What's Cyprus Confidential, probe showing how Russia’s wealth was protected from sanctions?

In the past, we have had the HSBC Swiss leaks in 2015, the Panama Papers in 2016 and the Pandora Papers in 2021. And this year comes Cyprus Confidential. An investigation by the International Consortium of Investigative Journalists (ICIJ) – journalists from 69 global media outlets – studying some 3.6 million documents from six offshore services providers in Cyprus, has revealed how the country became a hub for Russian money-laundering enabling oligarchs to bypass sanctions. In fact, Cyprus Confidential, as the investigation is being called, shows how 67 of the 105 Russian billionaires on the 2023 Forbes World’s Billionaires List used financial services firms on the island to hide their wealth and keep it out of reach from Western sanctions. The investigation also throws light on the financials of former Chelsea owner Roman Abramovich and his links to Russian president Vladimir Putin, a link he has denied for ever so long. We take a deep dive into the investigation and reveals what’s been probed and the reactions to it. What is Cyprus Confidential? Cyprus Confidential, simply put, is an investigation carried out by more than 270 journalists from 69 global media houses spanning across 55 countries. The investigation draws on a whopping 3.6 million leaked documents from six firms in Cyprus, dating mostly from the mid-1990s to April 2022—two months after the Russian invasion of Ukraine, prompting the West to impose sanctions on the Vladimir Putin-led country. As Le Monde explains, Cyprus Confidential tells the tale of how Cyprus, a small Mediterranean island, allowed itself to be overwhelmed by its offshore industry, and became European Union’s weak link in the fight against dubious financial flows. Notably, Cyprus Confidential reinstates and proves what many thought for so long; the Mediterranean island is a safe haven for the illicit gains of Russian oligarchs. The team behind Cyprus Confidential was headed by Australia’s Gerard Ryle, the same man responsible for the Panama Papers and Pandora Papers . The findings that are now out is a result of eight months of studying and analysing the leaked documents of six Cypriot financial services firms – ConnectedSky, Cypcodirect Corporate Services, DJC Accountants, Kallias & Associates, MeritKapital and MeritServus. What does Cyprus Confidential reveal? In short, a lot! The treasure trove of documents – investment structures, financial statements, company structure charts, email exchanges, share purchase agreements, trust deeds and much more – reveal how rich Russians used Cyprus to structure their wealth before the 2022 invasion of Ukraine. The project highlights how they have benefited from the global financial system’s secrecy and lack of regulations. As the probe states, “Collected documents offer a penetrating look inside the rogue financial system that has helped empower some of the West’s most determined foes.” One of the bigger revelations coming out of Cyprus Confidential is how PricewaterhouseCoopers (PwC), one of the world’s biggest accountancy firms tried to help Russia’s Alexey Mordashov, a steel magnate, to transfer £1 billion in a public company on the day he was placed under EU sanctions. The Guardian reports that document show PwC Cyprus staff discuss attempting to transfer about a third of the shares in Tui, Europe’s largest travel company, to Mordashov’s partner. The shares were then worth $1.4 billion, and the transfer was later provisionally blocked by German authorities. Documents also suggest that the accounting firms also helped Alexander Abramov and Alexander Frolov, two sanctioned Russian billionaires with stakes in Russian steelmaker Evraz, transfer $100 million between shell companies they controlled. [caption id=“attachment_13388752” align=“alignnone” width=“640”] Cyprus Confidential reveals the clearest paper trail that links former Chelsea football club owner Roman Abramovich to Russia’s president, Vladimir Putin. File image/AP[/caption] Moreover, they assisted Oleg Deripaska, another sanctioned oligarch worth an estimated $2.4 billion, in transferring the management of his superyacht Clio — worth $56 million — to a new captain, just days after the US Treasury Department sanctioned him in 2018. The investigation also shows Pyotr Aven, a Russian billionaire who co-founded Russia’s largest private bank, held most of his wealth in Cyprus-based trusts administered by a firm named Abacus Ltd. In February 2022, when he was sanctioned by the European Union, he transferred an estimated $5 million from an Austrian bank account to one in the UK linked to the manager of his $100 million mansion in Surrey. This move had caught the attention of UK’s National Crime Agency. Perhaps, one of the bigger revelations tumbling out of Cyprus Confidential was Russian oligarch Roman Abramovich , who has long denied having any connections with Vladimir Putin, sold a quarter of the shares of one of Russia’s largest advertising holdings to entrepreneurs close to the Russian president in 2010. Documents show how Abramovich handed over stake in a Russian advertising giant to two of Putin’s closest aides, including Sergei Roldugin known as ‘Putin’s Wallet’. The deal is the clearest paper trail that links former Chelsea football club owner to the Russian strongman. Another shocker from Cyprus Confidential is that German journalist, Hubert Seipel – who has made several documentaries and written best-selling books in Germany on Russia and President Putin – received money from an oligarch who is close to Putin. According to the investigations, Seipel received a total of €600,000 (Rs 5.42 crore) for two books via a Cyprus-based company linked to Alexey Mordashov. Notably, in 2021, the journalist published a book titled ‘Putin’s Power: Why Europe Needs Russia’. [caption id=“attachment_13388792” align=“alignnone” width=“640”] Russia’s president Vladimir Putin answers questions of ARD channel’s representative Hubert Seipel during an interview for the channel in Vladivostok in November 2014. Seipel, the probe shows, had received money from an oligarch close to the Russian leader. File image/Reuters[/caption] What have been the reactions so far? German broadcaster, NDR, part of the German national network ARD, is considering legal action against Seipel following the accusations of receiving money from an oligarch close to Vladimir Putin. “We suspect that we – and therefore our audience – have been deliberately misled,” Joachim Knuth, chairman of public broadcaster NDR told news agency AFP, adding, “We are now going to look further into the matter and are considering legal action against the person concerned.” When faced with the allegations, Seipel dismissed the idea that he was “some sort of agent of Putin”. But the NDR said it “sees in this a significant conflict of interest that casts doubt on Seipel’s journalistic independence,” reported AFP. The government of Cyprus too reacted to the overall accusations of serving as a haven to the Russian oligarchs. President Nikos Christodoulides told reporters Tuesday: “Everything that has come to light will be investigated, and no one is above our country’s reputation.” “All the information that has come to light will be investigated within a specified timeframe… The reputation of our country, the credibility of our country, you understand, is crucial,” he added. With inputs from agencies