ToI Investigates'There is shell company upon shell company'

Not much use to Putin anymore, ‘toxic’ oligarchs in Israel come under scrutiny

Tycoons ‘shocked’ by scale of sanctions, years of reputation-building gone, experts say; 2018 estimate said 30-40 Russia-linked oligarchs had taken Israeli citizenship or residency

Ricky Ben-David is The Times of Israel’s Tech Israel editor and reporter.

Russian businessman Roman Abramovich looks on, as he follows Prime Minister Vladimir Putin's press conference after Russia was announced being the host for the 2018 soccer World Cup in Zurich, Switzerland, December 2, 2010. (AP/Anja Niedringhaus)
Russian businessman Roman Abramovich looks on, as he follows Prime Minister Vladimir Putin's press conference after Russia was announced being the host for the 2018 soccer World Cup in Zurich, Switzerland, December 2, 2010. (AP/Anja Niedringhaus)

It was a flight heard around the world — or at least on the feeds of people who follow flight tracker accounts. On Sunday evening, a private plane belonging to Israeli-Russian oligarch Roman Abramovich was spotted landing in Tel Aviv from Moscow.

Flight data flagged by a Twitter account that tracks the movement of Abramovich’s six aircraft and those of other Russian oligarchs showed that a Gulfstream G650 belonging to Abramovich landed in the city at around 9 p.m. local time. That jet had departed Moscow earlier Sunday, following a flight from Istanbul where the plane had waited for about a week, according to the data.

(The automated account, as well as a separate feed tracking Russian oligarchs’ private yachts, was set up in recent days by American university student Jack Sweeney, 19, who made headlines late last month for tracking Elon Musk’s private plane. The plane feed, Russian Oligarch Jets, pulls data from the Automatic Dependent Surveillance–Broadcast (ADS–B), a surveillance technology that tracks aircraft’s position in real-time via satellite navigation.)

Since March 1, Abramovich’s Gulfstream has made a few trips between Istanbul and Moscow. Another plane belonging to the oligarch, a Boeing 787-8 Dreamliner, took off from Moscow to Dubai 10 days ago.

It was not known for sure whether Abramovich, a metals and petroleum magnate, was on any of these flights or if the movement of his planes indicates any illicit activity. He was photographed Monday afternoon at Israel’s Ben-Gurion International Airport near Tel Aviv apparently waiting to board a flight to Istanbul and thence to Moscow. Again, though, at time of writing, his presence on board was not definitively confirmed.

Abramovich’s assets and whereabouts, and those of over a dozen Russian oligarchs, have come under increased scrutiny as Western governments seek to punish Russia over its war on Ukraine by imposing unprecedented economic sanctions and targeting business tycoons who have amassed vast wealth in a country where only loyalists of Vladimir Putin get ahead.

Russian President Vladimir Putin chairs a meeting with members of the government via teleconference in Moscow, March 10, 2022. (Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP, File)

Abramovich himself was recently slapped with punitive measures by Canada and the United Kingdom, which recently disqualified him from running the Chelsea football club which he owns.

Israel has so far avoided joining in on sanctions against Russia or engaging in direct criticism of the Kremlin. Nor has it taken any action against Russian oligarchs with assets in the country.

This approach has earned Jerusalem a rebuke from the US government, whose undersecretary of state for political affairs, Victoria Nuland, publicly warned Israel in a TV interview Friday against taking in “dirty money” from Russia and called on Jerusalem to join Western sanctions against Moscow.

The public scolding came after reports this past weekend in the Hebrew-language press suggested that at least 14 private jets have taken off from Russia to Israel in the past 10 days.

In this Dec. 2, 2010, photo, then Russian Prime Minister Vladimir Putin, right, congratulates members of the Russian delegation, from left: conductor Valery Gergiyev, businessman Roman Abramovich and Nizhny Novgorod governor Valery Shantsev; after it was announced that Russia would host the 2018 soccer World Cup, in Zurich, Switzerland. (AP Photo/Alexei Nikolsky, Pool)

Channel 12 reported that an unusual number of rented private jets have been flying from Russia to Israel since the invasion of Ukraine on February 24, a possible indication that some wealthy Russians were looking at ways to slip around sanctions.

Under increasing pressure, Israel on Monday indicated that it was forming a special inter-ministerial committee to study the sanctions issue.

Foreign Minister Yair Lapid declared during a stop in Slovakia that “Israel will not be a route to bypass sanctions imposed on Russia by the United States and other Western countries.”

Assets hidden in layers

There is no definitive data on how many oligarchs are currently in Israel or exactly what assets they own, as many of these are registered to front companies or property managers, The Times of Israel was told by experts who have extensively covered this issue (and wish to remain unnamed).

One Israel-based person with deep knowledge of the history of Russian oligarchs in the country said that the assets are often purchased in such convoluted ways that it is often “very difficult or impossible” to understand who owns what.

Authorities in other countries like the US and the UK, where oligarchs are believed to have poured billions in real estate, yachts, and planes, face the same challenges.

