Date: 2024-05-18 Page is: DBtxt003.php txt00025959
RUSSIAN OLIGARCHS
Alexander Abramov & Alexander Frolov
Alexander Abramov & Alexander Frolov
Original article: https://www.icij.org/investigations/cyprus-confidential/oligarchs-offshore-clients/
Peter Burgess COMMENTARY
Peter Burgess
CONFIDENTIAL CLIENTS
Cyprus Confidential reveals the pivotal role the Mediterranean island plays in helping oligarchs move and hide their wealth.
Oligarch
Alexander Abramov & Alexander Frolov
Former executives at Evraz
Entities in the leak: 71 Companies ... 7 Trusts
Sanctioned by:
United Kingdom - 2022
Offshore providers:
Cypcodirect
MeritServus
About:
Russian billionaires Alexander Abramov and Alexander Frolov are fellow graduates of the Moscow Institute of Physics and Technology. They pursued separate scientific careers before serving together as the long-time leaders of Evraz PLC, a steelmaker and mining giant that produces 97% of the railway metal in Russia. In the early 1990s, Abramov moved into the world of metals trading, plowing his winnings into steel mills and other assets. He established EvrazMetal and, after Frolov joined him at Evraz in 2005, the partners amassed an industrial empire and a global investment portfolio controlled through an opaque network of offshore entities.
In May 2022, the U.K. government sanctioned Evraz due to its “strategic significance to the government of Russia” via its contributions to that country’s rail network, which authorities said were used to deliver “key military supplies and troops to the frontline in Ukraine.” The following November, the United Kingdom imposed an asset freeze and travel ban on Abramov and Frolov, citing their close business ties to another Russian oligarch, Roman Abramovich. U.K. authorities described the pair as part of the “cabal of selected elite” that Russian President Vladimir Putin relies on to fund the military machine behind his “illegal invasion” of Ukraine. Abramov and Frolov used the international accounting giant PwC, formerly known as PricewaterhouseCoopers, to move hundreds of millions of dollars in assets through Cyprus after the Russian war in Ukraine began. The oligarchs built and have maintained a network of investments spanning at least three continents. Forbes estimates Abramov’s net worth at $6 billion and Frolov’s net worth at $2.6 billion.
Cyprus connections:
Records leaked to ICIJ, now part of the Cyprus Confidential investigation, show that PwC Cyprus provided services to 55 Cypriot companies and five Cypriot trusts controlled or owned by Abramov and Frolov, as well as two British Virgin Islands-based companies. These companies held an array of investments, including in an “ultra-luxury” resort development on the Greek island of Mykonos; a hotel in the Brazilian mountains; and office buildings in the U.K. In Germany, entities Abramov and Frolov control quietly invested in Lagerlöwe, a self-storage operator that rents pods for as little as $2 a week.
As the threat of a U.K. asset freeze mounted, the files show, the partners extended personal loans worth a total of $300 million to one of their entities, Moravian Ltd., and later gifted the assets to their sons. In late 2022, U.S. regulators also declared that the billionaires had used a firm, also administered by PwC, in an investment that violated federal restrictions on foreign investment in the U.S. telecom industry by funneling money into Truphone, a telecom venture.
Number of companies and trusts in the leak:
Seventy-eight companies and trusts owned or controlled by Abramov or Frolov appear in the leaked data, including 69 Cypriot companies and trusts. Cypcodirect provided services to 27 of these companies and MeritServus, to two companies.
Response:
Abramov and Frolov did not respond to ICIJ’s requests for comment. Citing the need to maintain confidentiality, PwC declined to comment on its business with Abramov, Frolov and other clients. It added that it complied with EU and United Nations sanctions before Russia’s February 2022 invasion and has since severed ties with 60 clients as a result of the company’s new “Russia-related sanctions policy.” “PwC’s internal standards are reviewed and updated to reflect both lessons learned and changing circumstances,” Mike Davies, a PwC spokesperson, said in a statement, “and we do not hesitate to take action when our standards are not met. Any allegation of non compliance with applicable laws and regulations is taken very seriously, investigated and appropriate action is taken if necessary.”
The firm said its Cyprus office had “pivoted to a new economic model fit for the future, transforming its business” and pointed to the office’s annual report for 2022. PwC Cyprus's fiscal 2023 annual report, released in September, cited a 'significant contraction' in business related to implementing the global sanctions policy.