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(Bloomberg) — A foundation being set up to aid Ukraine with £2.34 billion ($2.9 billion) in proceeds from Roman Abramovich’s sale of Chelsea FC is nearly ready to go with a proposed chair lined up, but UK government approval is taking longer than expected.

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“We’re ready to go and we’re just waiting for approval,” said Mike Penrose, the former Unicef UK chief executive who is acting CEO for the new foundation. “There are complexities and delays based around political approval both between the UK and the EU and within the UK.”

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Penrose said his team had completed all the paperwork needed to set up the foundation, including proposing the Norwegian Refugee Council’s Secretary General Jan Egeland as chairman and an international shortlist of candidates for a seven-member board. He declined to disclose names, saying they’re all people who have been in the charity sector for a long time. Penrose said he has drawn up a shortlist of investment managers to oversee the money.

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“We aren’t going to make any decisions until we know the money’s coming,” Penrose said. “We don’t want to end up with a charity but no money.”

Last year, the UK government released about £200,000 to fund the legal and administrative costs of establishing the charity and hire experts to develop a plan to deploy the funds. The foundation plans to focus on humanitarian projects supporting medical, educational and shelter programs for Ukrainians, Penrose said.

Abramovich, a Russian businessman worth more than $7.5 billion according to the Bloomberg Billionaires Index, sold the London-based football club to a consortium led by American investor Todd Boehly in May 2022, after he was sanctioned by Britain and the European Union over his alleged links to Russia’s President Vladimir Putin.

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Nearly a year on from the sale, the funds remain frozen in a UK bank account and none of them have reached Ukraine. 

The UK Foreign Office declined to comment.

The EU has provided the relevant parties with legal clarity on how its own sanctions apply, and there is no further work expected to be needed from their side, a person familiar with the matter said.

‘Humanitarian Purposes’

The highly charged sale of Chelsea hinged on Abramovich not benefiting from the sale of the club. Abramovich himself proposed setting up the charitable foundation, with all net proceeds from the transaction to be donated to victims of the war in Ukraine.

A UK government statement in May last year said the proceeds would be held in a British bank account, to be “used for humanitarian purposes in Ukraine.” The UK would work with the European Commission and the Portuguese government — where Abramovich holds citizenship — to ensure compliance with sanctions and determine the destination of the proceeds, the statement added.

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The practicalities of the donation have proved to be highly complex and several hurdles still have to be cleared before Ukraine can see any of the money, according to another person who spoke on the condition of anonymity. It’s unclear when this will happen.

In November 2022, UK Foreign Office minister Leo Docherty told the House of Commons that he hoped the money “is on the start of its journey to Ukraine to help the people where they need help.”

The Telegraph newspaper reported in January that the UK government was close to handing over the proceeds to the foundation and arrangements were potentially weeks away.

An independent foundation is being established in the UK to manage and distribute the Abramovich funds. Humanitarian experts outside of the UK government are responsible for the process, which is proving complicated, the person familiar with the structure said.

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Legal Risks

The plan is for the proceeds to be transferred to the foundation led by Penrose. Once the foundation is finalized, it will then have to apply for a license to access the funds from the Office of Financial Sanctions Implementation, the department in the UK Treasury responsible for sanctions, the person said.

The UK government would then have to assess the license application against the risks of sanctions circumvention, the person said. The whole process would likely take a significant period of time to complete. 

Using sanctioned assets is a legally complex issue, with both the UK and EU are exploring ways to seize frozen Russian assets and use them to contribute to Ukraine’s reconstruction. The EU recently introduced reporting obligations and its laws allow it to invest immobilized Russian central bank assets to help Kyiv. But applying a similar mechanism to the assets of sanctioned individuals and entities could be problematic as the restrictions are designed to be temporary.

Separately, Canada has announced that it intends to seize $26 million in sanctioned assets from Abramovich, with proceeds from their forfeiture used to help reconstruct Ukraine and compensate victims of the war.

The Chelsea funds are a different case as Abramovich himself proposed setting up the charitable foundation when he announced he was selling the football club.