Cyprus has long been a haven for wealthy Russians seeking to obscure ownership of their businesses, superyachts and palatial homes, New York Folk reports.
Now an investigation by the International Consortium of Investigative Journalists (ICIJ) and nearly 70 media organizations around the world, named Cyprus Confidential, 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 relies on 3.6 million leaked documents from six Cypriot firms, dating mostly from the mid-1990s to April 2022 – two months after the war in Ukraine began, after which Western governments imposed sanctions on dozens of Russian billionaires. According to ICIJ, despite Cyprus’ status as a member of the European Union, the Cypriot firms continued to work with 25 Russians hit by Western sanctions after 2014. Fergus Shiel, ICIJ’s managing editor, says:
We see the wartime shifting of hundreds of millions of dollars in assets, which we believe ultimately demolishes the notion that financial sanctions have halted Russian dark money flows.
Another batch of leaked documents has revealed new information that Cypriot firms were deeply involved in a massive transfer of assets on behalf of Alexey Mordashov, a steel magnate and one of Russia’s richest people with an estimated $21 billion fortune. On 1 March 2022 – the day after EU sanctions were imposed on Mordashov – employees of PwC Cyprus, the local branch of audit giant PwC, and Cypcodirect, a firm founded by a former PwC Cyprus partner, helped transfer Mordashov’s stake in German travel company TUI Group to his wife Marina. The shares were worth $1.4bn at the time, and German authorities subsequently temporarily blocked the transfer itself, according to New York Folk.
A total of 64 shell companies linked to Mordashov appear in the data. Cypriot companies PwC and Cypcodirect ran almost all of them. According to the investigation, the same firms helped Alexander Abramov and Alexander Frolov, two sanctioned Russian billionaires who own stakes in the Russian steel company Evraz, transfer $100 million between the shell companies they controlled. They also helped Oleg Deripaska, another sanctioned oligarch with an estimated fortune of $2.4bn, hand over control of his $56m Clio superyacht to a new captain just days after the US Treasury Department imposed sanctions on him in 2018.
Most of Russia’s richest people have relied on Cypriot firms to manage their vast fortunes. Roman Abramovich, whose fortune Forbes estimates at $9bn, owned or controlled 246 companies and 14 trusts 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 at Evraz, had 78 companies and trusts registered to them in the leaked data. Forbes previously reported on an earlier data leak from MeritServus, which investigated Abramovich’s investments in startups that received government contracts in the US and UK and his $1bn fleet of superyachts. Fergus Shiel noted:
You can see flotillas of shell companies that are designed [and] built by Cypriot financial providers to defend the ultimate owners of the assets from transparency and accountability.
The investigation also reveals that Pyotr Aven, a Russian billionaire who co-founded Russia’s largest private bank as well as the investment company LetterOne, held most of his fortune in Cypriot trusts managed by the firm Abacus Ltd. On the day EU sanctions were imposed against Aven on 28 February 2022, he transferred about $5 million from an Austrian bank account to a British account linked to the manager of his $100 million mansion in Surrey. This caught the attention of the UK’s National Crime Agency (NCA), which investigates international financial crime. According to court documents obtained by the British non-profit organisation Spotlight on Corruption and shared with ICIJ and its partners, the NCA filed a civil suit against Aven to recover more than $1 million of those funds. Delphine Reuter, a data journalist and researcher at ICIJ, says:
The money was being moved out of the EU sanctions’ reach so that it could potentially be moved around in the U.K. The difficult thing is that he’s using assistants to make all of these transactions. Different authorities are not sure if it falls under or outside of the scope of the sanctions.
The Cypriot government responded to the investigation by pledging “zero tolerance” for sanctions evasion. The country has already revoked the citizenship of more than 200 people, including several sanctioned oligarchs such as Deripaska, since the 2020 closure of its golden passport programme, but the investigation shows the island remains a key hub for wealthy oligarchs seeking to move their assets abroad.
