Russian oligarch Aleksander Zhukov deprived the UK of taxes
The Guardian has published a dossier of Russian oligarch Aleksander Zhukov, father-in-law of Roman Abramovich. The British journalists have found that the oil tycoon – living in the UK for the last 23 years – was actively using the local liberal legislation to evade paying taxes. According to the Guardian, he had been doing this for 13 years.
Zhukov moved to London in 1993. For the next eight years, he enjoyed non-dom status, paying tax only on his UK income. After getting a UK passport in 2001, Zhukov declared himself a tax resident in Moscow. Finally, a spokesman for Zhukov confirmed that he had become a non-dom again from 5 April 2016. The date is two days after the sensational Panama Papers were published.
According to the scandalous documents, the Russian oligarch is linked with a sprawling network of offshore companies registered in the British Virgin Islands back in the 1990s. In particular, he is the owner and ultimate beneficiary of Kentgrove Investments Limited: the Panama Papers include a correspondence dated 2009 where Zhukov offers Mossack Fonseca law firm to become an agent for that company and sends them a scanned copy of his British passport. Journalist Luke Harding notes that Kentgrove Investments Limited is a holding company for another firm – Odisseya LLC, which controls a transshipment terminal near Odessa.
The name of Zhukov is also mentioned in the Panama Papers in relation to another company registered in a British offshore territory – Sintez Corporation. It is reportedly linked with Sintez (UK) Ltd. belonging to the oligarch and Eureast International SA – an Odessa-based oil company.
British organizations struggling for transparency of the British taxation system and against unscrupulous foreign moneybags have already taken the trick performed by Zhukov on notice. The point is that, according to the British legislation, the oligarch has done nothing wrong: it is not a crime to own offshore companies and change the status. But because of this trick, the national treasury and ordinary citizens of the UK fell short of millions of pounds. According to Aleksander Ratskevich, the Director of InterFinance Ltd. managing the assets of Zhukov, for the whole 23 years, he has paid only £1 million (some 86 million rubles) in taxes.
Alex Cobham of the Tax Justice Network said: “Direct taxation for wealthy individuals has simply become a game. The willingness of jurisdictions such as the UK to provide opaque, low or no-tax arrangements for an international elite is an affront to the public”.
Chido Dunn of Global Witness said that checks carried out on rich foreigners who bought luxury homes in London were woefully inadequate, and the vast majority granted visas or UK passports were Russian or Chinese.
“The government should stop rolling out the red carpet to anyone that can afford it,” – she said.
According to Knight Frank LLP, a residential and commercial property consultancy, Russians hold the first place among foreign buyers of London real estate. Only in 2013 they have spent there over £ 500 million (more than 46.6 billion rubles). The leaked Mossack Fonseca documents include a hydro bill for the year of 2015 showing a Kensington penthouse in west London worth £13 million (over 1.1 billion ruble) as the residence of Zhukov.
Tom Bill, an expert at Knight Frank LLP, told the CrimeRussia that the main reason for this is the UK legislation, comfortable for Russian moneybags. In particular, this includes a loyal taxation: unit recently, there was a 40% inheritance tax exemption for purchases of residential properties in the Great Britain via offshore companies so popular among Russian oligarchs (the exemption will be abolished since 2017).
The anonymity principle for ultimate beneficiaries of companies owning residential and commercial real estate in the UK is still in effect in Britain. The first Anti-Corruption Summit, where the ex-Prime Minister David Cameron has proposed to put an end to this and create an open register of beneficiaries, was conducted in London in May 2016 – but this was before Brexit.
Finally, for tax residents of other countries living in the UK – like Zhukov, – only the income received in Britain is taxable.
“Russians do not run business here, except for sports clubs,” – Roman Borisovich, an anti-corruption activist and immigrant from Russia, told the CrimeRussia. He organizes so-called kleptocratic tours in London and shows homes of East-European oligarch to tourists. According to him, one in ten homes in the Central London belongs to them.
Zhukov has always been running his main businesses outside the UK. In 1981 he graduated from the Institute of Asian and African Studies of the Moscow State University, worked for some time as an editor in Sovinterfest (a Goskino (State Committee for Cinematography) structure organizing expos and festivals), and then was an assistant producer at the Odessa Motion Picture Studio. In the 1990s he decided to start a business and established Sintez cooperative trading mainly oil and oil products, but also dealing with precious metals, investments, consulting, and banking activities. In the end of the 1990s, the capacity of the oil transshipment terminal in the Odessa sea port controlled by his structures was 20 million tons per year. His Morskoy Transportny (Sea Transport) Bank, established in 1995, was serving governmental institutions and enterprises in the Odessa region. The total annual turnover of his group of companies was $1.5 billion. In the period of 1998–2000, Zhukov was shipping Lukoil oil.
Not everything was smooth in the businesses run by Zhukov. For example, in 1999 Zhukov was mentioned in a criminal case initiated by Germany against Aleksander Andreas, a former USSR citizen, suspected of illegal financial operations for the benefit of Russian criminal groups. In 2001 the oligarch was arrested in Italy and charged with links with the Ukrainian mafia. He was a suspect in a case related to illegal weapon sales from Ukraine and Belorussia to Yugoslavia in 1994 (30 thousand Kalashnikov submachine guns, 10 thousand various missiles, antitank mines, grenades, and other ammunition). The following persons were also charged in the framework of this case: businessman Dmitry Streshinsky (sentenced to 1 year and 11 months behind bars and a fine); businessman Mark Garber; Leonid Lebedev, the co-founder of Sintez and future Deputy of the Federal Legislative Assembly from the Chuvash Republic in 2011–2015; Andrey Vazhnik and Anatoly Fedorenko (ex-officer of the USSR Committee for State Security – KGB), the former business partners of Streshinsky; and Evgeny Marchuk, the former Minister of Defense and Prime Minister of Ukraine. Ultimately, the Turin Court found them all – except for Streshinsky – not guilty. After six month in detention, Zhukov has returned to his business – although in 2005 the Italian Parliament named Zhukov a prominent member of the Solntsevo criminal group in its report dedicated to the Russian mafia.
Later Zhukov has sold most of his assets and switched to investments (into sea port infrastructure, oil, construction, development, etc.) within Russia via a newly-established InterFinance Ltd. based in Switzerland. In 2003–2007 Zhukov was investing inter alia into securities of Gazprom, Sberbank, Transneft, etc. Since 2004 and until 2016, Zhukov owned a portfolio of shares in JKX Oil Gas PLC (British oil and gas company) through his BVI–registered investment vehicle Glengary Overseas Ltd.
According to the Guardian, today it is impossible to specify the total fortune of Zhukov. Experts believe, however, that his wealth is smaller than that of his son-in-law, Roman Abramovich, who is valued by Forbes at some 7.6 billion rubles. Abramovich is married to Darya, a daughter of Aleksander Zhukov from his first marriage. It is known that in addition to a penthouse in Kensington, west London, Zhukov has a home in Sardinia and a 150ha estate in the Mozhaisk district of the Moscow region.
The story with the arrest of Igor Vainshtok, creator of famous bifidok, in absentia and his escape is pretty confusing. The company founded by him still remains the largest probiotics producer in Russia and generates multimillion profits – however, somehow it was declared bankrupt. An international warrant has been issued against Vainshtok for non-payment of salaries – while the businessman calls his prosecution an element of the raiding takeover of his company that was already recognized a raidership victim in the past. Concurrently, employees of Partner Joint Stock Company created by Vainshtok claim that he has stolen not only millions of rubles from the base bank of Roscosmos – but, more importantly, the bifidok inventorship. So, whom has Vainshtok fled from?