Rags to Riches: Top female Tory donor’s vast offshore empire with husband
Panora leak raises questions over the ultimate source of some of Lubov Chernukhin’s donations
The star prize at last year’s Conservative party fundraising ball was a game of tennis with Boris Johnson. The party’s co-chair Ben Elliot was enlisted to play too. But when bidding started there was little drama. Well-heeled guests already knew who was going to outbid everyone: a tall, outgoing blond woman from Moscow who – as one person put it – “dominates the room”. “She always gets top prize. She wins every auction,” the guest said, wryly.
The victorious bidder was Lubov Chernukhin, one of the biggest female donors in recent British political history. Since 2012, she has given the Tories £2.1m. This extraordinary sum has paid for two tennis matches with the prime minister, including in 2014 when Johnson was mayor of London, as well as dinner with his predecessor Theresa May.
Chernukhin, a former banker married to the former Russian oligarch Vladimir Chernukhin, reportedly donates enough to the Tories to qualify for membership of a small group of ultra-rich donors who meet monthly with Johnson and his chancellor, Rishi Sunak. What this exclusive club discusses is not made public. “She’s deep in the party,” the Tory ball guest said.
Yet nothing really is publicly known of Chernukhin’s views. That she is rich is self-evident. Her huge donations suggest a desire to nudge Downing Street and the country’s politics in her preferred direction. She is simultaneously a public figure – named as a donor in electoral commission updates, the subject of BBC and Daily Mail reporting – and an enigma. The couple appear to prefer to keep it that way. As Vladimir Chernukhin acknowledged, giving evidence in a 2018 legal case against a fellow tycoon, it has been “modus operandi” to disguise his commercial interests. He spoke of using “fronts”, “camouflage”, and “silent participation” in specific commercial deals, adding: “I want to be invisible.”
The Pandora papers shed a revealing light on the Chernukhins. Leaked files reveal their extraordinary reliance on the hidden offshore world, and thereby offer a clue as to their interests. The couple go to remarkable lengths to keep their wealth and financial arrangements secret, the leak suggests, instructing lawyers over a tax authority dispute that spanned France, Switzerland and the British Virgin Islands (BVI)
The papers also suggest Lubov Chernukhin’s money flows, at least in part, from her husband’s multifarious corporate structures. That raises the question over the extent to which it is Vladimir, not Lubov, who may be the ultimate source of some of the cash flowing into the Conservative party. Other documents raise questions about a source of Vladimir Chernukhin’s wealth: a lucrative Moscow property deal he secretly struck when he was a senior public official in Russia.
In 2015, Johnson boldly stated that checks by the party had assured him Vladimir Chernukhin was not a Vladimir Putin “crony”. All checks had been carried out, he said. The leak nonetheless suggests that Chernukhin may have in recent years remained on good terms with Kremlin-connected figures in Moscow: among them the wife of a government minister, with whom he owned a factory. At least until recently, Vladimir Chernukhin appears to have retained assets in Russia, some of them dating back to when he was a deputy finance minister under Putin and a powerful state banker.
As part of a joint investigation with BBC Panorama, the Guardian put a detailed list of issues and questions to the Chernukhins about disclosures in the Pandora papers and issues covered in this article. Their lawyers did not respond in detail to most of the questions, but stressed that their failure to address each allegation put to them should not be construed as an admission of their accuracy. They said the invitation to comment had raised “a number of serious, false and defamatory allegations” about their clients.
The Chernukhins’ lawyers did not respond directly to the suggestion their clients appear to have taken elaborate steps to move their money around various offshore structures, in what may amount to lawful but morally questionable tax avoidance. Vladimir Chernukhin does not pay regular UK tax. Instead, he is a “non-dom”, the leak suggests, with Russian and British citizenships. Being non-domiciled in the UK can bestow certain tax advantages, such as not paying UK tax on foreign income. Lubov Chernukhin refuses to disclose her tax status. She acquired a British passport in 2011, which – as the Tory party is keen to point out – makes her donations legal.
Private jets and superyachts
The Chernukhins use a sprawling network of shell companies to maintain their opulent lifestyle, the Pandora papers suggest. Even by oligarchic standards, the details are remarkable. Several times a year the couple have “chartered” their own superyacht to sail around the south of France and the Caribbean. They have also rented their own private jet registered in the Isle of Man. In both cases money to pay the bills is provided from UK entities to offshore companies. Between 2011 and 2014 yacht hire alone cost them £11m.
