30/08/22

CYPRUS: Large law firms under investigation for passports role.

As published on cyprus-mail.com, Tuesday 30 August, 2022.

The Bar Association has investigated 20 to 25 large legal firms and €70,000 in fines have been paid after they were named in various reports into the citizenship by investment scheme, the association’s chairman Christos Clerides said on Tuesday morning.

Speaking to CyBC, he added that lawyers may be liable for disciplinary and perhaps even criminal offences related to the passport scheme – citing the auditor general’s report released last Monday.

Clerides said that the association will decide whether it will refer lawyers to the disciplinary council, which is the only authority able to revoke their licences.

It will also investigate to what extent the ethics rules were adhered to, such as the requirement for the lawyer to know their client. They will also investigate whether there were violations of EU laws – specifically of money laundering.

Clerides explained that they are now awaiting the names of the lawyers from the auditor general and that their aim is to have the whole case finalised by December.

The chairman explained that there are two main lines of investigation – firstly, that lawyers must know their clients to ascertain details such as whether they are wanted persons or are politically exposed. The second field is that lawyers have an obligation to scrutinise their clients’ financial background, such as how and where their money came from.

He said that in most cases which the association has investigated those two provisions were poorly checked, meaning that there were violations.

Clerides said that some fines have been paid but that others are still pending, and that the association will make a decision on how to proceed with those outstanding fines this Monday.

As for the next steps, Clerides put the focus onto the legal services which he said are responsible for handling cases where criminal offences are concerned.

In June, the association fined lawyer Andreas Pittadjis €4,000 for demeaning the profession in posts made on social media.

Clerides also said an investigation into Anastasiades’ former law firm is one of two which is almost complete after being mentioned in the Pandora Papers.

In December, Anastasiades rejected suggestions that he was involved in setting shell companies abroad for personal enrichment after leaked documents, dubbed the Pandora Papers, implicated the law firm bearing his name and another law practice.

The president has also repeatedly claimed that his involvement in the firm since 1997, when he was elected leader of Disy, has been zero. In 2013, he handed over 60 per cent of the firm’s shares to his daughters.

The passport scandal has resurfaced following the publication of Auditor-general Odysseas Michaelides’ report, which highlighted a series of malpractices and potential criminal offences in the now-defunct Cyprus citizenship by investment scheme.

It noted that a very large number of people who were approved under the scheme did not meet the criteria, while at least 3,810 additional people were naturalised as relatives (spouses, adult dependent children, or parents) of the investors without any authorisation in the relevant law.

According to the report, €200m were lost from VAT, as well as €25m from the non-payment of fees.

In addition, €1bn worth of contracts were cancelled while contracts worth an additional €3.5bn are still pending, with the report observing that no satisfactory mechanisms were ever in place to prevent the likelihood of fake investments or their premature abandonment.