A few hours after Russia invaded Ukraine, the investment arm linked for years in public reports to oligarch Roman Abramovich and used to hold shares in renewable energy companies and technology startups in the US, UK and Israel, was transferred to one of its business partners, reports from securities authorities.
Disclosures of large corporations over the years have identified the company Norma Investments registered in the British Virgin Islands as being controlled by Abramovich. On February 24, the day Russian soldiers attacked Ukraine, David Davidovich, a close business partner of Abramovich, took ownership of the company, according to reports from the UK Securities and Exchange Commission.
Since that change, Britain has imposed sanctions on Abramovich and accused him of profiting from Russian President Vladimir Putin’s regime. On Tuesday, the EU followed in the footsteps of Britain. Sanctions against Abramovich freeze his assets and ban him from traveling to the UK and the EU.
Pressures on Abramovich in hopes of affecting the Kremlin
A source close to Davidovich confirmed that he has taken ownership of Norma Investments. Davidovich’s investment in the company is “part of his total investment and interest in the startup field,” the same source said. Also, he said, Abramovich was not Norma’s previous owner but did not identify who he was. The company is linked to Abramovich in several public reports. For example, in 2021, an American biotechnology company, backed by Norma, wrote in its annual report to the US Securities and Exchange Commission (SEC), which Norma was controlled by Abramovich. He also registered Abramovich as an indirect investor in Derech Norma Investments Ltd.
Various reports show that the two people often invested in companies together. In some of the reports, Davidovich is listed as the CEO of Millhouse, a Moscow-based investment house that Abramovich established two decades ago.
And this is how the sanctions are circumvented
The transfer of control of the norm comes as part of a wider effort by the Russian billionaire to get rid of or transfer assets in recent weeks, after Western governments threatened to dismantle the empire built by Abramovich since the 1990s because they claim it has ties to Putin and the war in Ukraine. London, Brussels and Washington The three have threatened to take action against a group of wealthy Russian billionaires like Abramovich in hopes of putting pressure on the Kremlin.
Sanctions attorneys say selling assets to partners or transferring ownership to family members can at least be a way to avoid temporarily freezing assets, and maintaining indirect control over assets without violating sanctions. The British Virgin Islands, a foreign British territory with many records of Abramovich’s companies, must implement British sanctions provisions. Davidovich is not subject to any sanctions. According to reports in the United Kingdom, the center of Davidovich’s residence in Israel.
Before being sanctioned in the UK, Abramovich sought to sell his 15-room mansion in London and the Chelsea football team. It has also tried to sell its stake in US-based funds, the Wall Street Journal previously reported. Two of its mega-yachts recently sailed from ports that may be under EU jurisdiction, according to vessel tracking sites.
The sanctions also challenge those who are supposed to enforce them
The complex investment structure in Norma Investments illustrates the challenge facing officials in the UK, US and EU countries trying to figure out which assets the oligarchs are subject to sanctions. British officials say once sanctions are imposed, assets controlled by the people subject to them are frozen. In Britain they began to impose sanctions on family members of oligarchs among other things to stop transfers that might have been made earlier.
Norma Investments served as an instrument for venture capital investments. Since 2018, Norma has owned MHC Services, a management consulting firm operating out of the Chelsea Football Club offices, according to MHC records. Norma has invested in renewable US fuel companies and acquired a stake in British energy company Velocys, according to reports to securities authorities. Norma also funded research into anti-cancer drugs and anti-aging at the American biotechnology company Cleveland BioLabs, which wrote in a report to the authorities in 2021 that Norma was under Abramovich’s control.
Our group, an Israeli technology company in which Abramovich invested in 2015, announced in a 2016 report that Abramovich had bought its stake through a company that was owned by Norma. According to a report by our group, the owner of Norma was A Corp-Trustee, a trustee in Cyprus called the Harmony Trust Settlement. A Corp-Trustee is also the owner of Abramovich’s estate in London, according to property records.
Britain is harnessing the law in an attempt to seize confiscated assets
Many governments have the ability to temporarily freeze the assets of individuals or entities within their jurisdiction, without having to prove a criminal act, whether through sanctions or other measures. Property owners are usually not allowed to sell or make a profit from the properties until after the sanctions have been lifted or success in repelling them in the courts. But most governments do not try to seize ownership of the property, except in cases of lengthy trials where it is necessary to prove a violation of the law. The UK government, however, is considering laws that would give it the authority to seize confiscated assets.
When the British government imposed sanctions on Abramovich, it said it had benefited from Putin’s rule. As a frequent visitor to London, Abramovich has not been seen in the country in recent years. His registered address in recent reports to authorities is in Russia.
In recent days, Abramovich’s private jet has zigzagged between Israel, of which he is also a citizen, Turkey and Russia, according to flight records. On Monday, Abramovich was photographed wearing a protective mask in the VIP room at Israel Airport. His representatives did not comment on the sanctions.
Abramowicz’s 163-meter Eclipse super-yacht sailed off the coast of Algeria in the Mediterranean on Tuesday afternoon, after leaving Phillipsburg, in the Netherlands Antilles in the Caribbean, according to FleetMon. The islands are part of the Netherlands, which is a member of the European Union. Montenegro is not part of the EU but said it would abide by the sanctions. Several other super-yachts, belonging to other oligarchs on which sanctions were imposed, were seized or detained at ports in France and Italy.
Shortly after the Russian invasion, Abramovich put the Chelsea football team up for sale. The first bids are expected on Friday, but British sanctions prohibit him from earning any amount received as part of a deal. The UK government has given the club a license to continue playing as usual, but with certain restrictions as long as the owner is subject to sanctions. Abramovich is also not allowed to sell real estate in the UK that he owns.