Rachel Reeves threatens Roman Abramovich over frozen £2.35bn Chelsea sale funds

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2 days ago

Rachel Reeves is preparing to haul Roman Abramovich to court to finally break the three-year deadlock around the frozen £2.35 billion Chelsea sale fund.
In a dramatic hardening of the UK's position, the Chancellor is taking a personal lead in attempting to force the fund's release for Ukraine aid.
The fund has remained in limbo as Abramovich remains at loggerheads with ministers over how it is spent on war victims. The Labour Government has been holding the same line as the previous Tory administration in insisting the huge sum is spent only on Ukraine.
As talks continue to stall, Reeves and David Lammy, the Foreign Secretary, have now resorted to threatening court action.
'We are deeply frustrated that it has not been possible to reach agreement on this with Mr Abramovich so far,' a statement from the pair read.
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. The possibility of action via the courts was previously toyed with by the Conservative government, sources close to talks say. 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 Government is determined to see the proceeds from the sale of Chelsea Football Club reach humanitarian causes in Ukraine, following Russia's illegal full-scale invasion,' the new statement said, before later adding: '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.'
No final decision has been made on taking Abramovich through the courts to seize the asset. Such action against the oligarch would inevitably be lengthy and messy.
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. Abramovich is still under UK Government sanction.
The proceeds have been frozen in a UK bank account since the Office of Financial Sanctions Implementation (OFSI) issued a licence to permit Abramovich to sell the club. The fund will have generated a significant amount of interest while in the account, potentially taking the total value beyond £2.5 billion.
The Foreign Office had repeatedly promised in recent months that the new Government would 'double down' on efforts to reach a solution.
Humanitarian charities have grown increasingly desperate for a breakthrough, fearful that discussions will be thrown further into chaos if UK sanction arrangements against Russia were to change.
Despite the sale of the club taking place entirely within UK jurisdiction, ministers signed a unilateral declaration in May with the European Commission, stating the money would be spent 'exclusively' within Ukraine.
That move bemused the humanitarian sector as Mike Penrose, a former UK chief executive of Unicef, was brought in to create an independent foundation on the basis that it would be spent on 'Ukraine and its consequences'. Penrose has been taking a neutral position in discussions between the Government and Abramovich's lawyers. He has set up legal undertakings to make sure the money cannot fall back into the hands of the Russian.
The Government will have board input and Jan Egeland, a senior Norwegian diplomat who once advised Kofi Annan at the United Nations, was brought in as interim chairman of the foundation.
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'.
The difference of opinion on the purposes of the foundation predates the Chelsea sale to a consortium led by American businessman Todd Boehly, which was completed on May 30, 2022.
A representative of Abramovich has been contacted by Telegraph Sport for comment.
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