In its report on Mafia State, which was made public yesterday, the Anti-Corruption Authority recommends that the following be investigated for the possible commission of criminal offences: Nicos Anastasiades, the law firm Nicos Chr. Anastasiades & Partners and its partners Stathis Lemis and Fanos Philippou, former Deputy Attorney General Rikkos Erotokritou, former President of the Nicosia District Court Charis Solomidou, the law firm A. Neocleous & Co and the firm’s lawyer Panayiotis Neocleous, Russian oligarch Dmitry Rybolovlev, journalist and communications consultant Andreas Hatzikyriakos, Laiki Bank chief executive officer Efthymios Bouloutas, former Minister of Agriculture Nicos Kouyialis, former MP Giorgos Varnavas, former head of MOKAS and prosecutor Eva Rossidou Papakyriakou, and former senior police officer Ioannis Sotiriadis.
The evidence emerged following an investigation that lasted two and a half years, into six different cases highlighted by Makarios Drousiotis in his book. These are as follows:
1. The divorce of Russian oligarch Rybolovlev and the billions concealed in Cyprus
Makarios Drousiotis refers in his book to a family and property dispute between Russian oligarch Dmitry Rybolovlev and his estranged wife, Elena Rybolovleva, which arose in the context of divorce proceedings. Rybolovlev acquired Cypriot citizenship in 2012, after becoming one of the principal shareholders of the Bank of Cyprus.
According to M. Drousiotis, Elena Rybolovleva, who filed for divorce in a Geneva court, was claiming $4.5 billion, corresponding to half the property acquired during their married life. Drousiotis claims that Rybolovlev was seeking, by every possible means, to protect the family fortune from his wife’s financial claims. As a result, Rybolovlev and those acting on his behalf implemented what he describes as a “scheme to manipulate” the justice system in Cyprus, with the ultimate aim of forcing his estranged wife into a settlement over the financial terms of the divorce.
Drousiotis claims in his book that the President of the Nicosia District Court, Charis Solomidou, was a central figure in the alleged serving of Rybolovlev’s interests. In summary, Drousiotis sets out a series of alleged facts that raise suspicions that two court cases were deliberately placed before judge C. Solomidou so that he would issue orders and decisions in favour of Rybolovlev’s interests. Drousiotis links the close timing between the issuance of favourable decisions and orders and the hiring of the judge’s wife by a company connected to the law firm Andreas Neocleous & Co Ltd, which represented Rybolovlev’s interests.
The hiring of the wife
According to the facts, on 13 May 2014, Rybolovleva’s lawyers filed an application for the recusal of judge Solomidou from hearing originating application 2092/2013 on grounds of bias. The principal reason for the application was the hiring of the judge’s wife by the company A. Neocleous Trust Company Ltd, which, according to the application, was linked to the law firm Andreas Neocleous & Co Ltd that was representing Rybolovlev.
On 9 July 2014, judge Solomidou issued a decision rejecting the application for recusal. In that decision, he stated, among other things, that his wife had been hired as an accountant, under an employment contract, by A. Neocleous Trust Company Ltd, which, he pointed out, was not the law firm Andreas Neocleous & Co handling the two originating applications before him. At the same time, he stressed that the two applications had been assigned to him in accordance with the case allocation programme maintained by the court registry. Rybolovleva’s lawyers appealed that decision.
The investigators of the Anti-Corruption Authority found that the judge’s reference in his decision on the recusal application was not true, since the evidence presented showed that the employer of his wife was the law firm Andreas Neocleous & Co and not A. Neocleous Trust Company Ltd, as the judge had stated in his ruling. It was also established that the judge’s wife was hired by the law firm Andreas Neocleous & Co on 1 November 2013, that is, only a few days after the issuance by the judge of the interim orders dated 9 October 2013 and 14 October 2013, which were issued in favour of the clients of that law firm.
