How Russian oligarchs use Cyprus to shield assets from sanctions

Good morning. Earlier this week the Guardian published Cyprus confidential, an investigation which picked through 3.6m documents to report on how Russian oligarchs have used Cyprus’s outsized financial sector to structure their wealth and, once the war in Ukraine began, shield their assets to avoid sanctions.

The cache of documents was leaked by an anonymous source in Cyprus to the International Consortium of Investigative Journalists (ICIJ) and Germany’s Paper Trail Media, which shared access with the Guardian, the Bureau of Investigative Journalism and dozens of other reporting partners around the world. The story that emerges is depressingly familiar: billionaires with shady histories using global networks and offshore financial centres to avoid scrutiny. But, as an EU member state, Cyprus is subject to strict rules and regulations around sanctions, taxes and the flow of money.

The actions of large financial service firms, billionaires and oligarchs may seem like a far away problem but the truth is it permeates every facet of society: from your favourite football club, the journalist whose book you read and the accountancy firm someone you know works for.

Cyprus confidential pulls back the curtain on this notoriously opaque and secretive world to uncover troubling practices. Today’s newsletter takes a look at the many bombshells from the biggest leak of financial information from Cyprus ever – right after the headlines.

Five big stories

In depth: What we know so far from the Cyprus confidential revelations

One of the most shocking revelations centres around a German journalist, Hubert Seipel, an expert on Russian geopolitics, who according to documents received hundreds of thousands of euros in sponsorship funds from companies linked to sanctioned oligarch Alexei Mordashov. It appears to be one of the first proven examples of a western journalist outside Russia receiving significant payments from a source linked to the Kremlin in what could be viewed by some as an attempt by Russia to acquire more sympathetic coverage in international media.

Seipel (pictured above), who is famously one of the only journalists in the world who has regular access to Putin and has, in his words, had over 100 meetings with the Russian president, was given €600,000 (£522,000) from accounts linked to Mordashov through offshore companies in two undisclosed instalments which documents suggest was to support his work on two books. One was published in 2021 on the political environment in the Russian Federation, and the other came out six years earlier titled Putin: Inner Views of Power. Both books are widely viewed as being sympathetic to Putin.

Seipel confirmed he had received support from Mordashov, saying “his support relates exclusively to the book projects”. He stressed he had remained impartial, saying: “I always set clear legal boundaries that guaranteed my independence,” and insisted that the money did not impact his impartiality. The award-winning journalist seemingly did not disclose the payments to his publisher, who announced that they would be halting the sale of his books.

The revelations are likely to reverberate across Germany, where debate has been raging since last year’s invasion of Ukraine over the role parts of the political and business elite played in helping to keep Putin in power, not least due to its long-term dependence of Europe’s largest economy on Russian oil and gas.

Oligarch money in football

Other documents reveal how Russian billionaire Roman Abramovich (pictured above) used offshore companies in Cyprus to make a series of payments worth tens of millions of pounds over a decade to various agents and associates seemingly for the benefit of his then football club, Chelsea FC. If the payments were not declared, the football club could have breached strict football rules, including those on “financial fair play” which limit the amount rich club owners can pump into their clubs. Abramovich’s investment in Chelsea – both declared and allegedly undeclared – coincided with an unprecedented period of success for the London club, which included multiple Premier League titles and two Champions League victories.

Chelsea, which was owned by Abramovich for 19 years until he was placed under sanctions after Russia’s invasion of Ukraine and forced to sell the club, is already under investigation by the Premier League, which is examining the football club’s finances from 2012 to 2019 and has already been fined £8.6m by Uefa in July for breaking financial fair play rules. The Football Association is now also investigating the club.

A Chelsea FC spokesperson said: “These allegations pre-date the club’s current ownership. They are based on documents which the club has not been shown and do not relate to any individual who is presently at the club.” Representatives of Roman Abramovich did not return requests for comment.

Avoiding sanctions

Accounting giant PwC Cyprus has also been caught in the revelations, as leaked documents appear to show that the big four accountancy firm scrambled to help Russia’s “richest” oligarch escape sanctions as Russia launched its offensive in Ukraine by transferring £1bn in shares of a public company on the day he was placed under EU sanctions, raising questions over the timing. PwC has long had an extensive client list of oligarchs.

