By George Koumoullis
A tsunami of revelations was triggered by the publication of the Pandora Papers, which brought to light the dark game of billions of thieves, crooks, super-rich, powerful government officials of the planet, who have built empires through the underground routes of “shell” companies and tax havens. More specifically, the documents relate to allegations of opaque transactions by 30 country leaders, 100 billionaire businessmen and lawyers, and 300 state officials, who tried to conceal trillions of dollars from taxes, authorities, prosecutors and other bodies, not to say the general public. Unfortunately for the reputation of Cyprus, the law firm founded by President Anastasiades is denounced by the newspaper “The Guardian”, which participated in the study of the documents, for falsely stating the details of the owner of four offshore companies of a Russian tycoon, who acquired Cypriot citizenship through the law firm Nicos Chr. Anastasiades & Partners, run by the daughters of the President of the Republic of Cyprus.
The Pandora Papers raise the question of how Cypriot kleptocrats manage to hide their millions. It seems not that difficult. First of all, they set up a company, preferably abroad (a very easy matter), because if they deposit their money received from bribes or other illegal activities in their name, in a bank account, the prosecuting authorities could easily locate the illegally acquired treasure. In other words, using a company to own a bank account is like robbing a house with gloves – they do not leave fingerprints, as long as the ownership of the company is hidden by the authorities. Unfortunately, there are many countries that do not do thorough research on property elements because they do not want in any way to discourage the inflow of capital.
But what kind of companies do thieves create? In economics they are called “shell companies” and are usually registered with the Registrar of Companies of some tax havens (e.g. Seychelles, Panama) and operate through their representative, who is usually a law or accounting firm. These companies do not have offices, so neither staff, they have no headquarters, nor specific tasks and are created to achieve business objectives, such as a reduction in tax obligations, protection of the legal entity, an increase in capital, but also – and here it is of interest to thieves – for illegal purposes, such as money laundering, concealment of ownership by legal authorities or circumvention of sanctions. It is worth noting that the financial piazza refers to these companies as “seal companies”. The term came from the fact that these companies, as I mentioned above, have neither staff, nor object, nor anything… only the seal they made when they were set up! The French call them société écran, that is, a company-screen. After such a company is created, the Cypriot kleptocratis can proceed to the purchase of real estate and / or investments in stocks and bonds.
However, because the real value of the money decreases over time due to inflation, there is a smarter solution for the Cypriot kleptocrat. In several Gulf Arab countries they can buy as much gold as they want anonymously. A gold bar (12.4 kg) has the dimensions of about one box of cigarettes and currently costs about 607,000 euros. If, therefore, a kleptocrat buys 2 gold bars, he will be able to put in a bank deposit box gold worth more than 1.2 million euros. euro. In addition to the security that the kleptocrat will enjoy, he will have also made a good investment: the price of this precious metal may fluctuate in the short term, but in the long term the price trend is upwards. 20 years ago, in 2001, the average annual price of gold was $270, whereas now it’s $1,520.
Of course, by order of a Cypriot court, the contents can be seized in a specific bank deposit box. Considering that no kleptocrat in Cyprus has been convicted of a financial crime (except for one, but by a foreign court), the possibility of such an eventuality is tantamount to that of the case of the Sun rising from the West.
*Economist, social scientist
*Opinions expressed in this article are the author’s own and do not necessarily reflect the editorial policy of CypriumNews.
