July 15, 2024

PricewaterhouseCoopers (PwC) Cyprus helped Russian oligarch Alexei Mordashov sell his stake in the TUI Group to his wife on the same day the EU imposed sanctions against him due to Russia’s full-scale invasion of Ukraine. Documents relating to the deal were sent for signature in the early days of March 2022, making it probable that PwC Cyprus violated EU sanctions.

Source: an investigation into a leak of Cypriot legal documents as part of an international investigative project, Cyprus Confidential, as reported by the Corruption and Organized Crime Investigation Project (OCCRP)

Details: Cyprus Confidential is a global investigation based on a leak of 3.6 million documents from six Cypriot firms involved in company registrations and consulting. It was conducted by 270 journalists from 69 media outlets led by the International Consortium of Investigative Journalists (ICIJ) and Germany’s Paper Trail Media.

As Russian tanks advanced into Ukraine in late February 2022, employees at the Cypriot branch of global auditing giant PwC were racing to close the sale of hundreds of millions of dollars’ worth of assets owned by Russian oligarch Alexei Mordashov.

Like other billionaires who supported the Kremlin, Mordashov, whom Forbes ranked as Russia’s richest person in 2021, faced the possibility of having his European assets frozen in the event that he was sanctioned by the authorities in reaction to the invasion.

The leaked documents show that PwC helped Mordashov to sell his stake in the TUI Group to his wife on the very day that the EU sanctioned him in connection with the start of Russia’s full-scale war against Ukraine.

Documents relating to the transaction were sent for signature in the early days of March 2022, making it probable that PwC Cyprus violated EU sanctions against Mordashov.

The Cypriot authority for monitoring sanctions compliance said they were aware of the sale of TUI shares and were looking into it, but did not disclose exactly who they were investigating.

PwC Cyprus said it was not aware of the investigation. “Whenever there is a reportable event, PwC Cyprus takes appropriate action,” the company stated.

TUI also stated that although it was unaware of a Cypriot investigation, it believed the share transfer “was not effective” based on the information provided by reporters.

A representative for Mordashov declared that the sanctions against the oligarch were “entirely unfounded and unjust, running counter to international legal norms, not to mention common sense” and that he had never broken “any laws, whether in Europe, Russia, or any other jurisdictions”.

It is noted that PwC also helped metals magnates Alexander Abramov and Alexander Frolov to transfer a co-owned company and other assets to their sons before they were sanctioned by the UK.

The documents that formed the basis of the investigation against Mordashov were leaked from Cypcodirect Ltd, a Cypriot corporate service provider that worked closely with PwC Cyprus. The leak included extensive correspondence from PwC employees and documents that the Cypriot branch prepared for clients.

Describing the details of the alleged sanctions breach by PwC, the journalists draw attention to the fact that PwC did not close the Mordashov deal until the moment when he was sanctioned – this is evidenced, in particular, by the documents prepared for signature that were leaked.

Transparency International lawyer Kush Amin said emails and attachments suggest that PwC Cyprus continued to work for Mordashov after Brussels had imposed sanctions.

“The transfer warrants further investigation because the records indicate that it may have been properly effected only after the [sanctions] designation,” he said.

In addition, PwC helped two more Russian oligarchs, Alexander Abramov and Alexander Frolov, to transfer their assets shortly before they were sanctioned.

On the same day that the UK announced its sanctions list, which included these oligarchs, PwC employees were attempting to quickly set up a $100 million transfer from a Cypriot company co-owned by Abramov and Frolov to another of their companies in the British Virgin Islands (BVI). The move would have kept the funds out of the reach of US and EU sanctioning authorities, though it’s unclear if this was part of a plan to lessen the risk of possible future sanctions.

The United States and the EU did not impose sanctions against Abramov and Frolov. The businessmen did not respond to requests for comment.

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