Law firm founded by Cypriot president accused of hiding assets of Russian exile

A law firm founded by the president of Cyprus was accused of hiding the assets of a controversial Russian senator behind fake beneficial owners in a secret report filed with Caribbean financial regulators.

A Panamanian offshore company broker, Alcogal, complained that the Cypriot law firm Nicos Chr. Anastasiades & Partners had claimed to it that four of the offshore companies it was managing were beneficially owned by its staff.

However, in the report, filed to financial regulators in the British Virgin Islands (BVI) on 8 June 2015, it said it had come to believe it had been misled, and it now believed the true owner was the Russian businessman and former senator Leonid Lebedev.

Lebedev fled his home country in 2015 after being accused of failing to declare his assets. He denies the allegations, and has since become a Hollywood film producer.

Contacted by the Guardian and the BBC, Anastasiades & Partners strongly denied filing false information to the broker. The firm’s founder, Nicos Anastasiades, became president of Cyprus in 2013. He said that while he owned shares in the law firm until his election, he had no active role in its affairs after becoming leader of the opposition in 1997.

In a statement to the Guardian, Anastasiades said: “I have no knowledge and it would be impossible for me to know and be in a position to respond to any allegations concerning the handling of the affairs of my ex-law firm.”

There is no suggestion that Anastasiades was involved in the firm’s activities. However, the response raises questions about the president’s wisdom in allowing a legal firm, over which he apparently had neither oversight nor control, to operate under his name while he served as a prominent politician.

Both the firm and its founder have previously had separate dealings with Lebedev. Anastasiades & Partners is understood to have advised the Russian on procuring Cypriot citizenship via the island’s legal, though controversial, “golden passport” scheme, whereby wealthy applicants could buy the right to live and work in the EU, in 2011. Citizenship was granted that year.

The Pandora papers leak includes documents dating from 2015, including a suspicious activity report (SAR) sent by Alcogal to the BVI’s financial regulator.

The SAR, which was not copied to the law firm, names four companies – including Doubleday Properties, Donmark Finance and Bloomfield Finance – and states: “We believe Mr Leonid Lebedev to be the UBO of these companies.”

In 2010, Anastasiades’ law firm took over the management of the companies and registered them with Alcogal. According to Alcogal’s SAR, when asked for the identity of their owner the president’s firm cited three beneficiaries.

Two were employees at the legal practice, while a third was an employee of a client of the firm and a legal consultant. Two worked out of Anastasiades’s office in Limassol, a seaside resort popular with wealthy Russians and where Lebedev bought a villa as part of his “golden passport” deal. The legal consultant worked in the same building.

However, the Alcogal report said it had come to believe the three individuals named by the president’s law firm were not the “real UBOs” and “strongly” concluded that the offshore shell companies actually belonged to Lebedev. It subsequently resigned as registered agent for the four firms, citing a “higher risk” to its reputation.

Anastasiades & Partners flatly denied wrongdoing and said it had no knowledge of the SAR or the concerns raised in it. It said the staff whose names were cited to Alcogal were never beneficial owners of the offshore companies, but were acting as trustees on behalf of the beneficial owner, entirely in accordance with Cypriot law. The legal consultant told the Guardian she had always been the true beneficial owner of one of the companies.

The firm declined to say if it acted for Lebedev, citing client confidentiality, but said it had always kept “proper records” in accordance with Cypriot law. It said Anastasiades had stepped back from “professional engagement” after becoming a political party leader in 1997, and described him as a “silent shareholder” in the firm up until 2013. “He was never involved in day-to-day activities of the office or had any conduct with clients and cases,” it said.

Lebedev did not respond to repeated invitations to comment. He has previously denied wrongdoing. He is among an estimated 6,779 people awarded citizenship by the Mediterranean island’s internationally recognised Greek-run south between 2007 and 2020.

The programme enabled the super-rich to acquire a Republic of Cyprus passport if they invested at least €2m (£1.7m) in real estate, stocks, government bonds or Cypriot businesses. Successful applicants got the right to live and work in the EU.

Following persistent criticism from Brussels, the government late last year announced the scheme’s suspension.

In addition to Russian oligarchs and Saudi potentates, the Cambodian leader, Hun Sen, was discovered to have been among the thousands of non-Europeans who received a Cypriot passport.

In July, the 75-year-old Anastasiades conceded there had been lack of due diligence on the part of the government in addressing “gaps, flaws and loopholes”. Apologising for what he described as mistakes, he admitted the passport furore had generated widespread public distrust. However, he denied a “personal connection” to the programme and said claims to the contrary were “myths”.

In a statement to the Guardian, the president described his relationship with Lebedev as “cordial” and official. It was never “lawyer-client”, he stressed. He added: “At no time and on no occasion did I handle the affairs of the firm’s clients, including Mr Lebedev.”

In June 2013, soon after winning the presidency, Anastasiades borrowed Lebedev’s private jet to fly to France for a meeting with the then French president, François Hollande.

Anastasiades said he used the jet “free of charge” because of a French air traffic controllers’ strike, adding the plane was due to fly to Geneva anyway for a service. He travelled home on a regular commercial airline, he said.