Homepage » News » Cyprus bailout in doubt

Cyprus bailout in doubt


The proposed €17 billion bailout for Cyprus has been put in doubt after politicians across Europe raised concerns over the small island nation allegedly laundering money for Russian criminals.

MPs from Finland the UK and Netherlands want answers from Cypriot banks before any deal is signed and any funds granted. Germany is also thought to be investigating.

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. Harking back to the Cold War 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 whilst out jogging last month.

The sinister conspiracy was uncovered by a UK based lawyer Sergei Magnitsky who died in 2009. He alleged that large-scale systematic theft from the Russian Government had been sanctioned by officials before being arrested. He died days before the one year limit that he could be held without trial expired.

In July a letter was sent to the Cypriot attorney general, Petros Clerides with evidence that the island’s banks had received stolen money. Clerides replied that he could not investigate unless he received a request to do so from the Russian authorities.

The German Intelligence Service the Bundesnachrichtendienst (BND) estimates Russians have $26bn in Cypriot banks and Russian oligarchs and “mafiosi” stand to gain most from a bail-out. The BND report concluded that this “black money” amounted to €26 billion—about 150% of the country’s GDP. Money that the banks had ploughed into Greek sovereign bonds, and the housing bubble that came with a nationwide title-deed scandal of phenomenal proportions resulting in the banks needing at least €10 billion to stay afloat.

The BND report also slams Cyprus for creating a fertile ground for money laundering. While some laws have been passed and some institutions have been created to combat money laundering, they’re apparently just decoration; rules are simply not enforced. Money laundering is further facilitated by the ease with which rich Russians can obtain Cypriot nationality—and thus freedom to establish themselves financially anywhere in the EU, which according to the BND, 80 Russian oligarchs have already done.

Some corners of the EU fear that by getting to close to Russia, Cyprus could become a vassal of the Kremlin. Russia’s spy agencies are suspected of operating out of Cyprus and its location close to the Middle East makes it an important strategic location.

In January a Russian cargo ship with 60 tons of ammunition stopped on the island on its way to Syria. Cyprus, as an EU member, must obey the Brussels strict embargo on military supplies to Syria. But the ship was allowed to sail after giving assurances that it would alter its route, the loyalties of the island are uncertain at best.

An EU meeting about the Cyprus bailout is set to take place Monday evening and it is expected that the bailout negotiations will be agreed upon. However, due to the ongoing investigations from a number of countries and the diligence audit being carried out by the US firm PIMCO no decisions will be taken. A decision is expected sometime in the New Year.

As of 10:30 am

The Pound to Euro exchange rate is currently trading at 1.2318

The Pound to US Dollar exchange rate is currently trading at 1.6052

The Pound to Australian Dollar exchange rate is currently trading at 1.5403

The Euro to US Dollar exchange rate is currently trading at 1.3031

The Euro to Pound exchange rate is currently trading at 0.8117

These Exchange rates are provided by TorFX, a leading foreign exchange broker, providing unbeatable exchange rates for all your currency needs.

For the latest news affecting world currencies and to follow market trends check out our Breaking News and Currency News sections.