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November 9 - 15 2011
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By Duncan Gardham and Gordon Rayner ROMAN ABRAMOVICH was forced to deny being a fraudster and an arms dealer as he gave evidence in a British court for the first time on Monday last week.
The 45-year-old owner of Chelsea FC, who guards his privacy as closely as he guards his billions, faced an uncomfortable afternoon in the witness box at the High Court in London as he disclosed details of his personal and business life.
The oligarch is being sued for $6.5billion (£4 billion) by Boris Berezovsky, his former associate, who accuses Mr Abramovich of swindling him out of shares in companies they allegedly set up together.
Mr Abramovich set out the rags-to-riches tale of how he had gone from selling rubber ducks to sitting on a £10.3 billion oil and minerals empire in just two decades. And while he acknowledged Mr Berezovsky’s role in helping him to win friends in the Kremlin, he described the 65 year-old as a “megalomaniac” who “behaved like a child”.
As the costly legal battle entered its fifth week, Mr Berezovsky stared intently at the man he says was his protégé as he entered the witness box. Mr Abramovich cut a strangely unassuming figure. Apparently unable to read or speak English, he gave his evidence via a translator and wore headphones to hear barristers’ questions in his native Russian.
His boyish voice was so quiet that he had to be told to speak up so that the court could hear his answers, which were often vague and evasive.
His evidence also suggested that he had little grasp of the workings of his business empire, as he admitted he had no idea how much the man who ran his Sibneft oil company was paid or when his closest aides had been appointed to key roles. The Roman Abramovich story Ever since Mr Abramovich’s arrival in England, when he bought Chelsea FC in 2003, stories about his past in Russia have swirled around him, making it hard at times to separate myth from reality.
For the first time in public, Mr Abramovich, who was orphaned and brought up by relatives in northern Russia, set out his own version of his early life.
Born on October 24 1966, Roman Arkadievich Abramovich left school at 16
‘MY MONEY FREED BRITONS’
and went to a local college, the Industrial Institute of Ukhta, but was called up for national service before he graduated.
He spent two years in the Soviet army in the late 1980s, leaving as a private. He studied at the Moscow Road Construction and Automobile Institute and left without a qualification.
His first job in 1987 was as head of the welding unit of the construction and installation directorate of the Soviet government. Soon afterwards, he organised a co-operative to make plastic toys, including rubber ducks, and from there entered the oil trading business in 1991. Arrested on suspicion of fraud Mr Abramovich was presented by Mr Berezovsky’s lawyer, Laurence Rabinowitz QC, with a Russian legal document in which he was accused of “procuring financial gain by means of fraud”.
It was alleged that he had deliberately forged documents for three million kilograms of diesel fuel carried in five railway tankers that were
“emptied and appropriated”. He was arrested on June 19 1992, and remanded in custody on the grounds of the seriousness of the offence and fears that he might try to “escape”, but was later released without charge. He said: “There were problems with the banking system… at the time when the refinery discovered they hadn’t got the money, while I was under arrest, they received the money and I was released.
ROMAN ABRAMOVICH provided a cash ransom to release two British aid workers kidnapped in Chechnya, a court heard last week.
He claimed that he paid to free Camilla Carr and her boyfriend Jon James from Chechen rebels more than a decade ago, but his former business partner Boris Berezovsky took the credit.
The couple, who later married, spent 14 months held in a cellar in the Russian republic after being kidnapped by masked men in Grozny in July 1997. On their release, they were flown home in a jet belonging to Mr Berezovsky.
At the time, Britain and Russia claimed no ransom was paid, but on Tuesday last week, details of the negotiations emerged during the High Court hearing in which Mr Berezovsky is suing Mr Abramovich for £3.6billion.
The court heard that Mr Berezovsky and his business partner Badri Patarkatsishvili were involved in helping to secure the hostages’ release. The British couple, both psychologists, were working with children traumatised by the war in Chechnya.
But Mr Abramovich gave a different version of events. “Badri was travelling to Chechnya to buy out the hostages, it wasn’t Mr Berezovsky,” he said. “After the hostages were bought out, Mr Berezovsky arrived with the journalists, everything was filmed and shown on TV … I gave the money to Badri, he flew there and bought out the hostages.”
Miss Carr, then 40, and Mr James, then 38, of Lydney, Glos, were flown to RAF Brize Norton on the private jet from Moscow in September 1998.
The case continues.
Duncan Gardham and James Orr
“I had not falsified documents and the problem disappeared all by itself.”
The hearing was told about documents belonging to Stephen Curtis, a British lawyer and adviser to several Russian oligarchs, who died in a helicopter crash in 2004. They discussed the sale of spare parts for tanks to Angola and Brazil.
