The Cyprus police force is investigating how an oligarch attempted to transfer a £1bn stake in a public company on the day he was placed under EU sanctions, government insiders have told the Guardian.
News of the involvement of the financial crime squad came as the Cypriot government and the European Union responded to revelations that local service providers appear to have played a key role in enabling Russian oligarchs to shield assets from EU sanctions within days of Moscow’s full-scale invasion of Ukraine.
The president of Cyprus said “no one is above the reputation of the country” as he vowed to respond decisively to the disclosures.
In his first statements after publication by the Guardian and media partners of the disclosures, Nikos Christodoulides suggested his government would be ruthless in safeguarding the island’s credibility as an international financial centre.
“Everything that has seen the light of day will be investigated and within a deadline. No one is above the reputation of our country,” he told reporters shortly after the publication of Cyprus Confidential, an eight-month-long global investigation that involved examination of about 3.6m documents leaked from financial service providers in Cyprus.
“We should be done with this matter. The reputation of our country, the credibility of our country … is of crucial importance in the effort of all the Cypriot people, so that we have a strong and resilient economy.”
It was only by having a strong economy that the government could push ahead with a “targeted social policy” that allowed it to invest in health, education and other sectors, he said.
The leader’s intervention came hours after the government spokesperson, Konstantinos Letymbiotis, insisted there would be “zero tolerance” for sanctions busting, money laundering and other illegal practices that could undermine western efforts to stop Kremlin-linked oligarchs shielding their immense wealth.
The leak raised questions about the role played by service providers, including PwC Cyprus, in efforts by high profile, ultra-wealthy Russian clients to outpace sanctions days after Putin launched his “special operation” in Ukraine.
They have come at a particularly sensitive time for Cyprus, with the EU member state still reeling from US and UK sanctions slapped on an array of individuals and entities in April for enabling oligarchs to hide assets.
Christodoulides, who assumed office in March after running as an independent, was forced into damage control, and Washington and London urged Nicosia to take immediate measures to rein in the illicit support of Russians blacklisted by the west.
On Tuesday the leader said Nicosia had not only reinforced the financial sector but “the entire institutional framework”, as part of efforts to dismantle networks operating at such reputational cost to the country.
Asked about the investigation, the European economy commissioner, Paolo Gentiloni, told reporters: “I’ve been following the Cyprus Confidential papers very closely.”
He said the Commission was still studying the reports and would respond in detail in due course, while sources in the executive body said it was a “very serious” matter and they have already been in touch with Cyprus authorities.
The leaked files suggest PwC Cyprus helped Russia’s “richest” oligarch, Alexei Mordashov, attempt to transfer a £1bn stake in Tui, Europe’s largest travel company, on the day the tycoon was placed under EU sanctions.
The disclosure raises serious questions about the role played by the accountancy firm in a potential sanctions breach.
A spokesperson for the Cyprus ministry of finance had previously said: “We are aware of Tui share transfers and a criminal investigation is being carried out.”
On Wednesday, Cypriot government insiders went further, telling the Guardian that the financial crime squad of its police force is investigating the Tui transaction.
PwC and a spokesperson for Mordashov said they were unaware of any criminal investigation before being approached by the Guardian.
In response to information in the leaked files, a spokesperson for the accounting firm said: “Any allegation of non-compliance with applicable laws and regulations is taken very seriously, investigated and appropriate action is taken if necessary.”
The Guardian has seen no evidence showing any intention to break any rules – and Mordashov’s spokesperson said the oligarch was not attempting to hide the share transfer or circumvent the law.