The first findings of the major investigation by the International Consortium of Investigative Journalists (ICIJ) regarding the highly acclaimed corruption case in Cyprus entitled “Cyprus Confidential” have been made public.
Specifically, a Guardian article refers to the role of “blue-chip accountants” from PwC Cyprus and other consultants in managing transactions while Vladimir Putin’s forces were carrying out the invasion of Ukraine. The evidence comes from ‘Cyprus Confidential’, a leak of 3.6 million files by an anonymous source to the International Consortium of Investigative Journalists (ICIJ) and Germany’s Paper Trail Media, which carried out the investigation alongside the Guardian.
This is the biggest leak of financial data that has ever happened for Cyprus. The evidence sheds light on opaque offshore structures run by accountants and corporate service providers in EU member state Cyprus. The Guardian notes that they could lead to undisclosed payments to a powerful Western opinion-shaping journalist, but also reveal potential breaches of rules relating to the financing of football clubs.
The leak reveals the scale of Cyprus’ role as a gateway to Europe for the Russian elite. Among Forbes magazine’s 104 Russian billionaires identified in 2023, two-thirds appear together with family members as clients of Cyprus’ professional service providers. There are records relating to 71 Russian clients placed under sanctions as of February 2022. Many of these relationships have since been terminated.
What the documents reveal
- PwC Cyprus and other business advisers helped one of Russia’s most powerful oligarchs, Alexei Mordashov, try to transfer £1bn to a public company on the day it came under EU sanctions. The Guardian has been told the transfer is subject to criminal investigation progress in Cyprus.
- €600,000 in undisclosed payments from companies linked to the same oligarch to a powerful German journalist, considered a leading expert on Russia, to support the publication of two books on Putin.
- Tens of millions in offshore payments made by Roman Abramovich during his ownership of Chelsea Football Club to agents, scouts and club officials who may have breached football’s strict accounting rules.
- Unclear deals that allowed Abramovich and super-agent Pinchas Zahavi to control the careers of 21 young footballers under controversial third-party ownership deals that have been compared to bonded labour.
Mordashov and PwC said they were not aware of the criminal investigation. The Guardian notes that it has seen no evidence of intent to break the rules.
The EU’s decision to sanction Mordashov was upheld in a ruling in September, according to the European Court of Justice, but the oligarch can appeal again.
The leaked documents, which date from the mid-1990s to April 2022, show nearly 800 companies and trusts registered in secretive tax havens owned or controlled by sanctioned Russians since 2014, when Russia annexed Crimea. These include more than 650 Cypriot companies and trusts.
What is the Cypriot government’s response?
The Cypriot government responded by pledging a “zero tolerance approach” to sanctions violations as it struggles to preserve the country’s status as a financial center.
Cypriot government spokesman Konstantinos Letympiotis said:
“The strategy of our government, which took office in March 2023, is to have zero tolerance for issues related to tax evasion, sanctions and violation of the law and by extension to safeguard the country’s name as a reliable financial center. I would like to emphasize that our government is firmly committed to the fight against corruption and illegal financing and is taking all necessary measures to ensure the full implementation of EU sanctions.”
