Commissioner in Cyprus to probe Russian asset freeze

Commissioner Reynders will request information on the total value of the assets of "Russian oligarchs" in Cyprus that have been frozen by the authorities he told Cyprus News Agency in an interview, noting that so far, according to official figures 104 million euros in assets have been frozen, which is considered a low amount. Reynders was speaking to CNA ahead of his visit to Cyprus on Thursday and Friday.

The Commissioner for Justice also referred to the progress of the infringement procedure on golden passports, noting that out of the three Member States on which the Commission focused, Bulgaria has completely stopped the relevant programmes and therefore the procedure is closed, Malta continues the programme and therefore has been referred to the EU Court of Justice, and Cyprus remains in the middle.

Reynders noted that Cyprus has suspended the relevant legislation without repealing it due to legal reasons related to the review of citizenship granted. According to the Commissioner, it would be preferable to have a complete repeal of the legislation.

The Commissioner also expressed his satisfaction with the cooperation so far in relation to the monitoring of the rule of law in the context of the Commission's annual reports, which he is visiting Cyprus to discuss, as well as on the reforms in the judiciary.

Reynders stressed the importance that authorities such as the new anti-corruption authority one can work in practice and that they will have the necessary manpower and resources.

Finally, Reynders refered to the situation of freedom of the press in Cyprus, focusing in particular on ensuring the independence of public media, and specifically the CyBC, as well as the Commission’s proposal to counter the practice of strategic lawsuits against public participation (SLAPP).

Commisioner Reynders explained that during his recent visit to Malta he discussed the implementation of EU sanctions against Russia for its invasion of Ukraine, asking in particular to be informed about the total value of assets frozen in the country as a result of the sanctions, noting that in some countries the amounts declared were lower than one would expect.

Citing Cyprus as an example, he noted that after years of operation of the "golden passport" programme against investments, which often involved citizens of Russia or Belarus, the question arises how relatively low amounts of frozen assets can be recorded.

“I've seen it in Italy, in Spain, after my visit”, pointing to “a huge increase of the figures”, a phenomenon which he added could be due to technical problems. He also referred to the example of Hungary, where initially information showed Russian frozen assets amounting to 3000 euros, which later increased to 870 million euros.

Russian frozen assets in Cyprus

Asked to comment on the value of the assets of individuals frozen in Cyprus under the EU’s sanctions, Reynders noted that there were more significant amounts than those reported in Malta or Greece, amounting to 104 million euros.

However, he noted, a few years ago official data showed a large number of Russian assets in Cyprus. He said that during his contacts he would discuss "why it is difficult to find more than that", "maybe in bank accounts or assets in various companies, but also real estate or yachts or other assets from Russian oligarchs".

He added that the second point of discussion will be how to best enforce sanctions, as, he said, "we are concerned about the different possible ways for various oligarchs and entities to circumvent sanctions" by transferring assets to other individuals or complex international structures in tax havens.

He also recalled that he has proposed the addition of sanctions evasion to the crimes recognised throughout the EU, and that the proposal is currently being discussed by the Council of the EU and the European Parliament.

Circumvention of sanctions

Asked to comment on the recent addition of natural and legal persons from Cyprus to the US and UK sanctions for allegedly assisting Russian oligarchs in circumventing sanctions, Reynders did not comment specifically on the case but referred to the fact that the discussion on the next package of sanctions is now even more focused on effective implementation.

He said however that he will ask to receive more precise information regarding sanctions against Cypriot citizens by the US and the UK.

Regarding the EU’s actions against sanctions circumvention in general, Reynders underlined that “if there are some links between companies in Cyprus and a third country to organize a circumvention of sanction, we have not only diplomatic action, we have also some possibilities to, to act for a criminal offence”.

Golden passports

Commenting on the issue relating to “golden passport” programmes in the EU and Cyprus, Commissioner Reynders noted that this is something that came up in three out of the 27 member states.

