Tax loophole may have bought Chelsea

A senior Russian tax official has reprimanded Chelsea's owner Roman Abramovich for using a loophole in the country's tax legislation to avoid paying 10 billion roubles (?200m) in tax, claiming that the money was used to fund his purchase of the London club.

Sergei Stepashin, head of Russia's audit chamber, which oversees the acquisition and spending of government money, claims that Abramovich used the loophole to enable his oil company, Sibneft, to avoid paying its dues in 2001. He added that the move was entirely legal, but expressed displeasure at its use.

"Oil companies' money should go into introducing new industries and the growth of production, instead of on the purchase of football clubs," he told the Interfax news agency. "This [tax loophole] is where he got the money for Chelsea," the Kommersant newspaper also quoted him as saying.

Abramovich moved from relative obscurity to become one of the most prominent yet mysterious figures in British football last week, buying 50.9% of the shares in Chelsea for ?60m and paying off the club's considerable debts of ?80m.

While Abramovich's spokesman claimed Sibneft's tax affairs and the Chelsea purchase were unconnected, Stepashin's decision to finger the club illustrates the Kremlin's anger with the billionaire.

Russian tax laws are highly complicated and tax legislation can be as fluid as their enforcement. Big business which gets involved in politics tends to accuse the government of cracking down on them using the vagueness of tax legislation. In return, the government can and does accuse big business of failing to meet tax payments.

In recent weeks the tension between Russia's wealthy businessmen and the state has heightened. This sudden and unexpected rebuke by a leading Kremlin official will lead some analysts to suspect that the Vladimir Putin administration is firing another warning shot to keep Abramovich in line.

The Kremlin has pursued seemingly unlikely investigations against out-of-favour oligarchs in the past, often in a bid to drive them from the country. Boris Berezovsky, a former Kremlin kingmaker who lives in west London, went into self-imposed exile when he fell out with Putin and is now sought on an extradition warrant to face theft charges, which he denies.

John Mann, a spokesman for Abramovich's company, said: "Sibneft is no different to any other company which employs a strategy that is 100% within the law to minimise payment of taxes. The audit chamber, which Mr Stepashin heads, did an audit last year and certified that we had complied. Mr Abramovich's purchase of Chelsea is completely unrelated to Sibneft's tax paying."