It is a similar story with the Chernukhins’ £30m London townhouse, overlooking Regent’s Park. They spent nearly £100,000 installing CCTV cameras and a vault with a bombproof metal door. The security guard gets his wages from an offshore company. So do the butler and housekeeper. Even the firm that maintains the swimming pool using an underwater robot sends its invoices to a low-key family office in Singapore, from where they are forwarded to the BVI.
The pair own a £10m country house in Oxfordshire, bought in 2006, two years after Vladimir relocated to the UK. Its quad bikes, beehives and chicken house are offshore-owned. In response to disruption during renovation works, an angry letter was sent to the contractor. It complained of blocked paths, and “inappropriate language” by workers. The author? An anonymous shell company, General Development Group Ltd, based in the BVI.
While there is nothing to suggest illegality, the couple’s reliance on offshore companies for even the most routine transactions is striking.
It is another Chernukhin property, however, that came to the attention of tax authorities, the leak reveals. In 2016, the French tax authorities sought information about Vladimir and Lubov’s offshore wealth – something the couple fiercely resisted. It centred on a turreted villa, once the home of English aristocrats, on Cap d’Antibes, a retreat popular with billionaires. Above the door is a Latin motto: small but convenient. The house belongs to a paper Portuguese entity. French tax officials wanted to know: who actually owns it?
The French wrote to the BVI’s tax authority, the ITA. It in turn demanded information from the Panamanian law firm Alcogal, which managed the Chernukhins’ island companies. Alcogal carried out its own research into the couple’s offshore empire. It found 32 BVI companies linked to the Chernukhins, 28 of them owned by Vladimir.
The ITA’s request for information caused alarm inside Alcogal, as it suggested to them potential concern over their clients’ tax arrangements. Internal emails at the offshore provider show them pondering how best to respond. One possible solution was to “stop providing” the Chernukhins’ companies with agent services, a supervisor suggested. It is not known what came of the French tax inquiries. However, documents in the Pandora papers do suggest the Chernukhins reacted aggressively when they discovered their offshore provider was in touch with French tax officials.
Their Swiss adviser demanded to know what information Alcogal had shared with international authorities. When Alcogal refused to say, the Chernukhins sued it – ultimately losing the case in early 2020. The east Caribbean supreme court ruled the Chernukhins were not entitled to see documents disclosed by Alcogal to tax authorities. Lawyers for Alcogal said the case demonstrated that it was a “responsible service provider which acts in accordance with applicable laws and cooperates fully with regulators”.
Separately, the Chernukhins took legal action against the tax authority in Switzerland, demanding it reveal its communications with France’s tax authority, which had requested information about who sat behind an opaque Swiss company. Multiple Swiss courts have dismissed that case. The Chernukhins’ lawyers did not comment on the status of the French tax inquiries or their failed lawsuit against Alcogal. However, they said their clients “have at all times been advised by reputable tax advisers and have complied with all applicable laws”.
Other files in the leak appear to shed light on the apparent source of at least some of Lubov Chernukhin’s wealth. In Companies House filings she has in the past described herself as a banking consultant and “investment director”. She came to the UK around 2003. A few years later she met Vladimir Chernukhin, after he left his native Russia having apparently fallen out with Putin. By 2014, one of her husband’s companies had loaned her UK company as much as £9.4m, the documents suggest. They appear to show the loans were written off as “bad debt”, a process the couple seemingly used at other times after they lent cash between their firms.
There is no suggestion these intracompany loan structures were unlawful. However, they do appear to show substantial funds were transferred to Lubov Chernukhin from her husband’s offshore empire. One key document in the files appears to confirm she is at least partly reliant on her husband’s funds. It is an email exchange from 2017, after the BVI introduced new financial transparency legislation. Under the new rules service providers were obliged to pass the names of company beneficial owners to the authorities.
The provider described Vladimir as an “investor in high-profile properties in the UK and abroad”, adding that Lubov, who was referred to as a “housewife”, was “financially supported by her husband”. The Chernukhins’ lawyers said it was not accepted that any of Lubov Chernukhin’s political donations had been funded by improper means or affected by the influence of anyone else.
Like other wealthy Russians, Vladimir Chernukhin started from nothing. “All of us came from the Soviet Union with zero money in the pocket,” he said in 2018. The “all” referred to future oligarchs who began as budding entrepreneurs back in the early 1990s, as the communist system fell apart. After a stint in the army Chernukhin went into finance. He founded his own company and joined the ministry of foreign trade.