The Authority’s investigators also found that judge Solomidou’s wife was hired by that law firm on high remuneration. They also established that, at the time the two originating applications and the ex parte interim applications were filed, the judge’s wife was unemployed.
Based on the evidence presented, the investigators of the Anti-Corruption Authority conclude, on the balance of probabilities, that judge Solomidou intentionally concealed, and contributed to the non-disclosure of, the fact that his wife’s employer was the law firm Andreas Neocleous & Co, which was handling the above-mentioned originating applications pending before him.
On the basis of the above, the Anti-Corruption Authority recommends in its report that the following be investigated for possible corruption:
- Former President of the Nicosia District Court, Charis Solomidou, for the following offences: bribery, transactions with agents indicating corruption, and unfair acquisition of pecuniary advantage.
- The law firm A. Neocleous & Co and lawyer Panayiotis Neocleous for bribery of a public official, namely a judge, transactions with agents indicating corruption, and active bribery of officials.
The entrapment plan
The case also had a sequel. In his book, Makarios Drousiotis put forward allegations of a coordinated operation allegedly organised in Cyprus with the aim of securing the arrest of Elena Rybolovleva in Cyprus, in the context of disputes arising from the divorce proceedings concerning the financial terms of her divorce from Dmitry Rybolovlev.
According to the allegations, persons connected to Rybolovlev, in cooperation with lawyers and others in Cyprus, are said to have taken steps to entrap and criminally prosecute Rybolovleva, making use of a complaint submitted to the Police by lawyer Panayiotis Neocleous, on behalf of a specific trust, concerning a valuable piece of jewellery. These actions are said to have included coordination, as well as continuous updates on the progress of the operation with state officials and the Police.
Rybolovleva arrived in Cyprus on 24 February 2014 and was arrested on the basis of a warrant issued on the complaint mentioned above. However, as the case developed, evidence and allegations emerged challenging the substance of the accusations, while public disclosure of the arrest attracted intense international attention.
Those involved
The complaint submitted to the Police by lawyer Panayiotis Neocleous against Rybolovleva was sent to the Legal Service for instructions and, following a request by then Deputy Attorney General Rikkos Erotokritou, the file was assigned to him personally for directions. Rikkos Erotokritou handled the file personally and, as the Authority’s investigators found, he deliberately did not forward the file to Attorney General Costas Clerides for instructions, but instead ensured its immediate return to the Police in deviation from the standard procedures followed by the Legal Service.
Specific police officers, including then senior police officer Ioannis Sotiriadis, who at the relevant time was serving as head of the Limassol CID, visited Erotokritou’s office during the period under investigation. A specific incident was identified in which a vehicle in which Rybolovleva and her lawyer were travelling towards the Russian embassy was being followed by another vehicle driven by a police officer.
According always to the Anti-Corruption Authority, a deliberate delay was also found on the part of Ioannis Sotiriadis in relation to the return of Rybolovleva’s passport, in coordination with the late founder and partner of the law firm Andreas Neocleous & Co and with Panayiotis Neocleous, disregarding instructions from the Attorney General and his own superior, in order to facilitate attempts to serve contempt of court papers on her.
As the Anti-Corruption Authority states, Sotiriadis, in cooperation with the late founder and partner of the law firm Andreas Neocleous & Co, Panayiotis Neocleous and Rikkos Erotokritou, was deliberately acting in such a way that the criminal investigation against Rybolovleva would remain open, in order to exert pressure on her to settle the financial terms of the divorce.
The report also refers to the involvement of journalist and communications consultant Andreas Hatzikyriakos, who is presented as the link between then President of the Republic Nicos Anastasiades and Rybolovlev and is alleged to have coordinated support, or apparent support, from the state authorities and officials involved in the plan to arrest Rybolovleva. It is also stated that Nicos Anastasiades had a close relationship with the late founder and partner of the law firm Andreas Neocleous & Co, who was Rybolovlev’s legal adviser in Cyprus.
