SOUTH CYPRUS; A HEAVEN FOR MONEY LAUNDERING ON ROUTE TO THE EU

The Russian mafia, also, used South Cyprus as base for its extensive operations. The Russian mafia greatly benefits from its extensive operations in GCA.

Under these circumstances, the recent developments regarding, the assistance of GCA to money laundering activities of Milosovic and to Bin Laden, led us to question and discuss the EU’s "best candidate", while the majority of the international community fights against terrorism all over the world. We should not ignore the fact that the EU tries to provide the basis for Member States to prevent criminal money entering the financial system.
The main aim of this paper is to discuss, how GCA will become a full member to the EU, while she is far away from international development, regarding anti-money laundering efforts, and is supporting war crimes and terrorisms.

The Money Laundering: Directive of the EU
The European Union (EU) applies some rules within its member states in terms of denying access of ‘dirty money’ to the EU’s financial systems.
The money laundering Directive of the EU (91/308/EEC) has provided the basis for Member States’ efforts to prevent criminal money entering the financial system, which is a crucial part of the campaign against drugs trafficking and organised crime in general. Indeed, the Directive serves as a reference at the world level for other countries’ measures to counter money laundering. The cornerstone of the Directive is the obligation on credit and financial institutions (including ‘bureaux de change’) to require identification of all their customers when beginning a business relationship (particularly the opening of an account or offering safe-deposit facilities), when a single transaction or linked transactions exceed ECU 15,000 or when they suspect laundering.

A new proposal by the European Commission aimed to extend the scope of the EU Directive on combating money laundering and to make it more effective. The proposal will extend the Directive’s obligations to activities and professions outside the financial services sector (such as auditors, legal professions, real estate agents and casinos) and extend the definition of suspicious transactions to cover the proceeds of other serious crimes besides drug trafficking. Such an extension of the Directive will bring EU rules into line with the latest international recommendations, in accordance with the Amsterdam European Council’s Action Plan to combat organised crime and requests from the European Parliament. The announcement is featured in a Commission report on implementation of the 1991 Directive. (http://europa.eu.int/comm/internal_market/en/finances/general/launden.htm)

Events that Brought Us to Today
The European Union considers the Greek Cypriot Administration (GCA) as the government of all Cyprus, having only one constitution on the island and one valid government. The GCA has been accepted by the EU as "the best candidate" in the enlargement wave. However, when human rights criteria are considered, to ignore the mass genocide committed by the Greek Cypriots it is not possible to make sense of the EU’s treatment of GCA as a perfect candidate.

Starting in December 1963, for the next eleven years the Turkish Cypriots had to seek survival in violent and traumatic conditions. Until the intervention of Turkey as a guarantor state, 103 villages were burned down, many innocent Turks including women and children were mercilessly killed, more than 50,000 people were driven away from their homes and they were forced to live %3 percent of the island in isolated enclaves.

The Greek Cypriots were not only trying to genocide the Turkish Cypriots they also destroyed the 1960 Cyprus Republic in 1963 by expelling the Turkish Cypriots from all the administrative organs by force of arms. The Turkish Cypriot people became victims of the ethnic cleansing policy of Greece backed by Greek Cypriot paramilitarists.

With the 20th July Peace Operation of Turkey, peace in Cyprus was achieved. However the perfect candidate of the European Union continues its illegal activities in different ways. Support of the GCA to terrorism and money laundering activities took place in some reports which were published in different time periods. The Greek Cypriot ‘House Special Committee on Organised Crime’ stated in a report in 1997 that "It’s widely accepted now that organized crime does exist in Cyprus." (Cyprus Mail, June 19, 1997)

South Cyprus: Milosevic’s Treasure Island
The Greek Cypriots involvement and assistance in money laundering activities cannot be disregarded: "A US State Department Report has stated that South Cyprus is major area of concern for money laundering and drug smuggling." (Phileleftheros, March 2, 2001) A massive investigation involving American, Swiss, Yugoslavian and UN officials has consistently pointed to Cyprus as a transit point for money smuggled out of war- torn Yugoslavia during the presidency of Slobodan Milosovic. (Cyprus Mail, March 14, 2001) Slobodan Milosovic secretly financed Serbian military operations in Crotia, Bosnia and Kosovo in 1990’s through Greek and Cypriot bank accounts, according to documents from the United Nations war crimes court. (The New York Times International, December 1, 2001)

In March 2002 Mladjan Dinkic, the Yugoslav central bank governor made an investigation on South Cyprus about the Milosovic’s money laundering. "4 billion US Dollars were channelled to Europe through Cyprus illegally from Yugoslavia." (Cyprus Mail, March 3, 2002)

The Greek banking ethics of this "perfect candidate" has made Southern Cyprus a heaven for smugglers, mafia and money launderers to deposit their illegally gained proceeds.

