A massive trove of raw data leaked from the internal database of Panamanian-based law firm Mossack Fonseca suggests that Russian President Vladimir Putin funnelled hundreds of millions of euros to individuals in his close circle through offshore entities, using various banks to help hide the money trail, among them Cypriot RCB bank, The Guardian reported on Sunday.
The leak, deemed “the largest in history”, comprises 2.6 terrabytes of data and 11.5 million documents, which reveal extensive use of shell offshore companies globally by heads of state, politicians, celebrities, sports stars, businessmen, and individuals whose names are included in international sanctions lists, presumably in order to keep the transactions private.
According to The Guardian’s report, although Putin’s name does not appear in any of the records, “the data reveals a pattern – his friends have earned millions from deals that seemingly could not have been secured without his patronage”.
Mossack Fonseca, “the world’s fourth biggest offshore law firm”, is a global operation based in Panama with presence in 42 countries, offering, among others, wealth-management services and incorporating offshore companies.
Mossack Fonseca (Cyprus) Ltd, a representative office of the Panamanian company, was registered in Cyprus in 2003.The company asked to be deleted from the registry of companies registered in Cyprus last month. Three individuals were listed on Mossack Fonseca’s website as contacts for the Cyprus office.
The report, which followed a year’s worth of sifting through the raw data using specialised software and additional investigation by some 400 journalists in over 80 countries, claimed that a series of suspicious-looking transactions have gone through Panama, Russia, Switzerland, and Cyprus, with hundreds of millions in unsecured loans end up with companies controlled by individuals in Putin’s close circle.
Although incorporating offshore companies and moving assets through them is not illegal in itself, it is a method often used to hide the true origin of funds and the real beneficiaries.
Investigation focused particularly on Sergei Roldugin, a professional musician and “Putin’s best friend”, who has apparently amassed a fortune worth “at least $100 million”.
Among other assets, Roldugin owns 15 per cent of a Cyprus-registered company called Raytar.
The Cyprus connection is further examined with regard to the role of RCB bank, which has apparently extended “enormous unsecured loans” worth over $1 billion, which were subsequently moved by Bank Rossiya, described by The Guardian as Putin’s “crony bank”, in which Roldugin also has a 3.2 per cent stake.
The paper said Rodulgin’s response to his alleged links to the offshore companies was “no comment”.
Although RCB Cyprus declined to disclose information about its clients, it unofficially denied any allegation of wrongdoing.
In a statement on Monday, the lender refuted the unfounded references made by media as untrue.
“We would like to clarify the following: RCB Bank, as a principal [sic], did not and does not provide unsecured loans,” the bank said.
“The bank always acts in a transparent manner and all information about its activities is available to the relevant Cypriot and European authorities. RCB Bank, in accordance with applicable legislation of the Republic of Cyprus never discloses to third parties, including but not limited to media, any information regarding its clients, their operations and transactions.“
RCB bank, as a significant EU bank, strictly fulfils the requirements of applicable legislation and in its day-to-day activities employs Anti-Money Laundering procedures to the full extent which conform to the highest standards, the bank added.
“The bank’s operations and procedures are under continuous scrutiny by the Central Bank of Cyprus and the European Central Bank,” it argued.
“Additionally, an audit was also conducted by Deloitte Italy, within the framework agreed between the Government of Cyprus and the Troika.”
In a brief statement, the Central Bank of Cyprus said it has taken note of the allegations and will take appropriate action as necessary.
“With regard to press reports citing leaked documents, known as the Panama Papers, the Central Bank of Cyprus announces that it is assessing the information to the extent that it may concern the Cypriot banking system and taking, where necessary, appropriate action,” the CBC said.
Founded in 1985, and known as Russian Commercial Bank until 2013, the Limassol-based lender boasts such eminent members of Cyprus’ economic and political elite on its board of directors as Economics Nobel laureate Christoforos Pissarides, former foreign minister Erato Kozakou-Markoulli, former attorney general Petros Clerides, former permanent secretary at the ministries of finance and justice Andreas Tryfonides, and former ambassador and permanent secretary at the foreign ministry Sotos Zakheos.
In the hectic days of March 2013, when Cyprus was in the throes of working out a deal with its Eurozone partners over seizing uninsured bank deposits in Cyprus in exchange for a bailout loan, Cypriot deputies were warned by people “close to the Russian government” that, should a horizontal deposit seizure that would include cash in RCB be imposed, Russia’s reaction would be harsh, DIKO MP Marios Garoyian said in October 2014.
According to the deputy – who was DIKO’s leader in 2013 – this was one of the key drivers for parliament’s ‘no’ vote to the first bailout proposal, which included a ‘levy’ on deposits across the Cypriot banking system. A subsequent proposal, which included the seizure of uninsured deposits from Bank of Cyprus and Laiki Bank, went unopposed by the Russian government.
“The message was delivered to me clearly, and I imagine to the other deputies, too – even if many now deny it,” he said.
According to Garoyian, the warning referred to RCB explicitly and made no mention to Russian nationals’ deposits at other banks.