Private flights
The investigators of the Authority also established, on the balance of probabilities, that there was an agreement between Nicos Anastasiades and Rybolovlev under which the Russian oligarch would cover the cost of Anastasiades’ private flight from Brussels to Athens on 21 March 2014, and that this arrangement was facilitated by Andreas Hatzikyriakos. In support of this finding, the investigators took into account, among other things, the absence of any booking made by the former President for a return flight from Brussels to Athens on 21 March 2014, the absence of any record of payment from the Accountant General of the Republic for the private flight, and the lack of any corresponding record of that private flight by the Presidency of the Republic and the Civil Aviation authorities.
On the basis of the above, the Anti-Corruption Authority recommends that the following be investigated for possible corruption:
- Russian oligarch and Cypriot citizen Dmitry Rybolovlev, for the offence of influence peddling.
- Former President of the Republic Nicos Anastasiades, for the offence of influence peddling.
- Andreas Hatzikyriakos, for the offence of influence peddling.
- Former Deputy Attorney General Rikkos Erotokritou, for the offence of abuse of power.
- Former senior police officer Ioannis Sotiriadis, for the offence of abuse of power.
2. A €5 million gift to the Archbishopric
Makarios Drousiotis advances the claim in his book that the purchase of a property in Limassol by Andri Anastasiadi, the wife of the then President of the Republic, which belonged to the Archbishopric, formed part of a broader relationship between the then President and the Archbishop.
According to the allegation, in April 2014 a newspaper published a contract for the purchase of property belonging to the Archbishopric by Mrs Anastasiadi. The property was located in Limassol and, according to Drousiotis, the purchase price was low for the area and the size of the property. Drousiotis links that purchase to the relationship between the then President and the late Archbishop Chrysostomos II. He claims that the Archbishop frequently made financial requests to Nicos Anastasiades and that Anastasiades usually satisfied them. In this context, Drousiotis refers in his book to a Council of Ministers decision by which the Archbishopric was granted state land of high value in Ayia Napa. The land was granted as compensation for church land in Engomi that had been expropriated by the state. According to Drousiotis, the transfer of state land to the Archbishopric was illegal or irregular because the Archbishopric was not entitled to receive state land in exchange, but only financial compensation. He presents the decision in favour of the Archbishopric and the subsequent purchase of property by Mrs Anastasiadi as two events that were not unrelated.
The findings
On 11 July 2013, the competent inter-ministerial committee on the grant, exchange or lease of state land met. Nicos Kouyialis participated in the committee in his capacity at the time as Minister of Agriculture, Natural Resources and Environment. Among other things, the committee examined a request by the Archbishopric for the grant of state land in Ayia Napa. That land was requested as part of the compensation owed by the state to the Archbishopric for church land in Engomi that had been expropriated. The committee decided to recommend approval of the request as an “exceptional case”. According to the decision, the Archbishopric would receive state plots in Ayia Napa with a declared value of €5,712,000. It was also provided that it would receive an additional €280,000 in order to fully cover the balance of the compensation due to it. Subsequent cadastral records showed that the eight plots ultimately transferred to the Archbishopric had, based on the 2013 general valuation, a value of €10,638,300. The difference was substantial. The value of the land actually transferred appears to have been almost €5 million higher than the value presented during the decision-making process. That amount appeared as a lump sum, without detailed explanation. There was also insufficient justification for the process by which the specific plots that were ultimately transferred to the Archbishopric were created, nor for their individual valuation. The possible harm to the public interest arises from the fact that the state appears to have granted the Archbishopric land of much greater value than had been presented at the time to the competent bodies. Consequently, the Republic suffered a serious loss of state property.
On the basis of the above, the Anti-Corruption Authority recommends that former Minister of Agriculture Nicos Kouyialis be investigated criminally for the possible misdemeanour of abuse of power. It is noted that no evidence was identified suggesting that Kouyialis derived a personal benefit from the decision-making process. For this reason, the possible abuse of power being examined does not constitute a felony but a misdemeanour.