Internal correspondence from the Cypriot arm of PwC show it was heavily involved in a massive asset transfer on behalf of steel, mining and banking tycoon Alexei Mordashov. Emails show staff discussing an attempt to transfer about a third of the shares in Tui, Europe’s largest travel company, to the life partner of Mordashov. Just 77 minutes later, the European Council sent out a message of its own, announcing that Mordashov – along with 25 other individuals – had been added to the sanctions list. The press release and sanctions notice described Mordashov as one of “Putin’s elite” who was allegedly “benefiting from his links with Russian decision-makers”. The exact timing of when those sanctions legally came into force is now under scrutiny. A government spokesperson confirmed an investigation was “ongoing” and being conducted by the “responsible authorities” in Cyprus.

A spokesperson for Mordashov said he and his companies had always acted in line with “fair business practices and strict compliance with the regulations”. They added: “All information and regulatory notifications with respect to the share transfer were duly disclosed to the relevant authorities and made public to the extent legally required short after the share transfer, which clearly demonstrates that there was no intention to hide something or to circumvent the laws.”

PwC has responded to the story by saying that: “All PwC firms, including PwC Cyprus, take the application of sanctions against clients and sanctions prohibiting various professional services extremely seriously. As we announced in March 2022, with regards to sanctions following the Russian invasion of Ukraine, PwC introduced a policy, that goes beyond what is legally required, of applying all sanctions imposed by major countries across the PwC network, irrespective of the sanctions country of origin.”

Mordashov and PwC said they were unaware of the criminal investigation. The Guardian has seen no evidence of any intention to break rules.

These are just some of the details revealed as the result of extensive, years long reporting conducted by 68 news organisations around the world on how large and secretive financial services potentially launder their money and by extension their reputation. For further information and updates keep a close eye on the Guardian website.

What else we’ve been reading

Dealing with the menopause while attempting to stay active can be tough – hot flushes do not pair well with a gym session. Shanti Nelson shares here how swimming has become a godsend to her and allows her to enjoy exercise while navigating the menopause. Nyima Jobe, newsletters team

For the last few weeks many Palestinian-Americans have been navigating how to go on with life, and work, while experiencing monumental grief. Lorena O’Neil interviewed a number of people about how they are processing the mounting tragedy unfolding before them. Nimo

At the recent Bletchley Park summit, Elon Musk claimed no job would be replaced by AI – but can that possibly be true? Phillipa Kelly discusses the prospect and how universal basic income could make up for unemployment. Nyima

What happens when you move out but your parents still cannot quite let go? For New York magazine, Juno DeMelo spoke with the helicopter parents who are setting up their college-aged children on playdates. Nimo

And if that wasn’t enough parenting angst, for a special week of the Guardian’s You be the judge series, Virginia Ironside discusses how to lay down boundaries between parents and grandparents as they grow into their new roles. Nyima

Sport

Cricket | As Pat Cummins and Mitchell Starc hugged each other in relief, the pair’s tail-end nous having booked a showdown with India in Sunday’s World Cup final, it was hard not to feel for the latest set of South Africans to fall at the penultimate hurdle. This three-wicket victory for Australia was deserving of the chance to take on the undefeated hosts at Ahmedabad’s Modi mega-bowl.

Football | Uefa has insisted there are “significant technical, operational and logistical challenges” to implementing VAR at all Women’s Champions League games after calls for its more widespread use after refereeing mistakes marred Chelsea’s 2-2 draw at Real Madrid. The Chelsea manager, Emma Hayes, said her side had been “robbed of a 3-1 victory” by “two humongous decisions” which she described as “embarrassing.”

Tennis | Jannik Sinner defeated Holger Rune to maintain his 100% record at the ATP Finals and send Novak Djokovic through to the last four alongside him. The world No 1 was left waiting to find out whether he had made it after defeating Hubert Hurkacz 7-6 (1), 4-6, 6-1 in the afternoon match.