But there have been some successes.

While European law enforcement agencies have moved in recent days to seize private yachts, including one that may or may not actually belong to Putin, a former CIA officer told CNN on Sunday that most of these ships are “owned by front companies and that “most of them are flagged in places like the Marshall Islands, or the Cayman Islands or the Isle of Wight [England] so it is very difficult to untangle who the beneficial owner is.”

A view of Russian-Jewish tycoon Roman Abramovich’s superyacht Solaris anchored in Tivat, Montenegro, March 12, 2022. (AP Photo/Risto Bozovic)

“There is shell company upon shell company and so trying to follow all of that back, and figure out exactly who the owner is, is very difficult and it’s done that way on purpose,” said Alex Finley, formerly with the CIA’s Directorate of Operations, where she served in West Africa and Europe.

Russian oligarchs have learned how to hide assets expertly since 2014 when sanctions were imposed after Russia annexed Ukraine’s Crimea, and now they “sign over ownership of their mansions, condos and fine art” to others, noted a Forbes report this month titled “Evading Sanctions: A How-To Guide For Russian Billionaires.”

These oligarchs “discovered that using a series of shell companies resembling Matryoshka dolls rendered it impossible for hostile governments to seize their jets and yachts. They made sure their stakes in companies were less than 50%, keeping them beyond the reach of US sanctions. They registered assets in the British Virgin Islands, the Isle of Man, Cyprus, or in the two Russian tax havens, Oktyabrsky Island and Russky Island, where nations opposed to the shelling of Ukraine can never lay a finger on them. Most importantly, they’ve enlisted lawyers and accountants to create an entire new field of practice: the sanctions-evasion industry,” the report read.

Beneficial owners

The issue of beneficial owners, people who benefit from asset ownership even if the legal title is registered to others, is one that Russian-born Ksenia Svetlova, a former journalist and MK, said she had tried in vain to tackle as a member of the Israeli parliament in 2015-2019.

“Currently there is no demand to disclose final beneficiaries [for assets]. Israel doesn’t have a good track record in money laundering, [although] it’s a little bit better in the last few years. My bill demanded that accountants and firms supervising deals disclose the final beneficiary to authorities,” she told The Times of Israel by phone Sunday.

“You have a [given] account or asset — what is it? Is it Israeli? The account [funding the deal] is in the Cayman Islands, and there may be some shady oligarch behind it. Needless to say, there was not much support for the bill, the MKs didn’t really understand the issue and didn’t feel the need to change the system,” she said.

Svetlova said that as Israel became a magnet for many people from around the world, “not just Russian oligarchs,” she felt the bill would be appropriate as “someone who was dedicated to the fight against corruption and money laundering.”

Journalist and political analyst Ksenia Svetlova, formerly an MK from the Zionist Union party. (Miriam Alster/Flash90)

In the present climate, she noted, “with questions surrounding oligarchs’ money, more people are starting to understand.”

“Israel has been looking away from this issue, at least until now. This is also true regarding the media because you have a few of Putin’s men here — or at least close to Putin — who hold [stakes] in various media: [Israeli-Georgian businessman] Mikhael Mirilashvili of Channel 14, and [Ukrainian businessman and investor] Len Blavatnik of Channel 13,” said Svetlova.

Channel 14 is in fact owned by Yitzchak Mirilashvili, the son of the Georgia-born billionaire and not the businessman himself.

Based in Israel, Mirilashvili was ranked by the Russian-language publication “Business St. Petersburg” in 2016 as the second-wealthiest businessman in St. Petersburg, with a net worth of 229 billion rubles ($3.6 billion). In 2019, he was accused of murky dealings related to an Israel-based organization.

Georgian-Israeli businessman Michael Mirilashvili at his offices in the city of Petah Tikva, on November 17, 2020. (Emmanuel Dundand/AFP)

Another person who wished to remain anonymous but who has done significant research on Russian oligarchs worldwide told The Times of Israel that Mirilashvili “has an early connection to Putin from St. Petersburg” where the Russian president started his political career. Mirilashvili also aligns with Russia’s stance or “propaganda about World War II,” the person added, which portrays the USSR as a staunch opponent of Nazism from the beginning.

Mirilashvili is also the owner and president of Watergen, a company that developed a patented technology that processes air to generate clean drinking water.

Blavatnik, meanwhile, is a Ukrainian businessman who cemented his fortune in the 1990s under then-Russian president Boris Yeltsin and his current ties to Putin are unclear. He has American and British citizenship and donates to Israeli organizations.

Neither Blavatnik nor Mirilashvili are currently on Western sanctions lists. But a number of other oligarchs, Jewish or Israeli, do appear, including Abramovich.

Israel’s most prominent oligarch

According to a 2018 estimate, some 30 to 40 Russia-linked tycoons have taken Israeli citizenship or residency, with most staying only part-time or temporarily because of scrutiny into their affairs.