3. The Focus case and party financing
Makarios Drousiotis claims in his book that, before the collapse of Laiki Bank, the late Andreas Vgenopoulos maintained close relations with a large part of the political system and that, through Laiki Bank money, he financed political parties and media organisations, which, according to Drousiotis, in return provided him with protection.
The investigation found the following:
In relation to Nicos Anastasiades, the Authority’s investigators concluded that there arises a possible commission of the offence of abuse of power. This finding is based, among other things, on evidence that, while the Focus Maritime case was under investigation, Anastasiades met and communicated by telephone with then Attorney General Costas Clerides, expressing strong dissatisfaction with the course of the investigation and requesting that inquiries be terminated on the grounds that no criminal offences had been identified. The investigators considered that this intervention may amount to an inappropriate exercise of executive pressure on the Legal Service, which is constitutionally independent, and that it could have affected the integrity of the investigation, the proper administration of justice and the public interest.
On the basis of the above, the Anti-Corruption Authority recommends that Nicos Anastasiades be examined for the possible felony of abuse of power. Evidence that there may have been a personal or political benefit in stopping an investigation that could have revealed his own possible involvement in securing financing for DISY constitutes the possible abuse of power as a felony, the Authority explains in its report.
In relation to former Deputy Attorney General Rikkos Erotokritou, the investigators concluded that there is reasonable suspicion of the commission of the offence of abuse of power. According to the findings, Erotokritou intervened in the police investigation of the Focus Maritime case by requesting that the original exhibits concerning the financing of political parties by Focus be handed over to him and by instructing investigators not to keep copies. The investigators also took into account testimony that, when his request was not accepted, Erotokritou exerted pressure or threatened the then head of the investigation team with professional consequences. They concluded that such conduct was unprecedented and ethically impermissible, as it could affect the handling of evidence, the chain of custody of the material and the independence of the investigation.
On the basis of the above, the Anti-Corruption Authority recommends that Rikkos Erotokritou be examined for the possible misdemeanour of abuse of power. It is noted that no evidence was identified suggesting that he obtained personal benefit from his intervention in the investigation and, for that reason, the possible abuse of power does not constitute a felony but a misdemeanour.
4. “Bribes from banks”
In this particular chapter of Mafia State, an allegation is made of tax evasion by Nicos Anastasiades and the law firm Nicos Chr. Anastasiades & Partners through undeclared income from commissions allegedly received from Cypriot banks for referring clients to them. According to the allegation, these sums were channelled abroad without being declared and without being taxed in Cyprus.
On the basis of the witness statements obtained and the documentary evidence submitted, the Anti-Corruption Authority recommends that the following be examined for corruption offences:
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Nicos Anastasiades: While holding the office of MP and at the same time the position of DISY president, he is alleged to have abused the influence he was capable of exercising over others in decision-making and, acting as an influence peddler, sought the misleading categorisation of a transaction with Laiki Bank in order to conceal its true nature and beneficiary. Specifically, by exploiting the practice of banks paying commission for major clients referred to the bank by intermediaries, he received sums from Laiki Bank for support of his presidential election campaign in 2013 under the pretext of such commissions, which were misleadingly categorised in the bank’s accounting books as “introducer fees”, that is, commission for clients referred to the bank. By receiving the relevant sums, which constitute an undue advantage, Nicos Anastasiades is involved in passive influence peddling.
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Laiki Bank CEO Efthymios Bouloutas: Although the evidence shows that the agreement for the provision of the political campaign contribution of €250,000 to Nicos Anastasiades originated from a deceased Laiki Bank executive, Mr Bouloutas, as chief executive of the bank, by permitting the use of bank funds for a disguised political contribution, breached the institutional and fiduciary duty owed to the bank, its shareholders, its depositors and the regulatory framework inherently linked to his office. Specifically, by providing the relevant sums to Nicos Anastasiades, which constituted an improper advantage, Bouloutas is involved in active influence peddling.
