Cyprus: Russia's EU weak link?
Ukraine has formal relations with many nations and in recent decades has been establishing . Russia took advantage of this political instability to annex Crimea in March , though Ukraine still claims sovereignty over the territory. Russia has also .. Cyprus Ministry of Foreign Affairs: list of bilateral treaties with Ukraine. The charges relate to Manafort's work for Ukraine's pro-Russian have been a threat to the "special relationship" between Cyprus and Russia. Cyprus is less concerned with the crisis in Ukraine and more focused on National issue: Cypriot bilateral relations with Russia are primarily driven by the.
I initially assumed that this was because Manafort's Cyprus accounts had been closed in Puzzling This was puzzling.
US trial sheds light on murky Cyprus-Russia links
How could such large transactions go under the anti-money laundering radar of any bank? How could they happen after all the improvements made in ? How was that even possible if Manafort's bank accounts in Cyprus had been closed in ? A big plus of such a high-profile trial, besides providing the juicy details behind the charges, is that it encourages investigative journalists to probe into questions like these.
An article published in the Wall Street Journal on 7 August throws new light on what happened afteralthough it doesn't quite answer all the questions.
It turns out that in and Manafort was still banking with Bank of Cyprus, the island's largest bank that took over Laiki at the peak of the financial crisis in March Bank of Cyprus closed his account as late asapparently after its software flagged Manafort's finances as suspicious.
Compliance officers at the bank recognised that he was high risk as a political campaign consultant. They also discovered that while he was still banking at Laiki he had flatly refused to ask questions about the source of his funds and who ultimately owned the companies the money moved through.
Although the bank took the right action inthe question remains why it took so long to discover what Laiki had already discovered in that prompted it to close what must have been most, albeit not all, of Manafort's accounts.
The Wall Street Journal article wants us to believe that this had something to do with Wilbur Ross - then a private investor, now US secretary of commerce - becoming the bank's largest shareholder in Ross, we are told, began forcing Russian members off the Bank's board, including a former KGB officer who had worked with the president of Russia, Vladimir Putin.
The Russians became major shareholders in the bank in Marchas part of the bank's resolution that involved a "bail-in" of investors, which converted uninsured deposits about half of which were Russian into equity.
I find this the least persuasive part of the story. Even setting aside the allegations made in Forbes magazine on 7 August about Ross being a "serial grifter", I very much doubt that the Cypriot government would want him there if they had thought he might have been a threat to the "special relationship" between Cyprus and Russia.
It is no secret that several successful Cypriot politicians, not just "Dr K", happen to be lawyers whose family law firms have significant business interests in Russia and other former Soviet republics. Prior to the Cypriot crisis ofthese firms were, in fact, the catalysts of foreign capital inflows into Cyprus, often acting as "introducers" of wealthy clients to the island's banks.
In fact, one of the first to enter the Russian market was the law firm belonging to the family of the current president of Cyprus, Nicos Anastasiades. Special relationship Even setting aside possible financial interests, Cypriot politicians have consistently seen Russia as a close political ally. Anastasiades himself has been described by the Cyprus Mail as "too subservient to Mr Putin", noting that he was the only EU leader who attended the 70th anniversary celebrations of the end of World War Two, which were boycotted by all other EU leaders because of Russia's annexation of Crimea.
It is inconceivable therefore that Cypriot politicians would want to attract Wilbur Ross to Bank of Cyprus, if they believed he would be a threat to the "special relationship" between Cyprus and Russia. If anything, actual developments suggest Ross was no such threat.
- Foreign relations of Ukraine
- Cyprus: Russia's EU weak link?
- Foreign relations of Cyprus
His arrival at Bank of Cyprus in mid coincided with a more high profile Russian oligarch, Viktor Vekselberg, buying out the shares of "ousted" Russians who never wanted to be shareholders in the first place. Vekselberg, a close ally of Putin, is currently at the center of allegations relating to Russian interference in the US elections.
Some of what Browder called the "blood money" came from the same scam that involved the death of Magnitsky - the Russian whistleblower - as well as other Kluyev group victims. When the news broke, Danske Bank's shares plunged by a third, its CEO resigned, and Denmark's good name was dragged through the mud. Danish affair prompted EU-level action Photo: The "political pressure" on supervisors in small EU states with large offshore sectors, such as Cyprus, Estonia, Latvia, and Malta "is so great that it's very hard for them to do the right thing," Demetriades said.
At the same time, the free flow of capital in the single market enabled Russia to use peripheral EU states in what Koutouzis called: He divided it into small chunks and funnelled it via banks in Panama, a small state with lax supervision, to EU banks with good reputations, then back to Panama via EU-based shell firms, which concealed his identity, Koutouzis, who is the author of several books on money laundering, explained.