At the moment, it is unclear how many remain but Abramovich is certainly Israel’s most visible oligarch. He is considered one of the wealthiest men in the country with an estimated net worth of $7.2 billion in 2022, according to Forbes, down from $14.5 billion last April.

Abramovich set up shop in Israel in 2018 after the UK would not renew his visa and started looking more closely into his background.

Chelsea FC owner Roman Abramovich, center, applauds at the end of the English Premier League soccer match between Chelsea and Sunderland at Stamford Bridge stadium in London, Sunday, May 21, 2017. (Kirsty Wigglesworth/AP)

In addition to Chelsea, he owns significant stakes in UK-incorporated steel and mining giant Evraz, whose shares were deleted Monday by index provider FTSE Russell (owned by the London Stock Exchange Group), and Norilsk Nickel, a Russian nickel and palladium mining and smelting company.

Abramovich also owns at least two yachts, Solaris and the 533-foot Eclipse, which he bought for nearly $400 million in 2010, according to Forbes. Solaris was recently spotted in the small Adriatic Sea state of Montenegro.

He also owned significant real estate in New York, and has over the years transferred more than $90 million worth of property in the city to his ex-wife, Dasha Zhukova, Forbes has reported.

In Israel, Abramovich is believed to own at least three properties — a hotel in Tel Aviv’s upscale Neve Tzedek neighborhood he bought in 2015 from actress Gal Gadot’s husband Yaron Varsano for NIS 100 million ($30 million) and converted into a home, a $65 million mansion in the Tel Aviv suburb of Herzliya Pituah, and a $58 million five-story Tel Aviv beachfront office building.

Abramovich has also backed a number of Israeli startups through his investment companies, including StoreDot, an Israeli developer of extreme fast-charging (XFC) battery technology for electric vehicles, transit company Via, and social engagement platform Spot.IM which was later renamed OpenWeb.

He is also a major donor to causes in Israel. But after trying to help him avoid punitive measures, the Yad Vashem Holocaust Memorial Museum last week announced that it was suspending ties with Abramovich following the imposition of the sanctions.

Chelsea owner Roman Abramovich holding a banner saying ‘Say No to Antisemitism’ in honor of International Holocaust Remembrance Day, January 2021. (Courtesy: Chelsea FC/President Rivlin/GPO)

Abramovich, who was described by the oligarchs researcher as “Putin’s wallet” and one of his moneymen charged with buying assets in Western countries, is no stranger to sanctions. He’s been on the 2017 Countering America’s Adversaries Through Sanctions Act (CAATSA) list and the “Navalny 35” list since 2021, named for the anti-corruption activist and opposition leader Alexei Navalny who was poisoned by Russian operatives and is now imprisoned in Russia.

The researcher said that Abramovich and others are Putin’s “cash handlers where [he] has almost complete control,” and he “uses them to access Western systems.”

Other Jewish-Russian oligarchs like Mikhail Fridman, Petr Aven, German Khan, and Viktor Vekselberg, all with deep interests in Israel, have also been sanctioned internationally because of their purported connections to Putin. Some of the sanctions stretch back years.

Fridman, Aven and Khan, who are together worth $21 billion, are behind the Genesis Philanthropy Group which awards the annual $1 million Genesis Prize, also known as the “Jewish Nobel.”

They are also among 210 names of prominent Russians on a list of possible targets for sanctions that was released by the US Treasury Department in 2018.

Dubbed “Putin’s list,” at least 18 of the figures on the document have Jewish backgrounds and have donated heavily to Jewish charities around the world in recent years. Their giving has shaped efforts to commemorate the Holocaust, inculcate Jewish identity, and fight antisemitism. Many have also given to Chabad, the Hasidic Jewish outreach movement, in Russia, and to Moscow’s Jewish Museum and Tolerance Center.

The trio donated $10 million to Jewish communities in Ukraine days after Russia invaded. On March 2, Fridman and Aven were hit with fresh sanctions by the EU.

Targeting oligarchs

The researcher offered that “what we [in the West] see as corruption is actually the deep penetration of the Russian state” and should be the main premise by which Western governments target oligarchs.

“There is no market economy, or real private banks, everything is state-controlled,” the researcher said, emphasizing that oligarchs are not even remotely independent.

The expert with historical knowledge said these Russian tycoons are often given “tasks” by the Kremlin, such as buying assets or creating connections, or funding projects to build up their reputation and credibility.

“These people are now shocked by what is happening. All this reputation-building they have done is now gone and they have become toxic,” said the expert.

“Their whole ‘raison d’être’ was to be useful to Putin and now they are not,” the expert said, adding that there is likely “no coming back from this.”

Israel, the person said, “should implement its own sanctions regime” like Singapore did.

Should Israel fail to act on sanctions, “the gap between Israel and the collective West will only grow and will damage Israel in the long term,” Svetlova said.

Agencies and JTA contributed to this report.

UPDATE: This article was corrected on March 16 to reflect that Channel 14 is owned by Yitzchak Mirilashvili, the son of Georgian-born billionaire Mikhael Mirilashvili.

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