According always to the Anti-Corruption Authority, by signing the fictitious invoices, Bouloutas acted as an accomplice, actively facilitating the provision of an “unjustified advantage” and the completion of the agreement between Nicos Anastasiades and the now deceased Laiki executive, thus making him criminally liable as a principal offender.
The Anti-Corruption Authority concluded that there arises reasonable suspicion of possible criminal liability on the part of Bouloutas for money laundering, since he is alleged to have authorised the transfer of funds to an offshore shell company in the British Virgin Islands on the basis of fictitious invoices, in a manner that concealed the unlawful nature of the transaction.
- The partners in the law firm Nicos Chr. Anastasiades, Stathis Lemis and Fanos Philippou, and the law firm Nicos Chr. Anastasiades & Partners: The investigators, on the basis of circumstantial evidence and documents concerning the management of the law firm, the use of offshore companies and the concealment of the true nature of payments, concluded that there is reasonable suspicion of possible participation by the above in facilitating the receipt and concealment of an undue advantage, including the €250,000 contribution to the election campaign of Nicos Anastasiades, which was misleadingly presented as “introducer fees.”
The investigators concluded that there is reasonable suspicion of possible criminal liability for money laundering due to the systematic use of offshore shell companies in the British Virgin Islands for the receipt, layering and concealment of funds that, according to the report, are or may be linked to influence peddling, including the possible connection to the €250,000 payment.
The investigators also concluded that there are reasonable suspicions of tax evasion and false declarations, on the basis of active participation in a cover-up scheme concerning the true nature of the funds and the identity of the beneficiaries. Their denial, when asked whether they knew the companies Masterton International and Truro Investments, contradicts documentary evidence and in particular signed invoices by Mr Lemis from Masterton International Corp.
5. The money laundering allegations and the “exoneration” by MOKAS
On 14 August 2019, the Organized Crime and Corruption Reporting Project, OCCRP, published an article entitled Bank records link Cyprus president to ‘Troika Laundromat’. The report included allegations that the law firm Nicos Chr. Anastasiades & Partners facilitated money laundering by moving millions of dollars between shell companies and acting as an intermediary with banks for high-risk clients.
As the Anti-Corruption Authority states in its report, by way of illustration and not limitation, the transaction records displayed glaring indications of money laundering, such as fictitious shell entities registered in the Caribbean routing transactions worth $220 million through high-risk countries, as well as intra-company financing, such as the movement of funds via share capital contributions and loans to related parties, and the modification of significant loans at 0% interest. These actions may constitute mechanisms capable of obscuring unlawful transactions, yet they were ignored by MOKAS during the investigation.
The then President of the Republic, Nicos Anastasiades, denied the publication and publicly called on the Unit for Combating Money Laundering Offences, MOKAS, which falls under the Legal Service, to investigate the OCCRP allegations.
As the Anti-Corruption Authority states in its announcement, “the effort of former President Nicos Anastasiades, by exercising institutional pressure, to direct MOKAS, a functionally independent and autonomous unit, to investigate the private company bearing his name and in which his two daughters were shareholders, seeking to secure public exoneration and protection from independent, rigorous scrutiny, may establish possible criminal liability for the misdemeanour of abuse of power or attempted commission of that criminal offence”.
As regards the then head of MOKAS, prosecutor Eva Rossidou Papakyriakou, the Anti-Corruption Authority notes the following: “The deficient manner in which the investigation was conducted, despite the existence of obvious indications requiring further inquiry, as well as the acceptance of explanations without prior independent verification or examination, constitute factors capable of establishing doubts as to the completeness, objectivity and reliability of the investigative process, as well as possible liability for the misdemeanour of abuse of power.” The Authority also recommends that the offence of neglect of official duty be investigated against her.
