Cyprus’ audit oversight authority has no power to investigate events that predate its creation in 2017, but it is still collecting evidence on Deloitte Cyprus as it expects to answer to European bodies, its director general said on Thursday.

The Public Auditing Oversight Authority for the Auditing Profession (Adeelep) Panos Prodromitis informed that the body was gathering and assessing information on the firm’s role in the Roman Abramovich affair.

The matter came to light after a BBC Panorama and Organised Crime and Corruption Reporting Project (OCCRP) investigation published on October 12.

The report alleged that Deloitte Cyprus signed off backdated paperwork for Abramovich companies.

Deloitte Cyprus has said it “acts in compliance with applicable laws”.

Abramovich has insisted he took independent professional tax and legal advice and acted on it, and his lawyers have denied any role in alleged tax evasion.

Andreas Zachariadis, who chairs the authority and is the finance ministry’s permanent secretary, told the House institutions committee on Wednesday that the authority had contacted the firm and received “its own interpretation”.

The case dates from 2003 to 2006, and obtaining information on it “is not easy”, he said; Deloitte has committed to passing on any new information.

Zachariadis said the authority had “no jurisdiction over events before it was established” and held disciplinary rather than criminal powers.

Prodromitis said that for conduct after 2017, the authority’s board would assess the matter and appoint an independent investigating officer if a breach appeared likely.

The officer’s findings go to a disciplinary committee, which can impose penalties ranging from a fine or reprimand to removal of the audit firm.

Any suspected criminal offence can be reported to the attorney-general, who decides whether to prosecute.

Police told the committee they had opened an investigation into the management of Abramovich’s assets through Cypriot companies.

Spokesman Andreas Anastasiades said it would be carried out with other competent bodies and was expected to take about six months.

Police said the passage of time did not remove the legal basis for investigating.

Committee chairman and Disy MP Demetris Demetriou said the session was a supervisory review.

“We are not here merely to endlessly discuss that these things happened years ago,” he said.

The Institute of Certified Public Accountants of Cyprus said it could not give absolute assurance that similar cases would not recur.

Its representative said the licence of the person named in the BBC report was revoked in 2023.

The anti-money laundering unit (Mokas) said it had received no report on the case.

Tax Commissioner Soteris Markides said there were time limits on the tax years that could be examined.

Akel MP Christos Christofides, who appeared in the documentary, said tax cases completed in 2016 remained within that period.

The Central Bank said it was examining whether any Cypriot bank was involved, though none had yet been identified.

Former independent MP Alexandra Attalides, who had originally pressed the tax department to act, said it was “unbelievable that the supervisory bodies were so incompetent”.

Police have launched an investigation into the management of Roman Abramovich’s assets through Cypriot companies.

Speaking before the House institutions committee on Wednesday, police spokesman Andreas Anastasiades said the inquiry would be carried out with the other competent bodies and was expected to take about six months.

The case dates back several years, but police said the passage of time did not remove the legal basis for investigating it.

A justice ministry spokesperson said the information was being evaluated and that an investigation would follow if indications of offences emerged.

The move follows an investigation published on October 12 by BBC Panorama and the Organised Crime and Corruption Reporting Project (OCCRP).

It alleged that Deloitte Cyprus signed off backdated paperwork for Abramovich companies.

Deloitte Cyprus told the Cyprus Mail it “acts in compliance with applicable laws”.

Committee chairman and Disy MP Demetris Demetriou said the purpose of the session was a supervisory review and not a recital of history.

“We are not here merely to say that these things happened years ago,” he said.

“Otherwise, this committee becomes a group therapy session, and I am not willing to go down that road.”

Alma MP Irene Charalambides said the case went back to 2006, when Cyprus operated in a different financial environment.

She said the authorities must tell the House whether current procedures could prevent a repeat, and asked whether the government could assure that past weaknesses had been addressed and that no similar revelations would emerge about recent years.

The committee heard that the main allegation was that an audit firm encouraged a client to backdate documents to secure a tax benefit or alter the presentation of financial statements.

The finance ministry’s permanent secretary, Andreas Zachariadis, said the public audit oversight authority (Adeelep), created in 2017, had contacted the firm involved and received its own interpretation.

He said the case dated from 2003 to 2006 and that obtaining information on it “is not easy”.

The authority had “no jurisdiction over events before it was established and holds disciplinary rather than criminal powers”, he said.

Conduct of this kind today could lead to proceedings and sanctions, up to removal from the profession.

They said audit quality had improved since oversight of the profession began in 2017, making incidents like those described for 2006 harder to repeat.

The Institute of Certified Public Accountants of Cyprus (Selk) said it was examining the reports but could not give absolute assurance that similar cases would not recur.

Its representative said Selk has no criminal investigation powers and refers evidence of offences to prosecutors.

He said the licence of the person named in the BBC article was revoked in 2023.

The anti-money laundering unit (Mokas) said it had received no report on the case, and that it possesses no power to conduct criminal investigations but could assist police if asked.

Tax Commissioner Soteris Markides cautioned that there were time limits on the tax years in question that could be examined, while other attending authorities said they lacked jurisdiction over events that predated their creation.

The Central Bank said it was examining whether any Cypriot bank was involved, although none had yet been identified.

It said it could demand corrective measures or impose fines if breaches were found, and that the banking system had changed substantially since the financial crisis. The Securities and Exchange Commission (CySEC) said that though it now holds greater powers it cannot bring criminal prosecutions.

The Bar Association said it could impose substantial administrative fines.

