Chancellor’s fury as £2.5bn meant for Ukraine war victims remains frozen THREE YEARS after oligarch’s forced sale of Blues
Government loses patience with Russian billionaire’s refusal to release funds as humanitarian charities grow desperate for breakthrough
Rachel Reeves has threatened to DRAG Roman Abramovich to court in a dramatic escalation of the three-year standoff over £2.5billion from the forced sale of Chelsea FC that was meant to help Ukraine war victims.
The Chancellor and Foreign Secretary David Lammy issued an extraordinary joint ultimatum to the sanctioned Russian oligarch, warning they are “deeply frustrated” and ready to launch legal action to seize the frozen funds.
The massive sum – which has likely grown beyond £2.5bn with interest – has been sitting untouched in a UK bank account since May 2022, when Abramovich was forced to sell his beloved Chelsea following Putin’s invasion of Ukraine.
In a rare display of government fury, Ms Reeves and Mr Lammy declared: “We are deeply frustrated that it has not been possible to reach agreement on this with Mr Abramovich so far.”
“While the door for negotiations will remain open, we are fully prepared to pursue this through the courts if required, to ensure people suffering in Ukraine can benefit from these proceeds as soon as possible.”
The £140m investment that became a £2.5bn headache
Abramovich bought Chelsea for a reported £140million in 2003 and transformed the club into a European powerhouse, winning five Premier League titles, five FA Cups and the Champions League twice during the most successful era in their history.
But The Russian bought the club in 2003 for a reported 140 million pounds ($184 million) and his investment resulted in the most successful era in their history as they won five Premier League titles, five FA Cups and the Champions League twice.
The oligarch was forced to sell after being sanctioned by the UK government on March 10, 2022, over his alleged “close ties with the Kremlin” – allegations he has consistently denied.
The UK government froze his assets in the UK on March 10 because of his “close ties with the Kremlin”, and on March 12, 2022 the Premier League disqualified Abramovich as a director of Chelsea.
The sticking point: ‘ALL victims’ vs Ukraine only
The deadlock centers on a crucial disagreement over who should benefit from the funds.
Abramovich has said he wants the funds to benefit “all victims of the war” which could mean some of the money going to Russia, while the UK government insists the money can only be used for “humanitarian purposes” in Ukraine.
The former Chelsea owner first promised proceeds for “all Ukraine war victims” after putting the west-London club up for sale on March 2, 2022, eight days before facing action over alleged links to Vladimir Putin, the Russia president.
But Britain wants the funds spent only in Ukraine in line with a wider European push for Moscow to foot the bill for the deaths and destruction triggered by its invasion.
Three years of frustration
The sale was made under the supervision of the Office of Financial Sanctions Implementation, under the proviso the proceeds go to humanitarian aid in Ukraine. They cannot be moved or used without a licence from the office.
Multiple sources have revealed the extraordinary breakdown in negotiations:
- NO meetings between Labour ministers and foundation representatives since July’s election
- A complete deadlock requiring political intervention
- Humanitarian charities growing “desperate” for breakthrough
- The Charity Commission confirming they’ve received NO application to establish the distribution foundation
In March, the Foreign Office said officials were in talks with Abramovich’s representatives, but multiple sources told the BBC there had been no meetings between any Labour ministers and members of the foundation set up to oversee the funds since last July’s general election.
Reeves takes charge
Senior ministers have been debating for years how best to deal with Abramovich, who has maintained throughout that his initial agreement with the Government was to release the fund for “all victims” of the war.
With Labour making no progress since coming to power, however, Reeves is understood to have played a key role in pursuing a new tougher on-the-record position.
The possibility of action via the courts was previously toyed with by the Conservative government, sources close to talks say.
Legal battle looms
The New York-based law firm Kobre & Kim, which represents Abramovich, said as far as it is aware “there are no law enforcement investigations in the UK involving Mr Abramovich, and to suggest otherwise would be false.
However, government sources suggest they are exploring all options, including potentially seizing the money through the courts.
Natalia Kubesch, the legal officer at Redress, a charity that has campaigned for the money’s release, said it seemed the government was looking at new ways to break the deadlock, including possibly seizing the money. “It shows how serious the stalemate is and suggests a complete breakdown in talks,” she said.
Foundation in limbo
A complex structure has been set up to manage the funds:
- Mike Penrose, former UK chief executive of Unicef, brought in to create independent foundation
- Jan Egeland, senior Norwegian diplomat who advised Kofi Annan at the UN, appointed as interim chairman
- Legal undertakings established to ensure money can’t return to Abramovich
- Government to have board input on fund distribution
But without agreement on the fundamental issue of who benefits, the entire structure remains paralyzed.
Aid sector fury
James Deneslow, head of the conflict team at Save the Children, is among leading figures in the sector to call on ministers to release the funds to support the full “humanitarian consequences of the war in Ukraine”.
This is a short-sighted and appalling move,” said humanitarian organizations frustrated by the delay as Ukraine’s needs grow ever more desperate.
The £2.5bn – and interest accrued – would make up for some of the reduction in the aid budget, announced in February.
What happens next?
The options:
- Court battle: Government launches legal action to seize funds
- Continued deadlock: Money remains frozen indefinitely
- Compromise: Agreement reached on fund distribution
- Parliamentary intervention: New legislation to break impasse
One former government official, who worked on the process and asked not to be named, said the deal was not perfect and was done under extreme time pressure to keep Chelsea afloat. “Ultimately it was not the deal anyone would have ideally designed,” the person said.
Meanwhile, at Stamford Bridge…
The tycoon, who had bought Chelsea in 2003, sold the club in May 2022 to BlueCo, an investment vehicle led by the American businessman Todd Boehly and Clearlake Capital.
Chelsea enjoyed the most successful run in the club’s history under Abramovich before the club was sold to a consortium led by U.S. investor Todd Boehly and private equity firm Clearlake Capital in May 2022.
The current owners continue to operate the club while billions meant for war victims remain tantalisingly out of reach.
The bottom line
THREE YEARS. £2.5 BILLION. ZERO distributed to those in need.
As bombs continue to fall on Ukraine and humanitarian needs grow ever more desperate, one of the largest single charitable donations in history sits gathering dust in a British bank account – a monument to bureaucratic failure and the complexities of international sanctions.
With Reeves now threatening the nuclear option of court action, the question remains: will Ukraine’s war victims finally see a penny of Abramovich’s billions, or will lawyers be the only winners in this extraordinary standoff?