Bulgaria, he said, has established that it has no intention to proceed with new legislation, which ended the infringement procedure, while Malta “continued to receive applications” having decided to suspend the programme for Russian and Belarusian citizens, while also sending a clear message that the programme is related to “budgetary reasons”, which led the Commission to take the case to the Court of the European Union, because, as Reynders said “we are sure that there's a lack of sincere cooperation with all the member states” since it’s not just the national passport that is provided, but access to the EU citizenship.

“And in between you have Cyprus” he added, noting that he has had many many discussions with the members of the government and the Attorney General. “What we have asked is to stop the process and to organize a review of the existing cases” Reynders added, noting that “I've seen that now there's a real work on revision” of applications from the past years.

However, he continued, the Cypriot authorities decided to suspend the law and to explain to me, we are doing that because we need to maintain the law for the revision of the cases in the past”, adding that the Commission is analysing this dimension.

“My preference is to see one day the withdrawal of the law” and referring to the infringement case added that “we don't want to stop the process before the court, without the real final certainty that will be possible to have an abolition of the law and not just a suspension”.

Asked if the Commission has been informed of the numbers of cases reviewed, Mr. Raiders said they have received some figures, but he prefers to be informed of the latest figures during the visit before commenting further.

Commissioner Raiders also linked the process of reviewing citizenships granted through the golden passport programme to the assets of oligarchs frozen as a result of sanctions. As he pointed out, the Cyprus Investment Programme was not just about paying for a passport but "real investment in assets in the country", which is why the Commission is trying to understand “why at the end of such a long process we have 100 million euros in frozen assets and not more".

Regarding the criteria that the government has set for giving permanent residence to investors, Reynders noted that he will ask what exactly the rules are at the moment.

Rule of law and justice

Regarding the rule of law, the Justice Commissioner said he was satisfied with his cooperation with the authorities during the preparation of the annual rule of law report.

“What is very clear is that we have seen for the justice system, and with some effect in the fight against corruption, a real set of reforms” Reynders said.

“The main message will be you need to continue to implement, new laws, not only with passing the laws in the parliament, but also to implement them very correctly” he stressed.

Commissioner Reynders especially stressed the importance of providing human and technical resources to the judiciary, and referred to the reforms currently being discussed such as the digitisation of justice with the help of the Recovery and Resilience Facility.

He also stressed the need to continue reforms regarding the role of the Attorney General and the question of limitations or possible actions against decisions of the Attorney General, as well as better monitoring for high-level corruption prosecutions.

“To be concrete, I said that also in Malta, I'm not asking to have condemnations. I'm just asking if there are investigations, where are the final decisions?” he added, explaining that the issue is not the content of decisions, but for there to be transparency about the “state of play” and the final decisions.

Referring to the high public perception of corruption in Cyprus as recorded by Transparency International, Reynders said that “ like other member states, we've discussed about the creation of an independent authority against corruption” which is also an important element of the recent Recovery and Resilience Plan.

“We have seen a very good progress with the creation of the authority. We want to be sure that the independence is a reality in the functioning” he said, noting that this is also not enough and that what is needed is that the authority has enough resources “to take initiatives in the fight against high level cases”.

Reynders also talked about the importance of transparency regarding the assets of government officials, so that the public can compare their economic situation at the beginning of their mandate, during their mandate and after their mandate.

Freedom of the press

Finally, regarding freedom of the press, and in particular referring to points included in previous rule of law reports regarding the legislation on media ownership and the status of the CyBC, Reynders noted that “discussing media freedom and media pluralism” is not the same “in a very large country and in a smaller one”. That’s why, he added, “if you don’t have a very large country and market it’s more and more important to pay attention to the public media service”.

“If the public service is in the hand of the government, it's a problem everywhere, of course, but in other members you will have competition and an immediate reaction from other channels. If you have a small market, it's more important to pay attention to that” he noted.

Reynders also referred to the idea of possibly organising a debate with different member states of the same size to tackle the challenges of having a small market at the national level.

The Commissioner also referred to the Commission’s proposal for legislation which would better protect journalist and civil society from abusive lawsuits (SLAPP), noting that while on the hand it should be possible to go to justice for defamation, the legislation will stop abusive uses of this possibility by giving the judiciary the possibility of shutting down a case from the beginning.