'South Cyprus sold Golden Passports to alleged criminals'
The passports were obtained through the “Republic of Cyprus” citizenship-by-investment scheme, said the English-language broadcaster which is based in Doha, Qatar. Members of the Al Jazeera Investigative Unit uncovered the facts after examining more than 1,400 leaked documents to produce a programme entitled “The Cyprus Papers” which was broadcast on Tuesday.
The documents consist of 1,471 applications containing the names of 2,544 people who received Cypriot passports between 2017 and late 2019, with almost half of them coming from Russia, so illustrating how that country’s political and business elite, billionaires and criminals have been claiming their place in the EU - and the right to bank, travel and work in the bloc.
Passport applicants need to invest a minimum of $2.5m under the citizenship scheme and most of the money is used to buy property, said the Al Jazeera programme. “On arrival at Larnaca International Airport, signs in Russian offering investment opportunities, luxury properties and advertisements for many agents wanting to handle citizenship applications show just how important Russia has become to the scheme,” it said.
“Many Russians who applied for citizenship made their money through political and economic relationships with their own government, with several having held official state positions to make them politically exposed people (PEPs). Under rules introduced last year, PEPs are now banned from buying passports but those who already have them are allowed to keep them.”
The Cyprus Papers found that among those to have acquired “Republic of Cyprus” passports was former Deputy Minister Igor Reva and former member of the Russian Parliament, Vadim Moshkovich. The list also includes the former boss of a subsidiary of the state-owned railway system, Vitaly Evdokimenko, and Vladimir Khristenko, who comes from a family with top-level political connections.
The reasons these politically connected people look to Cyprus, and by extension the EU, is because they fear their possessions might be at risk in their home country, Nigel Gould-Davies, a Russian expert at the UK’s International Institute for Strategic Affairs, told Al Jazeera. “They do not trust their own Russian state to leave them or their assets alone,” he said.
“They are looking for a place with the rule of law that is absent in their own country and that will not scrutinise their applications too closely, will make it easy for them to send their money and grant them citizenship.
“Particular spikes in concern occur when political tensions rise in Russia, when people trust the state even less to keep them safe or leave them alone. That is when they then look for alternatives,” said Mr Gould-Davies. “A good example of that is the Salisbury nerve agent attack in the UK in March 2018. The UK and US began to impose new sanctions and immediately we’ve got a spike of capital flight out of Russia looking for safe places,” he said.
Mr Gould-Davies highlighted that in 2014, VTB – often called “the Kremlin bank” – and its subsidiaries were among several big Russian banks to be sanctioned by the US and EU after the Crimea invasion. “Yet ‘Cyprus’ did not appear to consider it any problem to sell EU citizenship to three of VTB’s senior people – Victoria Vanurina, Vitaly Buzorevya and Alexsey Yakovitsky – who were all approved for passports on the same day in May, 2018,” he said.
Among the 1,000-plus list of Russian “Golden Passport” holders are some of that country’s richest men, with Al Jazeera identifying at least nine oligarchs with financial assets of at least $1bn each. More than a dozen of their relatives are now Cypriot citizens able to move money around the world with less chance of being flagged as “high-risk” because they are now able to use their EU citizenship.
Following Al Jazeera’s revelations, there have been calls for a change in the citizenship-by-investment programme that is used by South Cyprus and other European Union member states. In a letter to the European Justice Commissioner, Member of the European Parliament Sophie in t’ Veld(CORR.) said : “It is high time that the Commission gears up towards more decisive action on this front.
“Clearly, the situation is becoming untenable and inexplicable to EU citizens who fight for equality and against corruption.
“A more ambitious EU policy and regulatory framework is thus urgently needed.”
South Cyprus ramped up its citizenship-by-investment scheme to rescue its economy after the financial crisis it faced in 2013. Since then, $8bn brought in by the scheme, much of it from Russians, has kept the economy afloat.
In response to the large capital outflow, Russia has tried to reverse it. “Putin has increasingly put pressure on some of the most senior business figures to stop them sending their money abroad and to invest in Russia instead,” Mr Gould-Davies told Al Jazeera. “Although he is very powerful, they have been able to quietly ignore him. He’s not pleased with that but has not found a way to stop it, although he is looking for ways to make it more difficult.”
One group of once well-connected and still wealthy businessmen have already fallen foul of Putin. Most are accused of financial crimes but their “Republic of Cyprus” passports have helped them stay out of Russia’s reach.
“Our investigation of The Cyprus Papers has found that at least 40 high-level Russian officials and their families paid to become citizens of Cyprus,” said a spokesman for Aljazeera this week. “Even if they have done nothing wrong, their roles in their country of origin make them a high risk for corruption.”
Since its inception in 2013, the EU has regularly criticised the citizenship-by-investment scheme, claiming that Cyprus could possibly serve as a “back door” into the rest of the EU. “Criminals are endangering Europe’s security or want to engage in money-laundering here,” said Vera Jourova, a Vice President of the European Commission, in 2018. “We do not want Trojan horses in the union.”
As a result of such pressure, the “Republic of Cyprus” changed its rules, firstly in 2019 and then again last month, to enable it to strip citizenship from anyone who purchased it but who is now considered to be “damaging the national interest”.
In a written response to the Al Jazeera programme, South Cyprus minister of the interior, Nicos Nouris, claimed: “No citizenship was granted in violation of regulations in force at the time.
“The ‘Republic of Cyprus’, as an EU member state, is functioning in absolute transparency.”