Kremlin set to target Chelsea boss Abramovich

Billionaire Chelsea boss Roman Abramovich may be the next target of Kremlin prosecutors after the remote region he runs was declared bankrupt by Russia’s highest audit body.

The remote, sparsely populated, Chukotka region has doled out questionable tax breaks to the magnate’s oil company, said Russia’s Audit Chamber .

The strongly critical announcement by suggests that Abramovich and his Sibneft oil company might be the Kremlin’s next target of prosecution, after Yukos, analysts said.

The nine-month probe into Yukos has crippled the company and led to the jailing of its former chief executive and a top shareholder.

This “may be an attempt to flex muscles,” said Andrei Kortunov of the Eurasia Foundation. “Now that Yukos is almost dead it may be the right time to have a second look at Sibneft and Abramovich himself.”

The probe into Yukos was widely seen as a politically motivated campaign to stifle the political clout of former Yukos head Mikhail Khodorkovsky.

Abramovich, however, has consistently maintained a much lower political profile, despite his governorship of the Chukotka region in Russia’s north-eastern corner.

Russia’s Audit Chamber said that authorities in Chukotka had handed out tax breaks of €316m, most of which went to 22 companies linked to Sibneft, the Interfax news agency reported.

Sergei Ryabukhin, an auditor with the fiscal watchdog, said the affiliates were only nominally registered in the remote Arctic region and were not operating or producing anything there, making the tax breaks illegal.

He also told Russian television that “for all practical purposes the region is bankrupt,” with a state debt more than two and a half times the budget revenue.

A Sibneft spokesman played down the charges, saying the oil giant and its subsidiaries were operating in the region and investing in oil exploration and other spheres.

Abramovich, notoriously media-shy, made no public comment.

Besides paying taxes in Chukotka – as well as other regions in which Sibneft operates – “we have been rebuilding a region neglected by the federal government,” spokesman John Mann said.

When Sergei Stepashin, the head of the Auditing Chamber, announced the launch of the Chukotka audit, he said the checks were routine.

He added, however, that he had moral questions for Abramovich, whom he sought to cast as a big spender who neglects Russia’s woes.

Abramovich’s purchase of the Chelsea last year was derided by some Russian officials, who criticised the billionaire for not pumping his money into Russia’s own struggling soccer clubs.

Abramovich is Russia’s second richest man, according to Forbes magazine. The jailed Khodorkovsky is the richest.

The Chukotka administration defended itself, saying all the region’s debts were incurred before the arrival of the current administration in 2001.

It also claimed the basic conclusion of the chamber was that ”there are no criminal cases to be brought.”

The chamber’s report will be sent to the government as well as to the General Prosecutor’s Office, Ryabukhin said.