Cyprus Confidential exposes how the Cyprus arm of global accounting giant PwC helped Alexey Mordashov, one of Russia’s richest industrialists, transfer a $1.4 billion investment to his life partner in a bid to elude European Union sanctions. The investigation uncovers hidden payments by middlemen close to Mordashov to a famous German journalist to write a book about Putin’s power — a deal that highlights the sophistication of the Russian propaganda machine abroad.
It shows how Petr Aven, one of the key strategists behind Russian financial powerhouse the Alfa Group, used a Cyprus firm to shift $5 million outside of European authorities’ reach just as the EU was announcing sanctions on members of Putin’s inner circle, including him.
Reporting based on the financial documents also provides a glimpse into oligarchs’ lavish lifestyles — their private concerts featuring Amy Winehouse, Red Hot Chili Peppers and other famous rock stars; their superyachts; and their priceless art collections.
ICIJ’s analysis of the leaked records found nearly 800 companies and trusts registered in places that allow the rich to hide assets that were owned or controlled by Russians who later came under sanctions, including some who were sanctioned as early as 2014. Those include more than 650 Cyprus companies and trusts.
(Collectors of Trump Administration minutiae will recall the Wilbur Ross, the somnolent Secretary of Commerce, was caught by Forbes engaging in some shadowy transactions involving Russian money and a Cypriot bank.)
The immediate relevance of these revelations is found in their connection to the ongoing Russian assaults on Ukraine.
The product of an eight-month investigation, Cyprus Confidential stories explore Russia’s long-standing hegemony over Cyprus’ deeply intertwined worlds of politics and finance. It explains how the mighty European Union has failed to exert authority over Cyprus, a European Union member state, or to rein in a banking system bloated by illicit money. It illustrates how, as Russia invaded Ukraine in 2022, Big Four accounting giant PwC’s Cypriot unit helped Russian oligarchs shuffle their riches and undermine Western sanctions designed to cut off Putin’s war funding. As Western nations have increasingly used financial sanctions to block the flow of money that other governments use for hostile purposes, Cyprus became a cloak-and-dagger financial battleground.
“When the Russians came to Cyprus, they brought not only Russian corruption, they brought Russian organized crime, they brought Russian agents of the Russian intelligence services,” says Boris Demash, a Russian longtime resident of Cyprus and critic of Kremlin influence...All told, ICIJ found in these leaked documents nearly 800 companies and trusts registered in secrecy jurisdictions that were owned or controlled by Russians who have been sanctioned since 2014. (Secrecy jurisdictions are countries and territories that provide a low-tax regime and corporate ownership anonymity, limit access to company documents and can be more lenient toward financial crime.)
The analysis showed the professional firms also worked for Russian-controlled companies registered in the British Virgin Islands, the Channel Island of Jersey, the Isle of Man in the Irish Sea, Liechtenstein, Hong Kong and elsewhere. While many of the registered entities are shell companies with no employees or operations, some are subsidiaries of industrial giants — such as steelmaker Evraz, which supplies most of the train rails that Russia uses to transport arms and ammunition to its troops in Ukraine.
There are so many wheels within so many wheels, but there is always the money. Money is what never changes.
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