Politicians across Europe (Chicago Options: ^REURUSD - news) are urging their governments to demand a crackdown on alleged Russian money-laundering in Cyprus as a condition of any bail-out for the troubled eurozone member.
Cyprus is close to securing a €17bn (£14bn) rescue package but MPs (BSE: MPSLTD.BO - news) in the UK, Finland and the Netherlands want tough questions to be asked of the country’s banks before a deal is signed and any funds are released. German politicians are believed to be looking at making similar demands.
The moves follow revelations that the Cypriot authorities refused to investigate claims that criminals linked to a $230m (£145m) alleged Russian tax fraud laundered $30m through the country’s banks. The case has been linked to a number of suspicious deaths, including that of Alexander Perepelichny, the 44-year-old whistleblower living in Surrey who died while out jogging last month.
The supposed criminal conspiracy involving police and tax officials was uncovered by Sergei Magnitsky, a lawyer working for UK-based hedge fund Hermitage Capital Management, who died in 2009 after a year in pre-trial detention on unproven charges of tax evasion. The US has since banned entry to 60 Russians linked to the fraud and death.
In July, Hermitage wrote to Cyprus’s attorney-general, Petros Clerides with evidence that banks had received stolen money. Mr Clerides said he could not investigate without a request from the Russian authorities, even though similar allegations are being looked at by Switzerland, Latvia, Lithuania, Finland and Estonia.
Last week, Pieter Omtzigt, a foreign affairs spokesman for the Dutch opposition, asked the finance minister to consider attaching “to any support for Cyprus ... conditions in the field of money laundering, tax competition and investigation into the Magnitsky case”. Pia Kauma, a Finnish MP has asked for the subject to be “discussed at meetings of EU countries”.
Dominic Raab, a Tory MP who has campaigned for the “Magnitsky 60” to be banned from the UK, said in a letter to the Chancellor that he is “deeply concerned about the use of bail-out funds for Cyprus in the current conditions”.
The German Intelligence Service estimates Russians have $26bn in Cypriot banks and Russian oligarchs and “mafiosi” stand to gain most from a bail-out.
The Office of the Attorney General in Cyprus said: “The authorities are trying to clarify whether there is any need for an investigation.”