EU demands leave £2.3bn from sale of Roman Abramovich’s Chelsea in limbo


The £2.3bn from the sale of Chelsea which was pledged to Ukraine war victims is in limbo amid European Union demands about how the money should be spent.

When Roman Abramovich sold the football club almost 13 months ago, sources say he agreed with the Government that the money would be used for “all victims of the war in Ukraine”, as well as supporting the “long-term work of recovery”.

Mr Abramovich is under sanctions after ministers accused him of having “clear connections” to Vladimir Putin’s regime and being among a group of businessmen of having “blood on their hands”.

However, the huge sum remains unused in a frozen account. Telegraph Sport investigations have now established that a significant cause for the delay is Government consultations with the EU. The bloc is insisting the money be spent in Ukraine directly, rather than on those affected by the conflict as sources claim was stated in the agreement signed by Mr Abramovich and the government.

The independent foundation set up to administer the funds, which is being established by Mike Penrose, a former Unicef UK chief executive, is understood to be at a loss to explain why the Government has taken this position.

The charity is ready to get to work quickly once the funds are released, with Ukraine’s humanitarian crisis dramatically worsening in recent days after the destruction of the Nova Kakhovka dam caused a long-term environmental catastrophe affecting drinking water and food supplies.

The Prime Minister is expected to come under pressure from MPs to solve the impasse amid mounting frustration that a potentially “world-changing” independent charity cannot start work.

In a post-Brexit landscape, it has come as a surprise to some close to talks that the Government seems to be so readily siding with the demands from Brussels. One source described current inertia as “politics standing in the way of urgent humanitarian need”.  It is unclear whether Abramovich may now need to become involved in the process to break the deadlock.

Chelsea’s takeover by the US businessman Todd Boehly-led consortium took place entirely within UK jurisdiction last year, but the Government involved the EU in signing off the long-awaited foundation because Abramovich obtained a Portuguese passport in 2021.

Sources close to talks said EU demands were just one of several factors holding up sign-off, and the UK appears to now be in agreement that the funds should be spent inside the war-torn country only.

However, such a position, humanitarian experts say, would prevent assistance reaching some of the most affected people, including refugees, and those supporting them.

Senior insiders close to the government later suggested EU objections were just one of a myriad of factors in a hugely complex process behind the releasing of the funds. “Seizure is much harder than freezing,” said one source, suggesting it was much easier initially taking away sanctioned oligarchs’ assets in comparison to developing a legal framework for spending them. In a written answer to the Foreign Affairs Committee in November last year, James Cleverly, the Foreign Secretary, wrote: “The government is open to any application for the proceeds to be used for humanitarian purposes in Ukraine, but as you would expect, we must closely scrutinise the details of any proposal to maintain the integrity of the sanctions regime.”

The difference of opinion on the purposes of the fund appears to stem back to before the Chelsea sale was completed.

Sources close to the process said Abramovich had signed a deed of undertaking with the government stating the charity would be for “Ukraine and the consequences of Ukraine.”

However, in a unilateral declaration regarding the sale of Chelsea Football Club in May last year, the government stated: “The Treasury will only issue a licence which ensures that such proceeds are used for exclusively humanitarian purposes in Ukraine. The United Kingdom will work closely with the Portuguese Government and the European Commission when considering an application for such a licence and the destination of the proceeds.”

When contacted for an explanation over the delays by Telegraph Sport, the Government declined to cite the EU as a reason. “We want Ukraine to feel the benefit of this money as quickly as possible, especially given the recent destruction of Kakhovka dam, but we must protect the integrity of our sanctions regime,” a Whitehall source said.

A Government spokeswoman added: “The proceeds from the sale of Chelsea FC are frozen in a UK bank account while independent experts establish a foundation to manage and distribute the money for humanitarian purposes in Ukraine. A licence application will then need to be made to move the funds to the foundation.”

Telegraph inquiries elsewhere, however, suggest the foundation has been ready to apply for the funding since the end of last year, and was set up to use the money for Ukrainian refugees as well as causes in the country. Mr Penrose brought in Jan Egeland, a senior Norwegian diplomat who once advised Kofi Annan at the United Nations, as interim chairman of the foundation.

Mr Abramovich was sanctioned by the UK last year over his alleged links to Putin, but there is no suggestion that the charity is planning to help Russia. On March 2 last year, eight days prior to facing the Government sanctions, he announced his plan for Ukraine as he formally put the Stamford Bridge club up for sale. All net proceeds – the money from any sale minus legal fees – would be used “for the benefit of all victims of the war in Ukraine”, a statement on his behalf said. He also confirmed he had written off the £1.5bn of loans he had made to Chelsea, having transformed the club into a European footballing giant since purchasing the club in 2003.

Under Mr Penrose’s planned investments the fund is potentially set to grow considerably and provide much needed assistance to the victims of the Ukraine war over the coming years. Several projects covering health, housing, education and agriculture have previously been earmarked for immediate help once final agreement is reached.

However, the funds currently sit frozen in Mr Abramovich’s seized company Fordstam. Mr Penrose has previously said that he keeps Fordstam’s secretary, Paul Heagren, updated on progress, and has also spent time in Ukraine.

A small fraction of the takeover cash was released last year to allow Mr Penrose to hire lawyers and charity specialists to help him with a legal framework.

Having been on the ground and studied “many of the areas heavily affected by conflict”, Mr Penrose told Telegraph Sport last year, the foundation can meet an “immediate need to scale up the provision of humanitarian aid including medical equipment, trauma, surgery equipment, and an ability to meet the needs of conflict affected populations near the frontline in sectors such as the provision of food, nutrition, basic services, and very importantly, education as well as medical support.

“There is the need to support Ukrainian institutions that have been overloaded because when you have that level of displacement, obviously you get schools that are suddenly taking in far more children than they are equipped to deal with,” he said.

It is understood that Mr Penrose has very limited contact with the billionaire oligarch. Last year Mr Penrose told Telegraph Sport: “They [former Chelsea chairman Bruce Buck and Abramovich’s spokesperson]reached out to me because I was the CEO of Unicef UK, I was CEO of Action Contre La Faim in France, I was the Global Humanitarian Director for Save the Children, and the chairman of Soccer Aid. They reached out to me to do this but I am creating this independently on my own initiative with support from recognised legal and humanitarian experts.”

Legal undertakings ensure neither Mr Abramovich or Chelsea could ever benefit from the funds intended for the foundation. Officials from the Treasury, Foreign Commonwealth and International Development Office, and DCMS have all been involved in the process to help ensure the foundation is approved by both the Office of Financial Sanctions Implementation (OFSI) and the Charity Commission.