6. The “golden passports” and the oligarchs
In October 2021, the International Consortium of Investigative Journalists, ICIJ, revealed the Pandora Papers, with the activities of the law firm Nicos Chr. Anastasiades & Partners attracting the attention of the international press. The law firm appeared in the Pandora Papers as an intermediary for offshore companies, helping Russian clients conceal the true extent of their assets. Leonid Lebedev and Alexander Abramov, Russian oligarchs of enormous wealth, sought to acquire Cypriot citizenship within an exceptionally short period through the law firm Nicos Chr. Anastasiades & Partners.
The investigation established the following:
- Nicos Anastasiades: His intervention, and specifically his personal meeting with the then Minister of the Interior, making use of his status as political leader because at the crucial time he held the office of MP and at the same time the post of DISY president, through which he sought to secure Cypriot citizenship for a private client of the law firm Nicos Chr. Anastasiades & Partners, demonstrates, according to the Anti-Corruption Authority, conduct amounting to abuse of the power of his office and an attempt to instigate and bypass the lawful procedure.
The effort of former President Nicos Anastasiades to exercise institutional pressure in order to serve a private commercial purpose may establish possible criminal liability for the misdemeanour of abuse of power or, alternatively, attempted commission of that criminal offence.
- The partners of the law firm Nicos Chr. Anastasiades, Stathis Lemis and Fanos Philippou, and the law firm Nicos Chr. Anastasiades & Partners: By submitting the false sworn statement of Mr Philippou on 12 April 2012 before the Limassol District Court in a case brought by CommerzBank, the offence of perjury may have been committed. Specifically, Mr Philippou stated that his client, Leonid Lebedev, did not hold assets in the Republic of Cyprus, whereas he himself, acting personally as manager of the applicant’s assets, was in a position to know that this was not true.
In addition, it is recommended that the partners of the law firm be investigated for money laundering offences, with the Authority noting the following: “The use of offshore companies in the British Virgin Islands, debt-for-equity swaps and the arbitrary reclassification of capital flows between debts and 0% interest loans constitute classic forms of money laundering aimed at concealing the financial trail from regulatory supervision.”
7. The property in Dromolaxia
The allegations concern purported improper interventions by Nicos Anastasiades, who, as President of the Republic, attempted to promote the interests of a private company for the development of a property in Dromolaxia. In this effort, he intervened with various authorities and also mobilised political figures. The interests of the private company were represented and promoted by then EDEK MP Giorgos Varnavas, who is also alleged to have engaged in improper interventions.
The property in question extends to 3,113 donums, or 2,327 scales, and is registered in the district land registry as vakif land. It is Turkish Cypriot property which, under the applicable legislation, is under the administration of the Minister of the Interior as Custodian of Turkish Cypriot Properties. Suzan Dikraz, a Turkish national, was claiming ownership of the property, disputing that it was vakif land. Considering herself the lawful administrator of the vakif, she had signed a long-term lease agreement with a private Cypriot company for development purposes.
The Anti-Corruption Authority recommends that Nicos Anastasiades be investigated for the misdemeanour of abuse of power. As stated, his interventions may have been well-intentioned during a period of economic crisis and may not have been made for personal gain, but such actions did not fall within the duties of the President of the Republic.
For abuse of power, or attempted abuse of power, the Anti-Corruption Authority recommends that Giorgos Varnavas also be investigated. At the relevant time he was an EDEK MP and, “without institutional role, legal standing or official mandate in the specific private matter, he appears to have used his public office to facilitate privileged access by the private company and its legal representatives to senior public officials, including the meeting with the Attorney General on 6 June 2014 for the purpose of promoting the private company’s request”.
Finally, it is noted that, based on the evidence presented, Suzan Dikraz and those accompanying her entered the government-controlled areas on 4 August 2014 and on the following day, 5 August 2014, exited to the occupied areas. “These actions were unlawful and certain state authorities facilitated this unlawful crossing. The crossing was unlawful under the Green Line Regulation. For that matter, the case is referred to the Attorney General for his own actions,” the Authority concludes.
