Cyprus Confidential: The report, the companies and how Cyprus ties in

What the "Cyprus Confidential" investigation really aimed to highlight was Cyprus’ ties with Russian oligarchs and the role the island supposedly played in their effort to avoid the international sanctions.

The International Consortium of Investigative Journalists' (ICIJ), Paper Trail Media and another 67 media partners joined forces to investigate the matter over a period of eight months.

They claimed that Cyprus played an even bigger role than widely known in money laundering and moving wealth for the Putin regime and other so-called antidemocratic factors.

All in all, 270 journalists from 54 countries were involved, examining more than 3.6 million documents dating from the mid-1990s up to April 2022. These included financial statements, emails, bank account applications and confidential background checks.

It is noted that among the 104 Russian billionaires on the Forbes 2023 list, 67 of them – that is two thirds – are included in the Cyprus Confidential documents, along with their family members, as clients of professional services providers in Cyprus.

EU, Russia, Syria and the Cypriot model

At the same time, the Cyprus Confidential report attempts to highlight that the EU failed to exert authority over Cyprus as its member state, and also failed to rein in a banking system bloated by allegedly illegal money.

“The island’s economic system, known as the Cyprus model, relies on an oversized financial sector with some of the European Union’s weakest financial disclosure laws, an indulgent central bank — and a tsunami of more than $200 billion in Russian investment that has bought its oligarchs vast influence,” it says, among other things.

It further claims Cyprus, “at the east end of the Mediterranean nearest Turkey, Syria and Lebanon, plays an even bigger role than was commonly known in moving dirty money for Russian President Vladimir Putin’s autocratic regime and other brutal dictators and anti-democratic actors”. The report elaborates with specific examples, alleging that the Syrian state oil company attempted to circumvent the US sanctions through Cyprus.

PwC and the oligarchs

The journalists claim that PwC Cyprus helped Russian oligarchs “shuffle their riches and undermine Western sanctions”.

More specifically, that PwC’s Cypriot branch helped Alexey Mordashov, one of Russia’s richest industrialists, transfer a $1.4b billion investment out of his name in a bit to elude EU sanctions.

And it said PwC Cyprus helped transfer another $100m for “a pair of Russian oligarchs (Alexander Abramov and Alexander Frolov) whom the U.K. would soon declare part of the ‘cabal of selected elite’” helping Putin wage his war on Ukraine.

Abramov and Frolov are former executives of Evraz PLC, one of Russia’s biggest industrial groups which supplies most of the train rails that Russia uses to transport arms and ammunition to its troops in Ukraine.

In all, ICIJ said, PwC Cyprus worked with at least 12 of the 25 Russians who were already subject to sanctions by Western governments or Ukraine after Russia’s 2014 annexation of Crimea and the war in Donbas.

And it said it took PwC until a few months after Russia’s 2022 invasion of Ukraine to announce it was leaving Russia and ordering its affiliates to cease working for sanctioned clients.

The Cyprus Confidential investigation also mentions a Cyprus firm founded by former PwC Cyprus partners, Abacus Ltd, which is at the center of a legal dispute involving Russian billionaire Petr Aven. Aven is being accused of evading sanctions by using Abacus and European banks to shunt wealth beyond the reach of Western sanctions.

It mentions the company Kiteserve, which was also founded by ex PwC Cyprus partners, took over the administration of companies “controlled by the pair of oligarchs the UK listed among Putin’s ‘cabal’”.

The report also mentions a third company that allegedly represented Russian oligarchs, called Cypcodirect.

“Cyprus Confidential illustrates how PwC and other accounting firms profit from their global reach while distancing themselves, when needed, from their largely autonomous local units or their offshoots,” the report said. One such firm listed in the investigation is MeritServus.

The six Russian billionaire stars of Cyprus Confidential:

• Roman Abramovich, Evraz PLC co-owner

Offshore providers: MeritServus, Cypcodirect

Sanctioned by: UK, EU

• Petr Aven, Co-owner of Alfa Group and LetterOne

Offshore provider: Cypcodirect

Sanctioned by: UK, EU, USA

• Alexey Mordashov, Severgroup LLC founder

Offshore provider: Cypcodirect

Sanctioned by: EU, USA

• Rinat Akhmetov (Richest Ukrainian)

Offshore provider: Cypcodirect

Sanctioned by: -

• Alexander Abramov & Alexander Frolov, Former executives at Evraz

Offshore providers: MeritServus, Cypcodirect

Sanctioned by: UK