Two former directors of Blue Ocean Yacht Management Ltd are due to stand trial at the Limassol district court on November 26 over €25 million in unpaid VAT.

The company managed Abramovich’s superyachts, which together were worth about €1.2 billion.

Akel MP Christos Christofides, who appeared in the BBC documentary, said he wrote to Markides the day after publication asking for checks on possible offences and on whether money that escaped the treasury could be recovered. He said this was “money of the Cypriot people that could go to our education, to health, to people in need and not end up with billionaires”.

He insisted tax cases completed in 2016 remained within the period that could be examined.

Abramovich himself has insisted that he took independent professional tax and legal advice and acted on it, and his lawyers have denied any role in alleged tax evasion.

Former independent MP Alexandra Attalides, who had originally pressed the tax department to act, said it was “unbelievable that the supervisory bodies were so incompetent”.

Two former directors of a Cypriot company tied to Russian oligarch Roman Abramovich are due to stand trial at the Limassol district court on November 26 over €25 million in unpaid VAT.

Blue Ocean Yacht Management Ltd managed Abramovich’s superyachts, which together were worth about €1.2 billion.

Cypriot tax authorities allege sham transactions were used to avoid the VAT due. Abramovich is not charged in Cyprus, nor does the indictment name the people who allegedly designed and organised the scheme.

Reporting by the Organised Crime and Corruption Reporting Project (OCCRP) names Maria Damianou, Ioanna Ilia and Neil Wade as former Blue Ocean directors facing tax related charges, along with Meritservus Secretaries Limited.

OCCRP reported that Blue Ocean itself is accused of failing to pay more than €26 million in tax and interest, and that a third former director was not served an indictment because his whereabouts are unknown.

The two women were employees of Meritservus, a Limassol corporate services provider that allegedly managed Cypriot companies for Abramovich’s benefit.

They are said to maintain that they were ordinary employees following the instructions of their superiors.

At an earlier hearing, their lawyer asked for access to the evidence and made no comment on the charges; The director of Meritservus has declined to comment.

Under Cypriot company law, directors are responsible for management, accounting records, tax returns and payment of taxes due.

Article 46 of the VAT Law provides for a fine of up to three times the VAT owed, up to three years in prison, or both.

Blue Ocean received a VAT assessment of €14.2 million on 19 March 2012, though the objection took until 27 March 2024 to be finally determined, by which time the money and the directors had fled, with the accruing interest now standing at €25 million.

According to Tax Commissioner Sotiris Markides, the company’s lawyers spent 12 years contesting the assessment, with the appeal being dismissed as the lawyers could not locate their clients.

The company registry shows Blue Ocean had no officers from 15 March 2022 and was struck off on 19 July 2024 without paying.

A court order obtained by the tax department restored it in June 2025, after the matter was raised in parliament by then independent MP Alexandra Attalides.

Searches of the land registry and banks found no assets to freeze, and the company’s accounts were closed, owning no movable property.

OCCRP reported that Abramovich assembled a fleet of luxury yachts between 1999 and 2010, among them the Eclipse, once the longest yacht in the world, with two helipads.

Expenses such as fuel, crew wages, port fees and maintenance attract VAT in the EU, with exemptions for vessels used exclusively for commercial purposes.

Private use of a yacht attracts VAT, which Cyprus now charges at the standard 19 per cent, while genuine commercial charter can be treated as exempt.

Investigators allege the yachts, held by British Virgin Islands companies, were leased to Blue Ocean, which chartered them on to other companies controlled by Abramovich’s trust, so no VAT was collected on running costs.

One refuel of the Eclipse could cost up to about €1.7 million and carry about €350,000 in VAT.

Five superyachts appeared to be chartered to independent clients paying up to €1.1 million for each weekly cruise.

In reality the clients were four British Virgin Islands companies belonging to an offshore trust, with Abramovich as beneficial owner; tax authorities concluded the yachts were not used commercially.

Abramovich has said he took independent professional tax and legal advice and acted on it, while his lawyers have denied any role in any alleged tax evasion.

The UK sanctioned Meritservus in 2023, along with its then chairman and managing partner Demetris Ioannides, whom it accused of creating “murky offshore structures”.

Ioannides, 83, declined to comment through his lawyers, citing ill health.

Meritservus was a division of Deloitte Cyprus until 2005, which in an investigation published on October 12 by BBC Panorama and OCCRP, alleged that Deloitte Cyprus signed off backdated paperwork for Abramovich companies.

Speaking to the Cyprus Mail, Deloitte Cyprus said it “acts in compliance with applicable laws”.

The Cyprus Mail approached the anti-money laundering unit (Mokas), which insisted that despite being an independent body, it can “only analyse data when financial discrepancies appear and then pass the information to the police”.

The finance ministry, which oversees the tax department, declined to comment on the case.

Christos Andreou of the newly formed Cypriot FBI said the force would not investigate as “the case does not concern organised crime”.

Attalides, who originally pressed the tax department to investigate the case, said it was “unbelievable that the supervisory bodies were so incompetent”.

She said, “criminal investigations should be opened into anyone who held a supervisory position, to examine conflicts of interest”.

The Russian invasion of Ukraine is approaching its fifth year. Since February 24, 2022, Europe and the United States have rolled out a battery of sanctions intended to strangle the Russian economy to the point where regime change would be the only viable outcome for the Kremlin. The wave of restrictions, however, has several loopholes — some deliberately left by the West to preserve certain exchanges, such as a limited purchase of hydrocarbons.

Seguir leyendo

© Vyacheslav Prokofyev (Vyacheslav Prokofyev/Pool Sputni)