• Thu. May 19th, 2022

Abramovich owned a stake in a company that won contracts with the US government

ByLinda W. Smith

Apr 18, 2022

Russian oligarch Roman Abramovich has been in the headlines ever since Russia invaded Ukraine. Billions of his assets have been frozen by a Jersey court. French authorities have seized a $120 million mansion he owns on the French Riviera. And the fate of his British Premier League football club, Chelsea, has been making headlines around the world.

Russian oligarch Roman Abramovich. (Photo: Amir Hosseini/Fars Media Corporation, Wikimedia, License)But the Russian billionaire’s investment in a US pharmaceutical company that received funding from the US and Russian governments has attracted far less attention.

From 2011 until at least the end of 2021, Abramovich was a major player in Cleveland BioLabs, Inc. and its successor, Statera Biopharma, Inc. Buffalo, New York-based Cleveland spent years developing Entolimod, an anticancer drug that can be used to combat the effects of radiation exposure.

“It would be a storage agent,” Michael Handley, CEO of Statera, told pharmaceutical trade publication Endpoints News in December 2021. “So governments, including the US government and the world, would order it and stockpile it. in case God forbid. , a meltdown of a nuclear reactor or even worse, a nuclear war.

Public records show that during its early years, Cleveland lobbied for contracts with the U.S. government, employing six different companies to champion its case in Washington, D.C. between 2008 and 2013. Since 2010, the company has spent more than $400,000 on lobbying, according to the analysis. by Anti-Corruption Data Collective, a nonprofit group of journalists and data scientists.

“They were actually quite aggressive on the lobbying front, on par with the major players,” a lobbyist who worked for one of the six companies Cleveland hired, told OCCRP on condition of anonymity.

This lobbying quickly paid off. In September 2010, Cleveland was awarded a nearly $5.4 million research contract by the US Army Space and Missile Defense Command.

Abramovich invested in Cleveland the following year, although it is unclear exactly how much. In a subsequent regulatory filing, the company said it provided $10.5 million, with the right to increase its investment up to $30 million.

A representative from Cleveland’s successor company, Statera, confirmed Abramovich was an investor late last year, but did not provide further details. The London-based oligarch’s spokesperson would not comment either.

Cleveland won another $9.8 million contract from the Department of Defense’s Joint Combatant Medical Research Program in 2015, receiving a total of $15.8 million from the US government that year. In a March 2020 regulatory filing, the company said U.S. state contracts accounted for 81.2% of revenue that year and 64.5% in 2019.

Meanwhile, public records show that more than $60 million has flowed to Cleveland from the Russian government, Abramovich and other private Russian investors.

In 2013, two of its subsidiaries won more than $9 million in contracts from Russia’s Ministry of Industry and Trade to develop entolimod and another cancer drug.

Months before Cleveland won the first US government contract in 2015, Abramovich’s right-hand man, David Davidovich, reportedly took a majority stake in the company with a $25 million investment. Davidovich then appointed seven directors to the Cleveland board, all of whom would have worked for Abramovich’s investment vehicle, Millhouse LLC.

In 2020, Cleveland warned that its relationship with Russia could jeopardize its business with the US government.

“Because the largest holder of our company’s outstanding common stock is an investor with ties to Russia, and several Russian citizens and residents serve on our board of directors, our ability to obtain and maintain contracts with the US Department of Defense and other US government agencies … may become more difficult,” the company said in the March filing.

Louise Shelley, director of Terrorism, Transnational Crime and Corruption Center at George Mason University in Virginia, said there should be more transparency about who invests in developing products that can be used on the battlefield.

“I think there’s an absolute need to look at who is producing material of national security concern and who are the investors in it, who benefits from it,” Shelley said.

“We just don’t know who is behind our investments, what we don’t look at, how we allow shell companies and nesting companies to invest in key security sectors.”

The Pentagon did not respond to requests for comment.

Donations and sanctions

Abramovich’s investment in Cleveland BioLabs isn’t his only foray into the US pharmaceutical industry.

For the past five years, he has also been the largest individual donor to the New York state-run Roswell Park Cancer Institute, donating more than $1 million annually, according to records reviewed by Investigative Post.

Roswell Park is one of several cancer nonprofits that in 2011 entered into a joint venture with Cleveland and Russian state-supported incubator Rusnano to create Panacela, one of the Cleveland affiliates that won contracts with the Russian Ministry of Industry and Trade.

At the time, Rusnano was run by Anatoly Chubais, who helped lead Boris Yeltsin’s privatization in post-Soviet Russia in the 1990s when Abramovich made his fortune. Chubais left Rusnano in 2020 to become a Kremlin adviser to development organizations, but fled Russia this year after resigning in protest against the invasion of Ukraine.

Roswell Park spokeswoman Annie Deck-Miller said the institute hasn’t had a contract with Cleveland since July 2018, but defended its work with Abramovich.

“Mr. Abramovich has been a generous supporter of the cutting-edge cancer research taking place at Roswell Park, and his donations have helped advance advances in life-saving science,” Deck-Miller told Investigative Post “Cancer is a global problem that affects us all.”

It’s unclear what happened to Abramovich’s involvement in Cleveland this year. In recent weeks it has been sanctioned by the UK, European Union and Canada in response to Russia’s invasion of Ukraine, but so far the US has not followed suit. .

The Wall Street Journal reported in March that Abramovich transferred control of Norma Investments, through which he had invested in Cleveland, to Davidovich just hours after Russia invaded.

The UK on Thursday sanctioned Davidovich and another of Abramovich’s aides, Eugene Tenenbaum, saying the move would lead to the freezing of £10 billion in assets. Tenenbaum told OCCRP he was not involved in investing in Cleveland.

Statera does not mention Abramovich in filings with the U.S. Securities and Exchange Commission this year, and the company appears to be in freefall.

At the end of March, it issued nearly $5.7 million in new shares in an effort to raise funds. But on March 28, it notified the Nasdaq stock exchange that two board members had resigned, leaving it without enough independent directors.

Then, this month, Statera said its external auditor had also quit. The auditor did not respond to questions about whether this was related to sanctions.

Geoff Kelly of the Investigative Post in Buffalo and David Szakonyi of the Anti-Corruption Data Collective contributed reporting.

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