Mr Rabinowitz asked the witness: “Were you involved in weapons trading in 1995?” He replied: “I was never involved in arms trading … my business was petrochemicals.” Berezovsky the ‘megalomaniac’ Mr Berezovsky, who lives in exile in London after falling out with Vladimir Putin, claims he is owed $6.5billion by Mr Abramovich for what he believes is his share of the businesses they set up.
But in a witness statement submitted to the court, Mr Abramovich said that he and Mr Berezovsky were never partners.
He said that in 1994, he wanted to take his business interests “to the next level” by
Roman Abramovich grabs a sandwich for lunch near the High Court in London last week (above); and watching a football match with his girlfriend Daria Zhukova in 2008 (left)
creating what later became Sibneft. “It was not possible to achieve this in Russia at that time without the help of a person who had the appropriate political connections,” he said.
He claims to have paid Mr Berezovsky £1.3 billion for his help over the years, including a final payment of £850million, “to close this particular chapter in my life”.
He added: “Our business relationship was over and yet he still treated me as his cash cow and expected me to fund all of his expenses.” No interest in extravagance Mr Abramovich, who has a taste for custom-built yachts and private jets, and owns two football clubs, claimed to have no interest in extravagance.
He said of Mr Berezovsky: “I was quite surprised by his extravagant lifestyle … I was never interested in imitating this lifestyle. I have always been interested primarily in real business.”
As if to prove the point, he popped into the sandwich chain Pret a Manger for lunch.
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a number of explosions and black smoke. It’s not something you expect to see on the motorway, it was more like a scene from Afghanistan.”
The rugby club’s fireworks display was being investigated to see if thick smoke drifted on to the motorway.
The accident occurred at 8.25pm last Friday after a bank of fog or smoke about 200 yards across enveloped the M5 between junctions 24 and 25, near Taunton. The pile-up seemed to have begun when an Iceland lorry entered the fog, which one motorist said was “like emulsion”.
Police said vehicles were “immediately alight” after the crash as a “massive fireball” engulfed the carriageway.
Mobile phone footage showed members of the public desperately trying to open vehicle doors in an attempt to rescue those trapped inside.
Witnesses spoke of hearing the screams of men, women and children. One man who rescued people from burning cars had to dodge debris “like shrapnel”.
Assistant Chief Constable Anthony Bangham, the incident commander, said on Sunday: “Our worst fears have not been realised and the number of those that sadly lost their lives remains at seven.”
Police confirmed they were looking at the possibility that a pall of black smoke from the firework display at Taunton Rugby Club, 300 yards from the scene of the crash, may have drifted on to the motorway.
A member of the public who was at the club said: “The fireworks display was massive and caused a huge amount of thick black smoke that drifted towards the motorway less than 10 minutes before the crash.
“Before the display I could see right across the pitch and see the headlights of traffic on the motorway. After the display the visibility dropped to less than 30ft, I couldn’t even see the huge floodlights positioned around the pitch.”
The accident was the worst on British roads since 1991 when 10 people were killed and 25 injured in a pile-up on the M4 near Hungerford, Berkshire.
By Christopher Hope BRITONS with second homes overseas are to be targeted to save millions of pounds in tax evasion.
A team of HM Revenue and Customs inspectors is looking at people with second homes in France, Spain and other holiday destinations to see if they are cheating the taxman.
The inspectors have been told to claw back £560 million in lost revenue by 2015.
The 200-strong team will be scrutinising advertisements placed by second-home owners in magazines and on the internet. They will be looking for undeclared holiday rents and leased office space.
They are also checking overseas land registers to identify taxpayers with properties abroad.
The move is part of a campaign against evasion by the 330,000 richest people in the 50 per cent tax bracket who earn more than £150,000 a year. The Revenue’s first targets are second-home owners because holiday homes are seen as a common way for well-off people to hide a second income from the taxman.
They will be looking for Britons who get undeclared rent by leasing land overseas to local companies.
David Gauke, the Exchequer Secretary to the Treasury, said: “The message is clear: there is no hiding place for tax cheats. The Government is committed to tackling tax evasion.”
HMRC said the team would look at commodity traders’ work and at people with offshore accounts.
Gary Ashford, the head of investigations at RSM Tenon, said: “Taxes involving overseas properties can always be potentially complicated. It is not always the case that people have deliberately evaded their taxes. However, HMRC could target them whether or not they have intended to do anything wrong.”
The team will work with other inspectors focusing on companies, residence and domicile issues, and trusts and estates to end evasion.