How Mr Chelski cuts his tax bill

THE new owner of Chelsea Football Club avoided paying millions of pounds in tax by exploiting a scheme to help the disabled find work.

Billionaire Roman Abramovich's oil empire is based in Russia, where firms are given generous tax concessions if they employ handicapped staff. The Mail on Sunday can reveal that half the staff in companies linked to the 36-year-old Russian's Sibneft group are registered as 'invalids'.

'On one hand Abramovich looks like a perfect friend to the disabled,' said a source. 'On the other you realise Sibneft is exploiting every last law to avoid tax.'

By having more than half the staff in the trading companies registered as disabled, Abramovich's oil giant has been able to slice 50% from its corporate tax bill. In 2001 the savings ran into tens of millions of pounds. In the same year, six out of seven managers at one Sibneft-linked trading firm, Olivestra, were registered as handicapped.

The head of Russia's Audit Chamber, Vladimir Panskov, also revealed that Sibneft managers used trading companies registered in Russian 'offshore zones' such as Kalmykia and Chukotka, where Abramovich is also the regional governor. All Sibneft oil was sold to these offshore outfits - before being immediately sold back to Sibneft at double the price. Income on this re-sale is not subject to regional tax, saving more than a quarter off its tax bill.

One auditor said they were impressed at the skills of the Sibneft financial experts. 'They are virtuosos,' he said, acknowledging that loopholes exist.

A Sibneft representative said: 'All company actions to optimise its tax payments are within the law. Our tax policy falls in line with the interests of our shareholders.'

However, the Audit Chamber also hinted that the company's tactics would be beyond the law if it employed them today because of recent changes in the regulations 'In 2001, Sibneft transferred 18.3m roubles (£375,000) to companies that are not charities and then cut this amount out of profits,' it said. 'Sibneft-Noyabrsk did not pay mining tax. As a result the federal budget did not receive 22.6m roubles (£465,000).'

In 2000, Sergei Ignatiev, now the head of the Russian Central Bank but then a deputy finance minister, calculated that Sibneft paid only 23 roubles of tax for each ton of oil - eight times less than similar company Surgutneftegaz.

President Vladimir Putin challenged Sibneft president Yevgeny Shvidler, now a Chelsea director, to explain the discrepancy, according to reports. Shvidler claimed that the finance ministry had got it wrong, but later accepted the findings.

In 2001 Sibneft drilled more than 20.671m tons of oil, 97% of it passing through at least five small trading companies. By the beginning of 2002, those companies had been united with Sibneft.

Abramovich, who this month bought a controlling stake in Chelsea Football Club for £150m, is a close friend of Putin and the second richest man in Russia, with a personal fortune estimated at £2.5 billion.

Yet just 13 years ago he was a lowly technical worker, earning around £2,000 a year. His big break came when he met Kremlin insider Boris Berezovsky, who gave him money to invest in an empire that quickly grew to include interests as diverse as a TV company, an ice hockey team and Aeroflot, as well as the oil company.