At some point he must have attracted the attention of Putin, a KGB operative turned St Petersburg politician. In September 1999, a month after becoming Russia’s prime minister, Putin made Chernukhin deputy chairman of Vnesheconombank (VEB). This was a plum role in a state bank. Chernukhin oversaw huge loans, to industry and to the regions.
His financial dealings in Russia came under scrutiny in 2018 when he testified in a high court legal battle brought against him by the oligarch Oleg Deripaska. The dispute centred on the ownership of a Moscow textiles factory, which the two men acquired in 2002 as a lucrative property development. Ultimately, Chernukhin won the case when a judge ruled in 2019 that he was Deripaska’s true joint-venture partner in the project. Deripaska was ordered to pay $95m (£70m) to resolve the dispute.
Speaking on oath during the trial, Chernukhin made rare and previously unreported comments about his time as a senior Russian state official. He said there were few rules preventing state or state-connected employees from doing private business of their own. But it was better to be discreet about it, he said. Rather than holding the investment in his own name, Chernukhin said he used a previous girlfriend as a proxy. “She was my front,” he said of the woman, who was not Lubov.
Under cross-examination Chernukhin accepted that when he and Deripaska acquired the Moscow development, one of the things he could “bring to the party” was his relationship with Moscow’s then mayor, Yuri Luzhkov.
According to Chernukhin’s testimony, when the project encountered planning difficulties, he and Luzhkov negotiated an agreement. As part of the arrangement – and in return for Luzhkov agreeing to smooth over the planning issues – Chernukhin suggested to the court he agreed to use his influence as chair of VEB bank, a cabinet-level position, to help an acquaintance of Luzhkov on another business matter. There is no suggestion Luzhkov’s acquaintance was aware of the arrangements between the two men.
Chernukhin’s testimony raises questions about whether he used his influence as a senior public official for his own private gain. After reviewing the oligarch’s evidence about the deal with Luzhkov, at the request of the Guardian, Tim Owen QC said that while the “you scratch my back and I’ll scratch yours” agreement apparently described by Chernukhin in court was not proof of corruption, it “raises an obvious red flag” for a political party accepting donations that could be derived from Chernukhin’s wealth.
In their response to the Guardian, the Chernukhins’ lawyers said Vladimir had not accumulated any of his wealth in a corrupt manner. They added that none of the high court proceedings, nor the findings made in the case, which Chernukhin won, supported any suggestion of corruption by their client.
Among the Tory elite
Other Pandora files suggest that in 2004, when he exited Russia, Vladimir Chernukhin was allowed to leave the country with the assets he had acquired during his government and VEB years – equating to about $500m (£366m). These were bundled into offshore firms. This very Russian story would have ended there were it not for the fact that Lubov Chernukhin, after she had become a British citizen, started donating large sums to David Cameron’s Conservatives. Behind the scenes, and over non-public drinks and dinners, the couple were quietly building up a network of high-level British establishment contacts.
The files suggest the Chernukhins retain senior Russian connections. In 2017, Vladimir Chernukhin sold the St Petersburg factory plot he bought in the 1990s to a major Russian construction company. Purchase price: £20m. His business partner in this deal was the wife of Yevgeny Yelin, a former deputy governor of St Petersburg who served as Putin’s acting minister for economic development until 2017.
In July, the Financial Times suggested Lubov Chernukhin was a member of the Tory party’s advisory board, the elite donor group that meets monthly with Johnson and Sunak. Conservative officials say it was set up before Johnson took power, but will not say when. Its existence was a closely guarded secret. Several of those who are reportedly part of this group have given £250,000 or more in 2020 and 2021, including Lubov Chernukhin.
The Conservative party said Lubov Chernukhin was a British citizen “which gives her the democratic and legal right to donate to a political party”, and added that donors did not influence government policy. One former donor disagrees. “It’s about access and political influence. When you sit next to an MP or minister or secretary of state you have one-on-one time. You can tell them your agenda. You can question them or make requests. They have to give their time.” The donor was unimpressed with Lubov Chernukhin’s gifts to the party. “People suck up to her because of her money,” they said.
This accusation may be unfair. But if nothing else, the leak suggests the Chernukhins are likely to be opposed to greater offshore transparency. The government is committed to introducing legislation that would reveal the true owners of offshore companies that buy property in the UK. If it is passed, the Chernukhins will be forced to declare their ownership of multiple homes – worth at least £40m. So far, Johnson has not followed through on a 2018 draft law.