Roman Abramovich and Ukraine: Where is the Chelsea sale money two years on?

£2.5bn is sitting in a UK Barclays bank account, frozen. They are the proceeds from Roman Abramovich’s sale of Chelsea FC, nearly two years to the day. Those funds still remain unused. 

An open letter signed off by the sanctioned Russian oligarch, who seldom made any public statement during his 19 years in charge of the club, said the funds raised would be earmarked “for the benefit of all victims of the war in Ukraine”. 

They remain held up as a result of secret disputes between the UK government, the European Union and Abramovich’s representatives on how the money should be spent and over who ultimately makes the call on such decisions. 

Up until around mid-April, we heard from the government that there was renewed interest, optimism and progress on the matter, yet we still do not yet have a decision Victoria Kerr, Redress

Seizing cash

Since Western governments sanctioned herds of oligarchs and kleptocrats and froze Russia’s sovereign assets in the wake of its invasion of Ukraine in February 2022, authorities have straddled a tightrope between taking a hard line on seizing cash from bank accounts and following a sacrosanct rules-based system. The European Union only recently announced plans to use exceptional interest gained by Russian central bank assets for supporting Ukraine’s military. 

While the circumstances surrounding the frozen Chelsea sale funds are unique and different to any other, they are a symptom of an existential dilemma over who will eventually pay for humanitarian assistance in Ukraine – as well as its recovery and reconstruction. 

It also presents a problem for governments on how they can negotiate an agreement with a businessman they sanctioned. Abramovich has re-appealed sanctions imposed on him by the EU after his challenge was rejected last year in Brussels. 

A week before Chelsea’s sale was announced, the UK government’s Office of Financial Sanctions Implementation granted a special licence to the club allowing it to be sold on the assumption that a foundation is set up for “exclusively humanitarian purposes”. 

Chelsea foundation

The government publishes full details for many of its issued licences, but no record of this specific licence is available for public view. The Treasury withheld the information on the grounds of confidentiality after a freedom of information request was made. 

The foundation is yet to be set up. The government has to grant a separate licence for the cash to be moved from the frozen bank account to the foundation. For that to happen, there must be an agreement principally between Abramovich and the governments over who will receive the funds and how. 

A report by the Wall Street Journal last December suggested that Abramovich wanted the money to be spent on “good causes across the world”. Mike Penrose, the former Unicef director who has been tasked with setting the foundation up, told the US-based newspaper that funds could be directed to war refugees as well as those inside the country.

The way the international community addresses the situation in Ukraine will become a roadmap to how to respond to other situations Deborah Ruiz Verduzco, ICC trust fund for victims

He said an agreement between the EU and the UK on sanctions had created a “legal limbo” after paperwork on the special licence had been agreed. 

“At the moment, the lawyers are trying their best to work these through on both sides,” Penrose told City A.M. “We had a lot of blocks previously in the Foreign Office. Under the current minister, they’re showing promise. Things can move quickly.”

“It’s such a shame that it is stuck there through bureaucracy and legal problems, and that there’s no real philosophical difference here,” he added. 

Nearly $500bn!

The World Bank estimated in February this year that the total costs of recovery and reconstruction in Ukraine would amount to $486bn over a 10-year period. This may not reflect the chunk needed specially for “victims”, but the £2.5bn figure sourced from the Chelsea sale could help up to 5m people in need of humanitarian assistance, if UN figures from earlier this year are accurate. 

“There is already significant support going to Ukraine’s defence, reconstruction and humanitarian assistance, yet the government has not acted on supporting reparation to victims,” Victoria Kerr, a consultant legal officer at the human rights organisation Redress, told City A.M.

Kerr also stressed that the interests of the government, Abramovich or the foundation should not “override those of the victims”. 

“Up until around mid-April, we heard from the government that there was renewed interest, optimism and progress on the matter, yet we still do not yet have a decision. There is also still no public information on the status of the foundation, so we are unable to find out any further information from their side.

“Now, given the election, we will need to wait to see who is in power in July. This should be a priority given the delay.”

Redress has suggested the sale proceeds could be channelled to a number of existing organisations responsible for delivering reparations.

Abramovich not implicated

One such route includes the International Criminal Court’s trust fund for victims. Such a pathway for funds may allow the funds to go directly to victims by all accounts of a formal definition of the word. 124 countries including the United Kingdom understand the ICC to have jurisdiction over establishing war crimes, but countries including the US and Russia are not state parties to the international statutes. 

According to Deborah Ruiz Verduzco, the executive director of the trust fund, this funding option would not implicate Abramovich in any of the ICC’s cases against Russian individuals as it does not believe him to be responsible for any crimes to date. 

“The way the international community addresses the situation in Ukraine will become a roadmap to how to respond to other situations,” Ruiz Verduzco told City A.M. “Other situations around the world do not receive the same level of support and therefore reparations for victims in Ukraine can also set a very important precedent for other victims elsewhere in terms of showing how we deal with international crimes.”

Chelsea proceeds to go on

Penrose insisted that the foundation would be neutral, as had been briefed to him two years ago. An independent board would also be set up, with the government being offered a seat on it. The foundation would also have to follow regulations set out by the Charities Commission. 

The handling of the Chelsea sale proceeds is a symbol of the tensions lawmakers are facing in confronting businessmen they have sanctioned. A UK government spokesperson said that it was “working hard to reach an arrangement that delivers this money to humanitarian causes in Ukraine as quickly as possible”.  

Two years on from Chelsea’s sale, no clear resolution is yet in sight. This unfulfilled promise to support victims of torture, sexual violence and other war crimes dampens hopes of reparations and due aid ever being delivered in the longer term. This stalemate between the UK government, Abramovich and other groups locked into negotiations risks running on for some time longer.