Former President of the Yugoslav Republic, Slobodan Milosovic responsible for the mass murder of thousands of people in Bosnia, who enforced a policy of ethnic cleansing by expelling Bosnian Muslims from the country, also laundered millions of dollars in South Cyprus.

Greek Cypriot banks were utilised by the "official smuggling ring" organised by Yugoslavia to violate the internationally imposed sanctions against it during the Bosnian war.

Slobodan Milosovic headed a secret financial network spanning 50 countries, according to a report by prosecutors to the UN court in The Hague where he is on trial for war crimes.

In a 58-page report prepared by Morten Torkildsen, an investigator at the United Nations war crimes prosecutor’s office, it was stated that accounts held by companies and individuals located in more than 50 countries received funds from the Cypriot companies. The report stated that the former Yugoslavian President Slobodan Milosovic used South Cyprus as an international money laundering center in order to break the embargoes imposed upon former Yugoslavia. According to this report the Law Bureau of Greek Cypriot political party, Democratic Party (DIKO), leader Tassos Papadopoulos’s registered off-shore companies belonging to Milosovic’s brothers.

The report also added that "Popular (Laiki) Bank, the island’s second larger bank, allowed a group of Yugoslav-controlled front companies to operate in defiance of UN sanctions. These companies supplied Mr. Milosovic’s government with fuel, raw materials, spare parts and weapons to persue wars in Bosnia in 1992-1996 and in Kosovo in 1998-1999." (Financial Times, July 25, 2002)

During the years 1992 and 1994 it is estimated that as much as 4 billion US Dollars was transferred to South Cyprus, with the funds being deposited in the Popular Bank and its Greek subsidiary, European Popular Bank.
Inspite of all these allegations the Greek Cypriot authorities have kept their silence. "… instead of taking measures against Yugoslav sanctions-busting, leading members of Cyprus’s close-knit elite facilitated the transactions.
They included Afxentios Afxentiou, governor of the central bank; Kikis Lazarides, chairman of Popular Bank; and Tassos Papadopoulos, a prominent lawyer and leader since 2002 of the Democratic Party, the island’s second biggest political party." (Financial Times, July 25, 2002)
Papadopoulos is a candidate in the Presidential elections that would take place in South Cyprus in February 2003. According to the opinion poll by Greek Cypriot research organization, "RCI", Papadopoulos got 46.6% of votes. (Simerini, August 4, 2002). It is possible to say that Papadopoulos will be the president of the "Cyprus Republic" while the GCA will be a member of the EU. However, in the latest Milosovic money laundering operation, when sanctions were imposed on Yugoslavia by the UN, an innocent people were put in front of a firing squad, the person most responsible for defying the UN sanctions was Papadopoulos. "Without a doubt Papadopoulos will represent, very well, Greek Cypriot Cyprus, because, he will be the representative of South Cyprus, who for years has opened its arms to money laundering, the Russian Mafia and to the PKK and Armenian terrorist groups operating in the South" (President Denktaş’s statement, Kıbrıs, June 31, 2002)

The Greek Cypriot authorities kept issuing denials while the Torkildsen report makes it quite clear that Cyprus was at the center of those operations. "Why are the Attorney- general’s office and the Central Bank keeping quiet about very serious allegations, made by Liljana Randenkovic and Radmila Budisin, which are mentioned in the Torkildsen report? The two women claimed they had been made beneficial owners without their knowledge of two of the companies that played a leading role in the money laundering; both companies were registered in Cyprus." (Loucas Charalambous, Sunday Mail, July 28, 2002)

The Greek Cypriot bankers and politicians involved sound embrassed rather than repentant.

The Executive Chairman of Laiki Bank, Kiki Lazarides: "We did nothing illegal. After all, banks are in the business of making money." (Financial Times, July 25, 2002)

Tassos Papadopoulos: "We are not talking about the laundering of dirty money. It was the money of the Yugoslav state which the companies were transferring to break the US embargo." (Sunday Mail, July 28, 2002)
Attorney-General Alecos Markides: "The money might have come to Cyprus, but didn’t stay in Cyprus." (Sunday Mail, July 28, 2002)
Kikis Lazarides: "Because the amounts of cash arriving from Yugoslavia were quite large, we always checked with the Central Bank to get their permission on a case-by-case before we accepted them." (Sunday Mail, August 4, 2002)

All these statements also show that the Greek Cypriot officials have confessed that during much of the 1990s when the international community shunned Yugoslavia and despite the UN sanctions imposed, it assisted in the transfer of money belonging to ex-Yugoslav President Slobodan Milosovic from Yugoslavia to South Cyprus, where it was laundered.

From Milosovic to Laden: The Greek Cypriot Side a Heaven for Money Laundering Money laundering in South Cyprus is not limited with this. It has now become clear that the Greek Cypriot authority has laundered millions of dollars more for Saudi terrorist Usame Bin Laden.

