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Cyprus: The Oligarch’s Playground

Cyprus has long been an oligarch’s playground for Russian billionaires with close ties to the government. In 2009 Sergei Magnitsky, a Russian lawyer, died in prison, where he had been languishing after accusing Russian officials of tax fraud to the tune of $230 million—$30 million of which he claimed was deposited in Cyprus banks. The situation has hardly improved since then. The FT reports:

Estimates of the size of Russia’s deposits in Cyprus range from €8bn, according to some experts, to up to €35bn, according to a German intelligence report cited in Der Spiegel magazine.

In 2011, Cyprus was the number-one destination for Russian money being sent abroad and the number-one direct investor in Russia, with more than $13bn in investments, according to Russia’s Central Bank.

Some 40,000 Cyprus-based shell companies have connections to Russia, and while Cyprus has introduced laws against money laundering, its lax enforcement of those laws doesn’t inspire much confidence.

Cyprus, which is dealing with problems with its banking system, requested an international bailout back in June but has yet to receive anything from a wary EU. Germany is understandably hesitant to subsidize the questionable dealings of Russian billionaires.

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