Latvia recently suspended its central banker, Ilmars Rimsevics, on corruption allegations. But under current arrangements, there was nothing to stop Anastasiades from appointing a risky candidate to be Cyprus' next central bank chief and to hold a seat on the ECB's board, Demetriades said.
But when asked by EUobserver if that was acceptable, Anastasiades' office said it did not break any rules. Russia has a track record of using such funds to finance anti-EU parties and election-meddling, he pointed out. Vekselberg, who owns 9. Tentacles The special relationship has long tentacles that also embrace family members of the Cypriot elite.U.S. And Allies Prepare Response for Russian push in UKRAINE!
Anastasiades' daughters, for instance, are shareholders in a Russian state chemicals firm called Bashkir Soda via an investment vehicle called Imperium Nominees. The president's office said there was nothing untoward about his family's Russian income.
Foreign relations of Ukraine - Wikipedia
In this professional capacity, and according to common practice, they may act as nominees on behalf of clients of their law firm who happen to have shares or any other interest in various firms," such as Bashkir Soda, it said.
Popular with Russian tourists and thugs Photo: The special relationship also relies on fear to exert pressure.
When a senior partner in a Cypriot law firm with links to the Cypriot government explained the idea to Demetriades, he said: Then, once you've been compromised, they come with threats of blackmail and physical violence.
It's standard operating procure. A Russian oligarch would be unlikely to harm a Cypriot lawyer or politician, according to Mark Galeotti, a British writer on Russian organised crime. But the well-known links between the Kremlin, Russian intelligence, and the Russian mafia, give Russia's business barons a frightening reputation, Galeotti, an academic at the European Universities Institute in Florence, Italy, said.
The fact the "vory v zakone", a violent caste of Russian criminals, has set up camp in Cyprus, where they operate real estate scams, and where they shot dead a man in broad daylight in the town of Limassol in February, magnifies the fear factor.
Putin asked Anastasiades for 'satisfactory' result on Browder Photo: Its attorney general showed backbone by handing evidence on Manafort to the US and one of its courts recently granted an injunction which annoyed Putin.
Anastasiades has not vetoed renewals of EU sanctions on Russia imposed over its invasion of Ukraine. But he has often criticised those sanctions, breaking EU ranks on foreign policy.
Foreign relations of Cyprus - Wikipedia
Cyprus has also broken EU ranks in an international criminal justice affair by facilitating Russia's efforts to go after Browder, Putin's gadfly. The last time Anastasiades met Putin, in Moscow in Octoberthe Russian leader publicly told him at a Kremlin press conference that he wanted a "satisfactory" result on his request for "legal assistance" in the matter.
Satisfaction What he wanted was for Cyprus to let Russian law enforcement officers come to Nicosia to raid Browder's law firm there and interrogate staff. Other EU states and Interpol, the international police agency in Lyon, France, have, many times, denounced the case as a "politically motivated" smear campaign. It was meant to make him look like a criminal to stop his hunt for Russian money and his campaign for tougher EU and US sanctions, Browder said.
It was also meant to get him extradited to Russia for revenge. Russian officials had already flown to Nicosia for the raid inwhen they were turned back at the airport because Browder had obtained a Cypriot court injunction. But almost one year after the Putin-Anastasiades meeting, Cypriot authorities have not given up on a "satisfactory" outcome. Cyprus' justice minister, Ionas Nicolaou, "is currently thoroughly studying the decision of the court [Browder's injunction] Putin's request to Anastasiades was in any case in vain due to the separation of powers in Cyprus, the president's chancellery said.
The Cypriot leader "does not act under political pressure from any other country," it said. Constitutional order But for Browder, if the raid goes ahead, it would give the lie to claims of constitutional order and Anastasiades' independence. Gomes has also raised alarm on rule of law in Malta Photo: Cyprus may face consequences for the abrogation of its commitments to EU in the area of rule of law and human rights," the euro-deputies said in a letter to Anastasiades on 7 September.
An Irish court recently declined to extradite a Polish suspect to Poland under the so-called European Arrest Warrant EAW on grounds he might not get a fair trial due to political interference in the judiciary. Cyprus' treatment of Browder posed similar questions on EAWs.
When EU justice commissioner Vera Jourova met Cyprus justice chief Nicolao in Nicosia on 22 September, she talked about Cyprus' sales of EU passports, justice reform, and gender equality, but not money laundering or Browder. Cyprus mostly sells EU passports to wealthy Russians, such as Oleg Deripaska, another oligarch who is under US sanctions for election-meddling, but Joureva did not go into this either.
But "we're not here to point fingers at member states, we're here to support them," a Europol contact told EUobserver when asked about the situation today.