Abramovich billions may never reach Ukraine – and ‘Government knew it' from day one

Telegraph

3 days ago

The row centres on the interpretation of a 'deed of undertaking' between the Government and Abramovich in which he agreed for the money to be committed to charity 'for the purposes of helping victims of the war in Ukraine'.
When putting Chelsea up for sale, Abramovich publicly stated that he wanted the proceeds to be used 'for the benefit of all victims of the war in Ukraine' – including those from his native Russia, something successive governments have refused to countenance.
An official involved in the negotiations in 2022, speaking on condition of anonymity, told Telegraph Sport: 'Day one, we were concerned. We went eyes open with the fact that this was a possibility. But there genuinely wasn't an alternative.'
The official said the danger of Abramovich blocking the release of the Ukraine fund had taken a back seat to fears he 'would let Chelsea go to the wall' if a deal was not struck to sell the club before the end of that season, or that he would try to 'legally get the money back himself' if sanctions against him were lifted.
'The decision was to put it in a place where we knew he couldn't get at it, and then there was a principle that this charity would be formed and that it would spend the money wisely,' the official added.
'That it's dragged on to this point is just as much a testament to the fact that the Government hasn't invested financial pressure, resources or political capital in dealing with what was, from day one, very clearly going to be a problem.'
Three-year delay 'incomprehensible'
Indeed, Reeves and Lammy have taken until this week to threaten legal action, something Telegraph Sport has been told the previous Conservative government had ruled out.
That is despite a report by a House of Lords committee in January last year finding it 'incomprehensible' the issue had not been resolved and urging ministers 'to use all available legal levers to solve this impasse rapidly, so that Ukraine can receive much-needed, promised, and long overdue relief'.
The report was published by the European Affairs Committee, chaired by cross-bench peer Lord Ricketts, a former permanent secretary to the Foreign and Commonwealth Office, British ambassador to France and national security adviser.
He told Telegraph Sport it had taken too long for the Government to act upon the report's recommendations and acknowledged an acrimonious legal battle could delay things much further when it comes to accessing a fund likely to have accrued more than a hundred million pounds in interest.
'It's getting ridiculous that this delay should be dragging on and on,' Ricketts said. 'I'm not a lawyer and I can't explain exactly what the Government are going to do, but I think it's now really urgent to get this sorted. And I think 'incomprehensible' is still a pretty good word to describe why, three years later, we're still waiting for the money to go to the people who really need it in Ukraine.'
Concerns over the delay had been raised even earlier, including by Mike Penrose, the former chief executive of Unicef UK, heading the independent foundation set up to administer the fund.
He was joined two years ago by Oxfam, Save the Children, Kyiv-based charities and UK families hosting Ukrainian refugees in calling for then prime minister Rishi Sunak to urgently break the deadlock.
That was after the European Union, like the Government, ruled the money could only be spent within Ukraine's borders, an edict the charities urged Sunak to ignore.
Labour peer Lord Foulkes also wrote to then chancellor Jeremy Hunt in September 2023 over the 'unacceptable delay' in releasing the funds, adding in his letter: 'The only barrier, as far as I can tell, seems to be bureaucracy, and it strikes me as ridiculous that we should let a matter of paperwork confound these efforts, when our Ukrainian allies overcome incredible adversity on a daily basis.'
Foulkes told Telegraph Sport: 'The trouble is we've been playing by the rules that the Russians never acknowledge, never play by, and we have been trying to get some agreement on it.
'That was always likely to fail – and certainly take a long time. I'm glad that, at last, they're now taking action and I think it's the right thing to do, and they should press ahead with it as quickly and as forcibly as possible.'
Seizing of Russian assets 'politically explosive'
Telegraph Sport has been told the previous government ruled out legal action after concluding there were too many downsides, including the risk investors could shun the UK.
Various sources with knowledge of negotiations with lawyers for Abramovich have branded the ongoing row as a 'nightmare issue', describing the seizing of Russian assets as 'politically explosive'.
Explaining the difference between freezing and seizing assets, a source said: 'Seizing assets is a whole new ball game. There's a sizeable chunk that is frozen in Britain that are Russian-state assets. There are huge numbers of countries and lots and lots of lawyers who would explain to you that if you even try taking it and just seizing it and say that money is now ours, you are facing intense pressure.'
The source said that could include 'lobbying' from other countries which invest in the UK who might say: 'OK then, we're pulling out billions of billions from your economy now.'
Bart De Wever, the Belgian prime minister, also warned in March that confiscating almost €200 billion (£168 billion) of frozen Russian assets would be 'an act of war' and would carry 'systemic risks to the entire financial world system'.
Telegraph Sport has also been told the last government was split on whether to compromise on Abramovich's demands, with Andrew Mitchell said by one source to have discussed ways ministers could 'cut a deal' with the oligarch when he was at the Foreign Office.
Explaining the power Abramovich currently held over the frozen Chelsea sale fund, a source said: 'He can't access the money. He can't spend the money, but he can stop the trust spending it and, at the moment, he's always hidden behind, 'No, the terms that I agreed to the sale are not quite the same as the terms that the British Government are now insisting on'.'
Telegraph Sport has approached a representative for Abramovich for comment on the Government's legal threat against him.
A book entitled Sanctioned is being released next week in which he is expected to be quoted about the sale of Chelsea and the sanctions imposed on him.