Back in the news - The $13 billion sale of Sibneft in 2005 - Jersey’s Role via Millhouse Capital

Jersey’s investigation into the 2005 Sibneft sale is evolving into a significant international legal probe, with Swiss courts now actively cooperating to uncover potential money laundering and sanctions violations linked to Roman Abramovich and his offshore network.

Key Developments in the Investigation

• The Jersey Attorney General formally requested mutual legal assistance from Switzerland in 2022 and 2023 to obtain banking records tied to entities involved in the $13 billion Sibneft sale.
• Swiss authorities approved the release of documents from banks like Bank O. (now Bank P.) connected to companies such as A. Limited, B. Limited, and C. Limited, which allegedly received funds from the sale.

The Swiss courts  

• Jersey prosecutors are expected to use the Swiss banking data to build criminal cases against Abramovich-linked entities and possibly pursue asset seizures or prosecutions.
• Further appeals to the Swiss Federal Supreme Court are possible but limited to constitutional or asset seizure grounds.
• This case may result in a landmark moment for Jersey’s financial enforcement—and a rare glimpse into how offshore jurisdictions are now actively confronting their legacy of secrecy.

The $13 billion sale of Sibneft in 2005

• The $13 billion sale of Sibneft in 2005—Russia’s largest corporate takeover at the time—had a notable connection to Jersey through Millhouse Capital, the investment vehicle controlled by Roman Abramovich.

Jersey’s Role via Millhouse Capital

• Millhouse Capital, which held the majority stake in Sibneft, was registered in Jersey, a British Crown Dependency known for its offshore financial services.
• This Jersey-based entity was the formal seller of 72.7% of Sibneft to Gazprom, Russia’s state-controlled gas giant.
• The use of Jersey as a base for Millhouse Capital provided tax and regulatory advantages, typical of offshore jurisdictions, and helped facilitate the massive transaction.

Aftermath & Implications

• The deal gave Gazprom control of over 900,000 barrels per day in oil output, making it Russia’s fifth-largest oil producer.
• Abramovich reportedly received between 75–85% of the $13.1 billion payout, though the exact breakdown remains opaque.
• The transaction also marked a shift in Kremlin strategy—reasserting state control over strategic energy assets while discouraging foreign ownership.

Why Jersey?

• Jersey’s legal and financial infrastructure made it attractive for Russian oligarchs and international investors to manage assets discreetly and efficiently.
• Abramovich, like many wealthy individuals at the time, used offshore structures to hold and transfer ownership of major assets, including Sibneft.

How It Worked

• Millhouse Capital orchestrated the sale, but Jersey-based entities like Matteson and Ranelagh acted as financial and legal buffers, helping route proceeds and manage assets.
• These entities allowed Abramovich to minimize tax exposure, maintain confidentiality, and operate across jurisdictions without direct scrutiny.
• Jersey’s infrastructure ensured the deal could be executed cleanly, while keeping ownership layers opaque.

Post-Sale Impact

• In 2022, Jersey authorities froze $7 billion in Abramovich-linked assets, revealing the depth of the island’s involvement.
• The sale itself became a blueprint for how oligarchs used offshore jurisdictions to monetize strategic assets while staying aligned with Kremlin interests.

Source

https://www.rferl.org/a/1061759.html

http://news.bbc.co.uk/1/hi/business/4290282.stm