The International Consortium of Investigative Journalists and 68 media partners have exposed a sprawling financial industry using Cyprus to launder Russian money.
European Union lawmakers have criticized Cyprus for its lax enforcement of sanctions against Russia and called for the closing of loopholes in anti-money laundering systems following revelations in the Cyprus Confidential investigation.
AEJ Media Freedom Representative Kyriakos Pierides has this report.
Corruption through Cyprus Confidential
The international journalistic disclosures “Cyprus Confidential” have confirmed the veiled way in which financial service providers in Cyprus have been serving Russian oligarchs. They did it for years, systematically, before reaching the ultimate limit of tolerance by the West on February 28, 2022, the day of the Russian invasion of Ukraine. What does the new series of revelations highlight most? The answer is clear in Cyprus: the cover-up offered by the political system and the subservience of the institutions of the Cypriot state, particularly under the presidency of Nicos Anastasiades.
The international investigative media consortium ICIJ uncovers the names of some of Putin’s closest associates who owned shell companies in Cyprus: Roman Abramovich, Petr Aven, Alexey Mordashov, Rinat Akhmetov, Alexander Abramov, Alexandrer Frolov. They operated unhindered on the island, at least until 2018, but some of them managed to survive even after that, until 2022. They made shady transfers through Cyprus to Europe and the rest of the West for the purpose of money laundering. Thus, they managed to launder billions of euros, taking advantage of Cyprus’ lax legislative framework and weak supervisory system.
“Circuit” of interests
How can one explain the structuring of the “Cyprus model”? How did it work for so many years and at its peak ended up being combined with the granting of thousands of “golden” passports, which are also European? The conclusion from the “Cyprus Confidential” revelations is that the “providers” (big lawyers offices, bankers, contractors, etc) all together form a closed circle of vested interests, which at the same time has backs in the highest offices of the state. This is exactly what happened in the most sophisticated way during the decade of Anastasiades rule. He himself, deeply aware of this particular ‘Russian market’ as a lawyer, completely subordinated the state institutions to provide this kind of service.
The ICIJ and OCCRP investigative journalists devote an entire chapter to Anastasiades’ privileged relations with the Kremlin and the role played by oligarchs as major shareholders in the Cypriot banking system (Bank of Cyprus, RCB – Russian Commercial Bank) to “restore” it after the 2013 bail-in and meltdown.
Circumvention of sanctions
The international journalistic investigation extends to 2022, setting out some crucial evidence that merits immediate criminal investigation in relation to the Kremlin’s last-ditch attempt to circumvent Western sanctions following the Russian invasion of Ukraine. This aspect is crucial at this stage of Cyprus’ relations with the West. For this reason, Cyprus Confidential, unlike similar revelations in the past, has shaken up the political system in Cyprus.
Cyprus President Nicos Christodoulides understands the shaken credibility of Cyprus and its ongoing defamation every time such evidence comes to light. He is also aware that the US, UK and EU are putting suffocating pressure on Nicosia to close once and for all the dark routes of Russian dirty money through Cyprus. The EU is also holding open the “golden passport” file just one step before sending it to the EU Court of Justice and pushing for substantial changes at the core of the judicial system – ensuring the independence of the anti-corruption and justice institutions.
Who will conduct prosecutions?
The Cyprus Confidential revelations concern Christodoulides himself and his political future. Since he came to power, he has found himself in the middle of a crucial transition from one international state of affairs to another! Cyprus, by necessity now, from being a “golden nest” of Russian oligarchs, has had to transform itself into a …loyal Western ally and is passing daily compliance tests. “All the information that has seen the light of day will be investigated and with a time frame,” Christodoulides said (15/11). Does he really mean business?
The findings of the inquiry will be debated in the European Parliament next week, while the European Commission is recording the information to raise them with the government of the Member State.
In no way, however, can external pressure redeem the island. A normal country with a clear distinction of powers and institutional checks and balances would never have reached this point. Which prosecutor and which independant authority will move? The revelations have been moaning for years, but the justice system has almost zero record of registering and adjudicating criminal cases.
President Christodoulides states: “we have to end this, no one is above the reputation of the country”. How will he prove that he means it? He is a political figure who was a member of the Anastasiades government at the time of the corruption outbreak. Now, he needs to disconnect his own course from Nicos Anastasiades, who was identified with the complete discrediting of the country (Panama Papers, Padora Papers, etc.) However, in the first 10 months of Christodoulides’ governance, there is no evidence to confirm that he is indeed moving drastically to crack down on corruption and rid Cyprus – once and for all as he says – of the stigma.
The EU has identified the key institutional weakness in the justice system. The Attorney General is at the same time the Prosecutor with the sole power to initiate criminal proceedings and he is appointed by the President. The independence of the institution is currently being challenged due to a clear conflict of interest. The current Attorney General and his Deputy were appointed by Anastasiades while they were acting members of his cabinte. Now these two hold the most serious cases in their own hands. Almost nothing is going on with the “golden passports” and there is no initiative for a deep investigation in connection with them. Only, at times, misleading announcements to the press.
What about reforms?
Christodoulides forgot his pre-election commitment to separate the responsibilities of the Attorney General and the Public Prosecutor and secure an independent procedure for their appointments
The European Commission and the Council of Europe (GRECO) have also identified the second cause of inefficiency in criminal prosecutions. A multitude of institutions with persons appointed by the executive – thus with objectively limited independence – exercise casual control and inadequate supervision in the fight against corruption.
The creation of a Single Supervisory Anti Money Laundering Mechanism has been an urgent need for years, but no one has taken the political initiative for a radical reform. Corruption was rampant and the political system was indifferent. Will Christodoulides do it? How long will it take to deliver? Nobody knows.
In the media space within Cyprus, the documents from Cyprus Confidential were reproduced with numerous analyses. Some media outlets are keeping the pressure on the government to check its real motives. Fundamentally, however, the mainstream media do not take the lead for a deeper journalistic investigation So what will happen when the hornet’s nest settles?
This article has been published in Greek in Politis Newspaper Cyprus www.politis.com.cy and EfSyn Greece www.efsyn.gr (18/11/2023 Editions)
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