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According to a report by Kathimerini's Pavlos Neophytou, Cypriot police are close to completing an investigation into allegations connecting a luxury resort to one of Russia’s biggest financial scandals, the Magnitsky case, according to police officials. This investigation follows reports by the Organized Crime and Corruption Reporting Project (OCCRP) which linked the upscale Cap St Georges hotel in Peyia, Cyprus, to illicit Russian funds tied to the Magnitsky tax fraud case, a scheme involving $230 million stolen from the Russian state.
In a parliamentary hearing on Wednesday, Assistant Chief of Police Ioannis Georgiou revealed that the investigation, launched after the 2017 OCCRP report, is nearing completion. The police have been cooperating with authorities from several countries, including the U.S., France, Spain, and Latvia. Georgiou added that Cypriot authorities are looking into a "small part" of the larger Magnitsky affair, which has been under global scrutiny for years.
Dirty Money and Hidden Investors
The OCCRP’s December 2023 report raised serious concerns about the origins of investments in Cap St Georges. It pointed to two key Russian figures, Dmitry Klyuev and Igor Sagiryan, who are both implicated in the notorious Magnitsky tax fraud. Klyuev, believed to be the mastermind behind the fraud, was reportedly one of the first buyers of a villa at the resort. Sagiryan, a Russian banker, is said to have funneled over $9 million through shell companies connected to the tax scam and brought investors into the Cap St Georges project.
The revelations sparked a fresh examination of Cyprus’ money-laundering controls. During the hearing, a representative from the Central Bank of Cyprus confirmed that several bank accounts linked to individuals mentioned in the OCCRP report had been identified. However, it remains unclear whether these financial institutions flagged any suspicious activity to authorities.
Environmental Concerns Amid Scandal
In addition to financial wrongdoing, the case has stirred environmental concerns. The Cap St Georges project, located in a sensitive ecological zone near Cyprus’ famous sea caves, was criticized in 2019 by the European Commission for failing to properly assess its environmental impact. The luxury resort, which now includes over 200 villas and a 202-room hotel, was built in a zone designated for tourism in the 1970s.
Cypriot environmental officials defended the development, citing reports that showed no significant harm to local wildlife, including protected species such as the Mediterranean monk seal. Despite this, critics like MP Alexandra Attalidou raised doubts about the oversight, questioning how such a project could proceed with minimal environmental checks.
Tangled Web of Denials
Throughout the parliamentary session, Achilleas Aimylianides, the legal advisor for Korantina Homes, the company that owns Cap St Georges, categorically denied any connections between the project and illicit Russian money. He rejected the notion that any of the investors mentioned in the OCCRP report had financial ties to the resort, claiming that all accusations were unfounded.
"We have complied with all environmental and financial regulations," Aimylianides told lawmakers, promising to submit detailed written responses to clarify the company’s position. He added that the company never concealed any information from authorities or reporters, and accused the OCCRP of selective reporting that ignored the company’s side of the story.
Ongoing Investigation
While the police investigation inches closer to a conclusion, other Cypriot authorities are also keeping a watchful eye on the case. The Finance Ministry’s tax department awaits findings from the police before potentially launching its own probe. Meanwhile, the Customs Department and Securities and Exchange Commission reported no direct involvement but are ready to assist if needed.
The Cap St Georges case highlights ongoing concerns about Cyprus’ role as a hub for dirty money, particularly from Russia. Though Cyprus has long marketed itself as a tourist haven and investment hub, its financial system has repeatedly come under fire for lax anti-money laundering controls.
As Cyprus faces international scrutiny once again, lawmakers and authorities are under pressure to ensure that the island sheds its reputation as a safe haven for questionable money.
Key Figures Linked to Cap St Georges:
- Dmitry Klyuev: Alleged head of the criminal group behind the Magnitsky tax fraud; one of the first investors in Cap St Georges.
- Igor Sagiryan: Russian businessman and banker, linked to Renaissance Capital; allegedly funneled millions into Cap St Georges through shell companies.
The investigation has attracted global attention, with U.S. authorities closely watching developments due to both Klyuev and Sagiryan being on international sanctions lists.
