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The change of stake may have been designed to insulate the art from incoming sanctions packages, since these often apply only to assets that are at least 50 percent owned by blacklisted individuals.
Abramovich was indeed sanctioned by the U.K. and EU in the first half of March 2022 for his alleged association with Putin. While some of his prominent assets were frozen, and he was forced to sell the Chelsea FC soccer team, the artwork remained untouched.
“The 50 percent rule works slightly differently in [various] jurisdictions, but under any version of the rules, it would have been attractive to reduce the interest of a trust beneficiary who was likely to be sanctioned,” said Tom Keatinge, director of the Centre for Financial Crime and Security Studies at the U.K.-based think tank Royal United Services Institute.
“A lot of this was happening in the run-up to the war, in the hope of keeping assets out of reach of sanctions authorities,” Keatinge said.
Zhukova, a U.S. citizen, has not been sanctioned, and has spoken out against Russia’s attack on Ukraine. There is no suggestion she was aware of or involved in the change in beneficial interest in Ermis, since administrators of the trust had the power to make such alterations without her knowledge.
Keatinge said that oligarchs close to Putin were likely to have had “a strategy for dealing with heightened [sanctions] pressure” even before they were sanctioned. “This is [an] example of…an oligarch enacting a fairly simple strategy to safeguard their wealth,” he said.
‘The Public Are Deprived’
The leaked files show how Abramovich and Zhukova built their collection. In late 2010, Abramovich hired Sandford Heller, an art advisor to the world’s wealthiest collectors, on a $500,000-a-year contract. Over the next six years, Heller helped Abramovich and Zhukova put the collection together. (Heller did not respond to a request for comment).
The location of the works is unknown. The documents show that some of them were kept in storage in London over the years. Unlike some other famous art investors, Abramovich and Zhukova have not put their full collection on display for the public. Some pieces have occasionally been loaned to exhibitions, but usually anonymously, their labels reading only “private collection.”
A 2021 profile of Zhukova on an arts website described how her residences are full of artworks, saying that “she lives in the company of everything from a figurative painting by Mark Tansey to an abstract one by Piet Mondrian.”
But pieces from the collection have not been seen in public since the sanctions against Abramovich, likely due to complications caused by his sanctioning.
“It is regrettable that the trust that holds these works seems unable to lend them because of sanctions,” art market expert Georgina Adam told the Guardian.
“These sanctions were imposed for good reason. Now, the consequence of Mr. Abramovich’s investment in art is that the public are deprived of the opportunity to enjoy some of the greatest modern and contemporary works.”
The leaked records show that, before being sanctioned, Abramovich had certain pieces transferred to his European mansions or to his $1.3 billion yacht. According to loan agreements between Seline and companies associated with Abramovich’s properties, the pieces were moved out of storage for private display.
“It’s a tragedy that this collection is going to be invisible for a very long time unless some kind of solution can be reached,” said Renton.
“There are too few of these types of paintings for that to happen.”
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