A parliamentary committee in Cyprus on Wednesday discussed recent revelations by CIReN and media partners relating to Russian billionaire Roman Abramovich.
Last week, CIReN, OCCRP, BBC, and TBIJ reported how the Cyprus affiliate of multinational accountancy firm Deloitte and corporate service provider MeritServus had backdated documents relating to companies beneficially owned by Abramovich, helping the companies retroactively transfer billions of dollars in assets from Cyprus to the British Virgin Islands (BVI) to sidestep tax and transparency obligations.
The session of Parliament’s Standing Committee on Institutions was held to discuss “the institutional role of the supervisory bodies of the Republic of Cyprus in preventing and combating money laundering” in light of the recent publications.
Representatives of state institutions including the Ministries of Finance and Justice, the Tax Commissioner’s Office, the State Prosecutor, the Police, the Auditor General, the Central Bank and the Cyprus Securities and Exchange Commission were present at the discussion and were questioned by MPs about their institutions’ responses to the publications.
The representatives of state institutions were joined by officials from regulatory bodies – the Bar Association, the Cyprus Public Audit Oversight Board (CyPAOB) and the Institute of Certified Public Accountants of Cyprus (ICPAC), as well as the Cyprus Compliance Association.
An official from the Justice Ministry told the committee that the information published by the media would be assessed and that police investigations would be carried out to determine whether any criminal acts had been committed that warranted further investigation or prosecution.
A representative from the Police’s Financial Intelligence Unit confirmed to MPs that the police had already begun to gather evidence which would be analysed, and that discussions with the relevant bodies and institutions would be held. The police investigation is expected to last several months before any findings can be made public.
A representative from the Tax Commissioner’s Office told the committee that although a six-year time limit restricted how far back the office could conduct tax reviews due to administrative issues, a court conviction for tax evasion could result in an order to recover unpaid taxes.
The new tax reform laws introduced in Cyprus in January increased the possible fine for failure to pay the Special Defence Contribution, one of the taxes the Abramovich-linked companies were obliged to pay, to up to 100,000 euros in addition to four times the originally owed tax for repeat offenders.
Following the media reports, the general manager of CyPAOB, Panos Prodromitis had told state media that the board would be “taking all necessary actions” within its legal mandate without specifying what these could be.
Prodromitis himself was an auditor at Deloitte Cyprus between 2003 and 2009, a period that overlaps with the alleged misconduct by the accountancy firm’s staff. When questioned about this, he told local media that “any conflict of interest will be declared and mitigated.”
At the parliamentary committee hearing, a representative of CyPAOB stated that the regulator had been in contact with Deloitte Cyprus, since the publication of the reports, and had held several discussions with them. The representative referred to difficulties the company was experiencing in retrieving data and communications from the relevant period due to the passage of time, but stated that the company would provide the authority with all relevant information as it became available.
The CyPAOB representative also acknowledged that, because the authority had only been established in 2017, it had sought legal advice on whether it had the power to take action against members for conduct that predated its establishment.
In comments to the committee, the ICPAC representative said that the regulator had previously revoked the licences of Meritservus-related companies, and the company’s owner, Demetris Ioannides, following revelations from the 2023 Cyprus Confidential investigation.
Several representatives of regulatory bodies present at the committee highlighted the improvements made in Cyprus since the period covered by media reports, particularly as a result of EU directives being transposed into national law.
Previous reporting by CIReN, OCCRP and media partners on Blue Ocean Management, the company that managed Abramovich’s yachts, had resulted in the company being reinstated on the Cyprus company register by the Tax Commissioner and legal proceedings being initiated against the company, its directors and individuals linked to MeritServus over a 14.2 million euro tax bill that grew to over 25 million euro with interest.