The front pages

The front page of the Guardian has the headline “Senior female staff report sexual assault and harassment at MoD”. It’s a paper exclusive on how 60 senior women at the Ministry of Defence have described a “hostile” and “toxic” culture in a letter. In the Times it’s “Look for a job or lose free NHS medicines” on what the paper describes as a government proposal. The i headline is also on the reported proposal, saying “New benefits crackdown if jobless don’t accept work”. In the Telegraph the headline is “Braverman: My plan to get Rwanda flights off the ground”. The Daily Mail continues the Rwanda deportation policy theme claiming “Unelected Lords plot to block Rwanda law that could end scenes like this” over an image of what it says are migrants in a dinghy. In the Financial Times the paper reports that the Chancellor Jeremy Hunt is looking at plans to cut inheritance tax with “Hunt eyes inheritance and business tax cuts in bid to lift Tory poll ratings”. The Mirror headline is “Christine Keeler’s son: I’ll clear mum’s name” on the Profumo scandal of the 60’s. And in the Sun “It’s PC gone mad”, a headline on what they say is a warning to the police force that using the word policeman could be breaking the law.

Something for the weekend

Our critics’ roundup of the best things to watch, read and listen to right now

TV
The Lazarus Project (Sky Max)
Series two jumps in right as we left off, at least in terms of George’s (Paapa Essiedu) perspective. We not only see his personal and professional life in ruins but are introduced to new rivals in the form of the Time Break Initiative. Watching The Lazarus Project requires focus, and it refuses to become the sort of TV that can be half-watched while flicking through your phone. But the sense of pride that comes from solving the twisted puzzle box of the plot is part of the fun. Leila Latif

Music
Dolly Parton: Rockstar
Dolly Partonhas done it all. She has asserted her primacy over the reactionary forces of Nashville’s music industry, sold 100m records so what do you do next? Her 49th solo album attempts to answer this. A distinct sense of panic sets in when you see the track list, on which a sprinkling of Parton originals mix with covers often featuring the original artists or big-name latter day substitutes: Elton John, Paul McCartney, Stevie Nicks, Pink. Listening to it feels like being trapped in a karaoke bar however not everything is bad. She sounds great on the down home southern rock of Freebird and duetting with goddaughter Miley Cyrus on Wrecking Ball. Alexis Petridis

Film
The Lost Weekend
As Yoko Ono enters her 90s, it is perhaps a tactless time to release a documentary about the woman with whom John Lennon had a love affair. The couple’s then assistant, the extremely smart May Pang (above, with the singer), in her early 20s at the time, who emerges with grace and dignity from this engrossing film. This film documentary fortunately refrains from making glib comparisons between Ono breaking up this affair to the way some saw her as breaking up the Beatles, but the film (based on Pang’s two previous books on the subject, and using the resulting TV interview footage) is implicitly critical of both Ono and Lennon and their self-absorption. Peter Bradshaw

Podcast
What now? With Trevor Noah
Widely available, episodes weekly
Have people become too scared of uncomfortable conversations? Trevor Noah thinks so – that’s why he’s pushing the intimate celebrity format to the next level. First up: Dwayne “The Rock” Johnson opens up about parenting worries, depression and, err, running for president. Hollie Richardson

Today in Focus

Cartoon of the day | Ben Jennings

The Upside

A bit of good news to remind you that the world’s not all bad

When Frozen graced cinema screens 10 years ago, it was an instant hit for youngsters across the globe, as songs like Let It Go offered lessons on learning to love yourself and ignore other people’s expectations of yourself.

For so long, the film has only been associated with young girls, yet the message of the film can resonate with boys and adults – as Gaby Hinsliff writes, with Frozen 3 in the works possibly releasing in 2025, the teachings and messages of the film continue to change girls, boys and Hollywood itself.

Sign up here for a weekly roundup of The Upside, sent to you every Sunday

Bored at work?

And finally, the Guardian’s puzzles are here to keep you entertained throughout the day – with plenty more on the Guardian’s Puzzles app for iOS and Android. Until Monday.

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