Cyprus is in the spotlight following a damning Guardian investigation into Russian oligarchs handing over assets worth hundreds of millions to avoid sanctions following Russia’s invasion of Ukraine.
The Guardian report highlighted the role of PwC Cyprus’ senior accountants and other consultants in managing transactions during the war.
The evidence comes from Cyprus Confidential, a leak of 3.6 million files from an anonymous source to the International Consortium of Investigative Journalists (ICIJ) and German newspaper Paper Trail Media, which conducted the investigation with the Guardian. This the largest financial data leak that has ever occurred in Cyprus.
Evidence sheds light on opaque offshore structures run by accountants and corporate service providers in a Member State EU In Cyprus.
The leak reveals Cyprus’ role as a “gateway to Europe” for the Kremlin-linked elite. Among the 104 Russian billionaires identified by Forbes magazine in 2023, two thirds are listed, along with family members, as clients of Cypriot professional services providers. There are records of 71 Russian clients under sanctions since February 2022. According to experts, many sanctions are still in effect (not lifted) against these individuals.
Cyprus and other business advisers helped one of Russia’s most powerful oligarchs, Alexei Mordashov, try to transfer £1 billion to a public company the day it fell under EU sanctions.
What follows is a sum of 600,000 euros in hidden payments from companies associated with the same oligarch to an influential German journalist, considered a leading expert on Russia, in support for the publication of two books about Putin.
Tens of millions of offshore payments made Roman Abramovich during his ownership of Chelsea Football Club to agents, scouts and club officials who may have breached strict football accounting rules.
The unclear deals that allowed Abramovich and super-agent Pinhas Zahawi to oversee the careers of 21 young footballers in controversial third-party property deals that have been likened to bonded labour.
A PwC spokesperson said: “Any allegations of non-compliance with applicable laws and regulations are taken very seriously and are investigated and appropriate action taken where appropriate.”
Mordashov and PwC said they were not aware of the criminal investigation. The Guardian notes that it saw no evidence of intent to break the rules. According to the European Court, the EU’s decision to impose sanctions against Mordashov was upheld in a September ruling, but the oligarch could appeal again.
Leaked documents dating from the mid-1990s to April 2022 show that some 800 companies and trusts registered in secret tax havens are owned or controlled by Russians who have been sanctioned since 2014, when Russia annexed Crimea. These include more than 650 Cypriot companies and trusts.
The Cyprus government has responded by promising “zero tolerance” for sanctions violations as it struggles to maintain the country’s status as a financial center. Cypriot government spokesman Konstantinos Letimpiotis said: “The strategy of our government, which came to power in March 2023, is to have zero tolerance for issues related to tax evasion, sanctions and violation of the law, and as a result, save the name the country as a trustworthy financial center. “I would like to emphasize that our government is firmly committed to the fight against corruption and illicit financing, and is taking all necessary measures to ensure full implementation of EU sanctions,” writes the Greek publication parallaximag.gr.
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