Filenews 16 November 2023 - by Giacomo Tognini
Cyprus has long been a haven for Russian tycoons who want to conceal ownership of their companies, luxury yachts and huge residences.
The "Cyprus Confidential" survey, conducted by the International Consortium of Investigative Journalists (ICIJ) in collaboration with nearly 70 media organizations around the world, reveals how 67 of the 105 Russian billionaires included in Forbes' 2023 list used financial services companies on the island to conceal their wealth and evade Western sanctions.
The investigation looked at 3.6 million documents leaked by six companies in Cyprus, dating from the mid-1990s to April 2022 – two months after Russia's invasion of Ukraine prompted Western governments to impose sanctions on dozens of Russian billionaires. The Cypriot companies' clients include 25 Russians sanctioned by the West following Russia's annexation of Crimea in 2014, according to ICIJ, although it is unclear whether all of these relations continued.
"We are seeing the transfer of assets of hundreds of millions of dollars, which we believe ultimately refutes the view that economic sanctions stopped the flows of Russian black money," notes Fergus Shiel, director of ICIJ.
One of the report's biggest revelations was that a shell company linked to Alexei Mordashov, the steel magnate and one of Russia's richest men with an estimated fortune of $21 billion. He agreed to pay about $700,000 over five years to German journalist Hubert Seipel for "writing a book about the [political] environment in the Russian Federation." In 2021, Seipel published a book titled "Putin's Power," while he identifies himself as "the only Western journalist who has direct, personal access" to the Russian president.
"This shows you how the Russians work: they pay this guy through shell companies, through a billionaire," said Neil Weinberg, co-author of the Cyprus Confidential study. "The Mordashovs are carrying out Putin's orders on his behalf," he adds.
Other leaked documents give new information about how some companies in Cyprus are involved in Mordashov's transfer of assets. On March 1, 2022 – the day after the EU imposed sanctions against Mordashov – employees of PwC Cyprus, a subsidiary of the accounting giant, and Cypcodirect, a company founded by a former partner of PwC Cyprus, helped transfer the Russian oligarch's stake in German travel company TUI Group to his wife. Marina. The shares were worth €1.4 billion at the time in question. dollars and the transfer of the package was later temporarily blocked by German authorities.
In total, there are 64 shell companies linked to Mordashov – almost all managed by PwC Cyprus and Cypcodirect. The same companies also helped Alexander Abramov and Alexander Frolov (two sanctioned Russian billionaires who have a stake in Russian steelmaker Evraz) to transfer €100 million. dollars between front companies they controlled, according to the investigation. They also helped Oleg Deripaska, another sanctioned oligarch worth an estimated $2.4 billion. He transferred management of his $56 million luxury yacht to another person, days after the U.S. Treasury imposed sanctions on him in 2018.
Many of the Russian tycoons relied on the Cypriot companies mentioned in the leaked documents to manage their vast fortune. Roman Abramovich, who according to Forbes is worth $9 billion. He owned or controlled 246 companies and 14 trusts, registered in Cyprus, the Isle of Man, Jersey and the British Virgin Islands, managed by Cypcodirect and another Cypriot company, MeritServus. Frolov and Abramov, Abramovich's partners at Evraz, had 78 companies and trusts featured in the survey data. Forbes previously reported on another leak from MeritServus, which was investigating Abramovich's investments in start-ups that had struck deals with Washington and London, government contracts in the U.S. and U.K., and his fleet of ultra-luxury yachts. with a total value of 1 billion dollars.
"You will see a multitude of shell companies created by Cypriot financial services companies to 'protect' the real owners of these assets from transparency and accountability," Shiel stresses.
According to the investigation, Pyotr Aven, a Russian billionaire who co-founded Russia's largest private bank as well as investment firm LetterOne, kept much of his fortune in Cyprus-based trusts managed by the company called Abacus Ltd. On February 28, 2022, the day the EU imposed sanctions on Aven, The Russian tycoon transferred about $5 million from an Austrian bank account to a U.K. account linked to the manager of his $100 million mansion. The move caught the attention of the UK's National Crime Agency (NCA), which investigates international financial crimes. According to case records obtained by the British nonprofit Spotlight on Corruption and obtained by ICIJ and its partners, the NCA filed a lawsuit against Aven to recover more than $1 million. dollars from these funds.
"The money was moving outside the scope of European sanctions so it could potentially be funnelled to the UK," says Delphine Reuter, a data analyst and investigative journalist at ICIJ. "The difficult thing is that they use partners to implement all these transactions. The authorities are not sure whether or not this action goes against the scope of the sanctions."
The Cypriot government responded to the survey by promising "zero tolerance" to those who circumvent sanctions. The country has already revoked the citizenship of more than 200 people since 2020, when it shut down its "golden passport" program — including several sanctioned oligarchs like Deripaska — but research shows how the island remains a key hub for wealthy oligarchs seeking to move their assets overseas.
