAT Commissioner is not obliged to disclose information, citing tax secrecy, unless requested to do so by the Minister of Finance.
The VAT law in Cyprus is very strict when it comes to unpaid tax. Anyone subject to VAT must pay within 30 days of the notice, or they risk imprisonment for committing a criminal offence. For legal entities, criminal liability falls on directors or managing executives. The term “managing executive” includes any director, secretary, similar officer, or anyone acting in such a capacity.
“Tax avoidance is an infringement of the penal code and zero tolerance should be shown to anybody violating the law,” Attalides said.
The company’s annual reports and financial statements until 2019, the last year available, indicate that Blue Ocean did not remit the amount owed. According to the law, “any person involved in the fraudulent evasion of VAT or who acts with the intent of fraudulently evading the payment of VAT, either by themselves or through any other person, is guilty of a criminal offence and is subject to a fine up to three times the amount of VAT due, imprisonment for up to three years, or both penalties.” The responsibility for prosecuting suspects lies with the state Legal Office.
The scheme also involved another Cypriot company, MeritServus, which established two offshore trusts controlled by Abramovich through opaque entities. Blue Ocean leased the superyachts to companies in the British Virgin Islands, which were owned by Sara Trust and Neptune Trust.
Cypriot chartered accountant Demetris Ioannides, the managing director of MeritServus, was sanctioned by the U.K. government in 2023 for setting up “murky offshore structures” for Abramovich. The Institute of Certified Public Accountants of Cyprus (ICPAC) told CIReN in an email that Ioannides’s licence was terminated at the end of 2023.
“ICPAC informed the Cyprus Securities and Exchange Commission for the above decisions, since the provision of administrative and trust services falls under their remit. ICPAC maintains no record for the above entities and is not aware of any developments regarding any trust structures they may still maintain,” wrote Kyriakos Iordanou, general manager for ICPAC.