By John Helmer, Moscow
Oleg Deripaska’s airplane touched down in Cyprus on February 28. He wasn’t on holiday; that came a fortnight later, when he, his plane and his boat had a reunion at Male, in the Maldives. Deripaska left Cyprus on March 2. It isn’t known what was in the luggage offloaded on arrival, or taken on board when the plane departed. Maybe cash, if during the time in Cyprus an informant warned that the newly elected government of Nicos Anastasiades was about to accept a European Union bailout requirement hitting all Cyprus bank accounts with a 9.9% tax on amounts above €100,000; 6.79% on accounts below that amount.
Timing is everything. Eighteen months ago, in September 2010, Alexander Abramov became a citizen of Cyprus. Abramov, who is the second shareholder of the Evraz steel and mining group after Roman Abramovich and his Millhouse holding, was granted naturalization after then-Cyprus Interior Minister Neoclis Sylikiotis announced to the Cyprus cabinet that Abramov was being rewarded because he had “offered [note carefully that word] the highest level of service to the Republic of Cyprus, and considering his business activities, naturalisation is in the public interest.”
The Cyprus press report  confirming the switch counted among Abramov’s services to the republic “a 51.4 per cent stake in the Cyprus based company, Palmrose for USD $1.06 billion (€0.83 billion), and as of June 2010 Evraz held minority stakes in two Cypriot scrap metal companies, EKV Invest (9.6 per cent) and RVK Invest (42.6 per cent). Evraz also has a 50 per cent stake in Cyprus based Streamcore Limited, which had net assets of $62 million in September 2009.”
As a Cyprus citizen, the terms of the Cyprus bank bailout agreed over the weekend allow Abramov to convert the 6.75% tax he must pay on the first €100,000 of his accounts into shares in the banks whose capital is being refilled by the tax. That may not have been quite the offset Abramov was looking for. Already the biggest Russian shareholder in the commercial Cypriot banking system is Dmitry Rybolovlev; through a front called Odella Resources, he owns at least 5.01%, and maybe as much as 9.9% of the Bank of Cyprus. That bank owns about 80% of the domestic Russian bank, Uniastrum.
Did Abramov know in advance what was going to happen to Cyprus bank depositors, and did Abramov remove his Cyprus bank deposits to safer haven in good time? Did he tip off his partner, Abramovich? Evraz’s spokesman is not answering email or telephone calls; the company website disappeared for part of Monday morning.
Did Deripaska, another of Abramovich’s partners, get the tipoff, and did he fly away with all the cash he could withdraw in four days? Deripaska’s spokesman was asked what was Deripaska’s purpose when he visited Cyprus between February 28 and March 2, and how much of Rusal’s funds is exposed to the Cyprus bank exaction? Irina Pashinkina, the spokesman, is incommunicado until 5 pm, her secretary said.
Independent accounting evidence reveals there are, or recently have been, dozens of companies in the Rusal group with Cyprus-registered accounts in Bank of Cyprus, Hellenic Bank, and Alpha Bank (Greece). These companies have variants of the names Rusal and Rual. Fifteen more companies have been identified in the Cyprus company register with variants on the name, Alumina & Bauxite.
Abramovich’s spokesman, John Mann, was asked how much his boss calculates his Evraz and other holdings in Cyprus were exposed to the 9.9% tax? He replied: “No, sorry. We do not publish financials.”
Most of the Cyprus bank deposit tax is assumed in Berlin, London and Washington to be extracted from Russians. At a take estimated to total between $2 billion to $3 billion (assuming Russian bank deposits in Cyprus banks of between $20 billion to $30 billion), it is one of the biggest attacks on Russian financial interests since the US and the NATO alliance went to war in Libya, killing Russian arms supply charges, infrastructure contracts, and past-due state debt.
For the time being President Vladimir Putin is silent. Not a single Kremlin or government official is reported in Monday’s Russian media as commenting on the situation in Cyprus, not even anonymously. That kind of silence usually means there is no disagreement among them on what must be done, and what has been decided. So what did Putin know and agree to in advance?
