After the leak of data about Russian billionaires, Cyprus promised to strengthen control over its financial sector. As the investigation showed, the Russians were moving their assets out of the country in huge amounts.
This is evidenced by the leak of documents of six Cypriot corporate service providers, which became the basis of the international investigative project Cyprus Confidential, writes the Corruption and Organized Crime Investigation Project (OCCRP).
For example, PwC Cyprus helped Russian oligarch Oleksiy Mordashov sell his wife a stake in TUI Group on the same day that the EU imposed sanctions against him in connection with the start of a full-scale Russian invasion of Ukraine. And the documents related to the agreement were forwarded for signature in the first days of March 2022 — PwC Cyprus probably violated EU sanctions by doing so.
When Russian tanks entered Ukraine in February 2022, employees of the Cyprus branch of the international auditing giant PwC hurriedly completed the sale of the multimillion-dollar assets of Russian oligarch Oleksiy Mordashov. In 2021, Forbes named him the richest Russian.
The Cypriot Sanctions Authority said it was aware of the sale of TUI shares and was investigating, but did not say who it was investigating.
TUI said it was unaware of the Cypriot investigation, but noted that based on the data provided by the journalists, the deal was "void".
Mordashovʼs representative stated that "the businessman has never broken the law — in Europe, Russia or other jurisdictions", and added that the sanctions against his client are "absolutely unfounded and unfair, they contradict international laws, not to mention common sense".
Journalists draw attention to the fact that PwC did not close Mordashovʼs deal until the moment when he came under sanctions — this is evidenced, in particular, by the documents for signature that were included in the data leak.
Kush Amin, a lawyer at Transparency International, said the letters and files indicate the possibility that PwC Cyprus worked for Mordashov after Brussels imposed sanctions on him.
"The agreement needs further investigation, as the documents indicate that it could be finalized only after the publication of the sanctions list," Amin believes.
PwC Cyprus could have violated EU sanctions by working on the deal even on February 28, 2022. A European official told OCCRP partners The Guardian and Paper Trail Media that the sanctions took effect "within the first hour of the day of publication" of the official announcement. This means that Mordashov was technically under sanctions all day on February 28, 2022 — probably neither he nor PwC knew about it until the evening when the EU issued an official statement.
PwC also helped steel magnates Oleksandr Abramov and Oleksandr Frolov transfer a joint venture and other assets to their sons before British sanctions were imposed on them.
On the same day when Britain announced the sanctions list, which also included the mentioned oligarchs, PwC employees tried to urgently organize the transfer of $100 million from the Cypriot company jointly owned by Abramov and Frolov to their firm in the British Virgin Islands (BVI). It is not known whether this was an attempt to minimize sanctions risks, but in this way the funds were unavailable to the EU and US authorities.
The USA and the EU did not introduce sanctions against Abramov and Frolov. The businessmen did not respond to requests for comment.
Reaction of Cyprus
In response to the investigation, the Cypriot government has declared "zero tolerance" for sanctions violations, saying it is fighting to preserve its status as a financial center.
In response to detailed questions, the representative said that Cyprus is receiving technical support from the British government to establish a sanctions compliance unit in 2024.
- Cyprus Confidential is a global investigation based on the leak of 3.6 million documents of six Cypriot companies engaged in company registration and consulting. It was held by 270 journalists from 69 media outlets under the auspices of the International Consortium of Investigative Journalists (ICIJ) and the German Paper Trail Media.