MPs seek answers to missing €14 million in outstanding VAT debts

Russian billionaire Roman Abramovich, currently sanctioned by the EU, does not appear on any documents relating to a Cyprus-registered company chartering yachts and which dissolved in 2024 while having €14 million in outstanding VAT debts, MPs heard on Thursday.

Authorities said they cannot track down the directors or shareholders of the company, Blue Ocean, meaning the outstanding amount cannot be collected.

Cyprus’ trust laws in the early 2000s apparently allowed Russian billionaire Roman Abramovich to set up a maze of interlinked companies, but independent on paper, taking advantage of a VAT exemption relating to the leasing of yachts.

Although tax authorities here eventually caught on, and the courts ordered the company to pay its tax dues, Blue Ocean dissolved, and the debt never got settled.

The matter was revisited at the House audit committee, based on a report published in January this year by the Cyprus Investigative Reporting Network (CIReN) – the Cyprus partner of the Organised Crime and Corruption Reporting Project.

In parliament, the tax department said that one of the directors of Blue Ocean also appeared as director for hundreds of other companies.

But Abramovich’s name appears nowhere in the paper trail; the ultimate beneficial owner of Blue Ocean appears to have been an entity by the name of Neptune Trust Settlement.

According to the Organised Crime and Corruption Reporting Project (OCCRP), people working for Abramovich had designed a corporate structure to give the false impression that the billionaire’s yachts were being commercially chartered to third parties, and therefore eligible for tax breaks.

“To take advantage of an EU tax exemption for commercial vessels, executives at Abramovich’s companies devised a complex scheme in which his superyachts were leased to ostensibly independent customers,” the OCCRP alleged.

To claim the exemption, people working for Abramovich devised a scheme in which the pleasure craft were leased to what looked like independent customers paying to go on a cruise for a week or two.

“In reality, the companies hiring the superyachts were owned by an offshore trust whose beneficial owner was Abramovich,” the OCCRP reported.

In 2010 tax authorities here began investigating Blue Ocean. In March 2012 authorities slapped a €14 million fine on the company for unpaid VAT for the years 2005 through 2010.

Blue Ocean challenged this in court, but in 2018 the administrative court ruled against it, deeming “baseless” the company’s contention that it did not have to pay VAT.

The company next appealed with the Supreme Court; the appeal was dismissed in March 2024. Shortly later, in July of the same year, Blue Ocean was dissolved.

In parliament, Tax Commissioner Soteris Markides said that in court the company’s lawyers claimed they had no contact with their client because as of 2022 there were no directors listed for Blue Ocean.

In 2022 also, the Registrar of Companies requested that the company be struck off the register.

Irini Milona-Chrysostomou, the registrar, told MPs that one means of leverage against non-compliant companies is to initiate a process to de-register them.

But, she added, at the time the tax commissioner had objected to striking Blue Ocean off the register as it has outstanding debts.

Later, and following the ruling by the Supreme Court, the tax department withdrew its objection.

Milona-Chrysostomou also said that, under the law, any person having a legal interest may request a court order to reinstate the company.

Meanwhile a representative of the anti-money laundering unit (Mokas) said they had “no information” regarding Blue Ocean.

This drew an angry response from Akel MP Irene Charalambidou. She wondered how it was possible for Cypriot authorities to be in the dark when multiple media reports had been circulating abroad.

Committee chairman Zacharias Koulias asked if authorities can indict the company director for unpaid VAT. The answer he got is that even if that person were tracked down, indicted, found guilty and sentenced, it’s unclear whether the state could collect as no assets are traceable.

Drama unfolded towards the end of the discussion, when Koulias challenged researcher Makarios Droushiotis – who had contributed to the CIReN report – to divulge his sources.

This concerned a claim made by Droushiotis, namely that in 2013 then president Nicos Anastasiades – who at the time was in New York – telephoned his finance minister and asked him to “take care” of the Abramovich case.

The clear implication of the allegation is that Anastasiades had instructed his finance minister, Harris Georgiades, to act to let Abramovich’s company off the hook.

Droushiotis refused to disclose his source, saying only it was someone with direct knowledge of the alleged phone call.

“I don’t believe it,” Koulias snapped back, asking the researcher whether the phones were being tapped for him to have such information.

Georgiades, currently an MP with the Disy party, told the committee that in January a reporter with the BBC – a certain Paul Grant – contacted him asking about the story and the alleged phone call from Anastasiades.

The ex-finance minister told the BBC journalist he had no recollection of such an event.