A new investigation based on millions of leaked documents from Cypriot financial services providers has revealed how Russian oligarchs moved their wealth precisely to Cyprus to protect themselves from Western sanctions.
Cyprus has long been a haven for wealthy Russians who want to hide the ownership of their businesses, superyachts, and lavish homes. Now an investigation by the International Consortium of Investigative Journalists (ICIJ) and nearly 70 media organizations around the world, called Cyprus Confidential, shows that 67 of the 105 Russian billionaires on the 2023 Forbes World’s Billionaires List used financial services companies on the island to hide wealth and keep it out reach of western sanctions.
The investigation is based on 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, which prompted Western governments to sanction dozens of Russian billionaires. Clients of the Cypriot firms include 25 Russians who were later sanctioned by the West after Russia’s annexation of Crimea in 2014, according to the ICIJ, although it is unclear whether all of those relationships have continued.
One of the biggest revelations in the report was that a shell company linked to Alexey Mordashov, a steel magnate and one of the richest men in Russia with a fortune of 21 billion dollars, agreed to pay about 700.000 dollars over five years to German journalist Hubert Seipel. in exchange for “writing a book about the political environment in the Russian Federation.” In 2021, Siepel published a book titled “Putin’s Power” in which he was described as “the only Western journalist who has direct, personal access” to Putin.
Another set of leaked documents revealed new information about how Cyprus firms were deeply involved in massive asset transfers on behalf of the Mordashov. In March 2022 — the day after Mordashov was sanctioned by the European Union (EU) — employees of PwC Cyprus, the local branch of accounting giant PwC, and Cypcodirect, a firm founded by a former PwC partner in Cyprus, helped transfer his stake in a German tourism firm TUI Group to his wife Marina. The shares were worth 1.4 billion dollars at the time, and the transfer was later temporarily blocked by German authorities.
In total, 64 shell companies linked to Mordashov appeared in the data, almost all of which are managed by PwC Cyprus and Cypcodirect. Those same firms also helped Alexander Abramov and Alexander Frolov, two sanctioned Russian billionaires with stakes in the Russian steel company Evraz, move 100 million dollars between shell companies they controlled, according to the investigation. And they helped Oleg Deripaska, another sanctioned oligarch worth an estimated 2.4 billion dollars, transfer control of his 56 million dollar superyacht Clio to a new captain, just days after the United States (U.S.) Department of the Treasury sanctioned him in 2018.
Many of Russia‘s richest people relied on the Cyprus firms in the leak to manage their vast wealth. Roman Abramovich, estimated to be worth 9 billion dollars, owned or controlled 246 companies and 14 funds registered in various jurisdictions, including Cyprus, the Isle of Man, Jersey, and the British Virgin Islands, which were managed by Cypcodirect and another Cypriot firm, MeritServus. Frolov and Abramov, his business partners in Evraz, had 78 companies and trusts that appear in the leaked data. An earlier leak from MeritServus was previously reported, investigating Abramovich’s investments in startups that received government contracts in the U.S. and the United Kingdom (UK) and his billion-dollar fleet of superyachts.
The investigation also shows that Pyotr Aven, a Russian billionaire who co-founded Russia’s largest private bank as well as investment firm LetterOne, held much of his wealth in Cyprus-based funds managed by a firm called Abacus Ltd. In February 2022, when the EU sanctioned Aven, he transferred around 5 million dollars from an Austrian bank account to a UK account linked to the manager of his 100 million dollar mansion in Surrey – a move that attracted the attention of the UK’s National Crime Agency (NCA), which investigates international financial crimes. According to court records collected by UK nonprofit Spotlight on Corruption and shared with ICIJ and its partners, the NCA then launched a civil action against Aven to recover more than 1 million dollars from those funds, Forbes reports.
E.Dz.
