The Public Oversight Authority for the Auditing Profession (ADEEp) is taking all necessary steps regarding the case involving Deloitte Cyprus, its Director General, Panos Prodromitis, told CNA.
When asked by KYPE whether the Authority would proceed with an investigation into the allegations published by the BBC and reports of Deloitte Cyprus’s alleged involvement in falsifying data that led to tax evasion amounting to millions by companies owned by Russian oligarch Roman Abramovich that were based in Cyprus, Mr. Prodromitis said that “the Cyprus Securities and Exchange Commission (CySEC) has been informed of the recent reports and is taking all necessary actions in every direction, within the framework of its statutory powers and obligations, with the aim of serving the public interest.”
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According to a joint investigation by the BBC’s Panorama program and the Bureau of Investigative Journalism, Deloitte Cyprus is alleged to have helped backdate documents used to conceal Abramovich’s assets worth hundreds of millions of dollars.
According to the investigation, the corporate services provider MeritServus, based in Limassol, which managed an extensive network of the Russian businessman’s offshore companies. Until 2005, MeritServus was owned by Deloitte. After their separation, the two companies continued to work closely with each other and with Abramovich’s associates to manage his global assets; meanwhile, according to leaked documents, Deloitte is alleged to have provided advice that led to tax evasion.
The investigation is based on thousands of documents leaked as part of the international journalistic investigation “Cyprus Confidential.”
According to the BBC, in 2006, following the introduction of new Cypriot legislation requiring the disclosure of corporate financial statements, Abramovich’s associates proceeded to retroactively transfer assets to companies in the British Virgin Islands.
A notable example is that of another Cypriot company, which, it is alleged, saw luxury residences, private jets, and yachts worth $672 million. Following the accounting changes, the company appeared to have assets totaling just $75,000.
Even more serious are the allegations of possible tax evasion through the Cypriot company Kravin Investments, which, according to reports, held nearly two billion dollars in bank deposits in 2003. According to the investigation, backdated documents were used to ensure that interest income was not reported as taxable income in Cyprus.
In a third instance, MeritServus allegedly falsified documents relating to more than $10 billion in assets belonging to the Cypriot company Electus Investments, listing a company of the same name in the British Virgin Islands as the beneficial owner.
Abramovich’s lawyers deny any wrongdoing, arguing that he relied on professional advice. Deloitte Cyprus told the BBC that it operates in accordance with the law and that it cannot comment on documents drafted 20 years ago. Following the revelations from the “Cyprus Confidential” investigation, MeritServus ceased operations.
It should be noted that, under the current legal framework, the Commissioner of Taxation cannot investigate allegations of tax evasion, as, under certain conditions, tax audits can go back up to 12 years, whereas the allegations concern events that allegedly took place more than 20 years ago. However, any criminal offenses that may arise from the case are not subject to a statute of limitations.