According to the public record  the Kremlin issues, on January 29 of this year Putin “had a telephone conversation with President of Cyprus Demetris Christofias. The two presidents discussed current issues of bilateral cooperation, including cooperation in the economy and finance.”
Christofias reported  his version of what he had heard the following day in the Cyprus press. “It was a cordial and friendly conversation, as usually, and of course it focused on the financial situation in Cyprus and the possible participation of the Russian Federation in the financing of the Republic of Cyprus. President Putin assured me that the Russian Federation is ready to contribute, with the EU, in the financing of Cyprus. It is natural that the Russian Federation is interested in Cyprus being financed from the EU as well, as it (Cyprus) is a member of the Union. The Finance Ministry of the Russian Federation is in contact with the European Commission and I hope that there will be a positive outcome on this issue soon… this helping hand will save Cyprus. This does not mean that we will disengage from our obligations concerning structural changes in the economy and the payment of potential loans either from Russia or jointly from the EU and the Russian Federation.”
Was Christofias too wishful to hear exactly what Putin was saying? Were there Russian conditions Christofias didn’t want to reveal because, for domestic political reasons, he dared not accept them? Was Putin intending to be ambiguous ahead of the February 13 presidential election in Cyprus? Was his “helping hand” a pair – one which added no new money to the bailout, requiring the depositor confiscation; and the other, a secret handshake for oligarchs like Deripaska and Abramov?
According to European Commission (EC) announcements over the past two days, the Russian government communication to the EC, ahead of the last round of bailout negotiations, was to consider extending the term of the 2011 state loan to Cyprus of €2.5 billion by adding years to the 5-year maturity, and cutting the 4.5% interest rate. That’s quite a back-hander – with interest payments running at the old rate of €112.5 million per annum, an interest rate cut to 2.25% would save just €56 million annually, and be clawed back by another ten years on the loan repayment period.
On February 4 the Russian Finance Minister, Anton Siluanov, said as much. “’We are more looking into second option [extension of repayment term]. We are ready for softening [reduction of interest rate]. Restructuring of the debt is possible and we’ll see about the rates.”
Cyprus Finance Minister Michalis Sarris is scheduled to be in Moscow to discuss these terms, and others, this coming Wednesday. Reportedly, he is asking for an extension of term of four years, and is offering a takeover stake in Popular Bank (Laiki), the closest to insolvent of the local banks in the bailout .
Does the Kremlin’s silence, compounded by the refusal of the federal Finance Ministry to add new state money to the current Russian loan, signify that from at least January Putin was agreeable to seeing Russian offshore depositors penalized by the 10% confiscation? A tax which he and the Finance Ministry won’t impose in Russia itself, either at source, when illegal transfer pricing moves profit revenues abroad, or at the border when dividend and other capital remittances cross over?
Igor Shuvalov, a first deputy prime minister now and a government official at the time he (and supposedly his wife) took a $119 million  payoff from Cyprus-registered companies, said this past January: “I don’t want to provide any money for Cyprus. We have so many friends and partners who would like to receive some loans from us.” He meant no more than the €2.5 billion already on loan. When Shuvalov’s fortune left Cyprus for the Caribbean in 2007 was anything left behind in the Cyprus banks in January, when he made his announcement, the effect of which was to block a further €5 billion sought by the Cyprus government, before the February 17 Cyprus presidential election?
Former president Christofias and his officials may have hoped the Russian rescue funds were in the bag when they tipped off a local newspaper last September . He and everyone else now know that the bag was leaving the country, not coming in. Had the Kremlin agreed to the €5 billion in new loan money requested, the €5.8 billion depositor tax would not have been imposed. So there is a cause-and-effect connection between what Shuvalov said, what Putin decided, and what Deripaska and Abramov have been doing in Cyprus very recently.
Putin may be calculating that in pursuit of his “de-offshorization” policy, first announced to the two houses of the Russian parliament last December, it is easier said at home but done abroad. Putin had said then : “We need a comprehensive system of measures to reverse the offshorization of our economy. I am instructing the Government to make corresponding integrated proposals on this matter.”
If Deripaska and Abramov have not benefited from inside and advance knowledge, and are dutifully paying out their 10% to the betterment of , er, Cyprus, that would be a surprise.