Osama Bin Laden: he is one of the CIA’s most wanted men. He and his associates were already being sought by the US on charges of international terrorism, including in connection with the 1993 World Trade Center bomb; 1996 killing of 19 US Soldiers in Saudi Arabia; Nairobi and Dares Salaam bombs; 2000 Attack on USS Cole in Yemen; 2001 September 11 Attacks to the Twin Towers.

Fugitive Saudi billionaire Osama Bin Laden has bank accounts in South Cyprus to finance these terrorist activities. "Bin Laden’s group maintains bank accounts in Nicosia. Bin Laden also used Cyprus as a transit point to export Sudanese exports such as peanuts, to Europe. … Cyprus has been identified as a leading location for money laundering by orginized crime." (World Tribune.com, April 10, 2001)

"Former State Department official Jonathan Winer included Cyprus in a list of countries whose alleged inaction in the freezing of accounts was giving time to suspected terrorists to move their money to a safer heaven." (Cyprus Mail, October 3, 2001)

Former CIA chief James Wolsey has told Italian newspaper La Repubblica that the Greek Cypriot side has been harboring funds manipulated by Osama Bin Laden. Wolsey said: "The worst country of all is the Greek Cypriot State. They want to enter the EU and we have advised our friends in Brussels to visit the island and say: you will enter the EU but only 400 years unless you hand over information concerning Bin Laden’s money straight away." (La Repubblica, September 18, 2001)

It is also stated by the former NATO Supreme Commander in Europe General Wesley Clark to CNN that South Cyprus was supporting terrorism and at the same time became a place for money laundering.

Russian Mafia in South Cyprus
The Russian Mafia also greatly benefits from its extensive operations in South Cyprus. The murder of a Russian banker in Limassol in February 1997, unearthed a "well-organized gang of burglars" (Cyprus Mail, editorial, February 15, 1997) and highlighted the prevalence of Russian Mafia activity in Southern Cyprus. Furthermore, its pervasive and powerful influence in the Russian banking system (Cyprus Weekly, July 11-17, 1997), has allowed the Russian Mafia to increase its connections in Southern Cyprus where it controls an extensive operations network in many Greek Cypriot off-shore companies and banks.

The Greek Cypriot Central Bank has also been severely criticised by Greek Cypriot MP’s for failing to prevent the widespread practice of money laundering. (Cyprus Mail, March 22, 1996)

"Pavel Borondin, advisor of former Russian President Boris Yeltsin, transferred millions of dollars acquired from illegal activities in Moscow to off-shore corporations in other countries through South Cyprus. … The Geneva Prosecution investigating this issue included South Cyprus regarding money laundering. The Geneva Prosecution stated that ‘Cyprus on many accounts has been used as an intermediary station on transferring millions of dollars to other countries’." (Simerini, April 12, 2001)

The European Union tries to provide the basis for Member States to prevent criminal money entering the financial system, which is a crucial part of the campaign against drugs trafficking and organised crime in general. For this purpose the money laundering Directive of EU (91/308/EEC) has been announced. However, there is a paradox from the EU point of view. From one hand the EU tries to prevent entrance of dirty money to their financial system. On the other hand it is prepared to accept the GCA, which is a center for money laundering, as a full member. Yet this "perfect candidate" of EU is not only money laundering center but also a great supporter of terrorism and war crimes.

As we discussed in the previous sections, it is clear that the GCA has a center role in supporting illegal activities. The Greek Cypriot side has a history and experience with the underground organisation called EOKA which started a campaign of violence in the mid-1950s in order to annex the island to Greece (Enosis) and committed the genocides of Turkish Cypriots during 1963-1974.

Today, Greek Cypriot involvement and support for international terrorism and money laundering has become all the more obvious. Recent reports of UN authorities stated that the former President of the Yugoslav Republic, Slobodan Milosovic responsible for the mass murder of thousands of people in Bosnia, used South Cyprus as an international money laundering center in order to break the embargoes imposed upon the former Yugoslavia.
The Greek Cypriot authorities assisted the genocide in Bosnia and crimes against humanity by laundering this dirty money of Milosovic.

Like the Russian Mafia, Osama Bin Laden, who is responsible for international terrorism, used South Cyprus as a location for money laundering. He has bank accounts in South Nicosia for money laundering activities and used these banks to finance his terrorist activities.
As it is mentioned before the law firm of DIKO Leader Tassos Papadopoulos, the candidate of the 2003 presidency elections in GCA that has high possibility to win the elections, facilitated the transactions of dirty money of Milosovic. Thus, it is possible that the GCA will become a full member to the EU under the leadership of Papadopoulos as representing the "whole" of the island.

While South Cyprus has been identified as a leading location for money laundering by organized crime, we wonder how the GCA fulfills the criteria of EU the regarding dirty money. How the EU can accept the GCA as "the best candidate" while she is the main actor for money laundering, and the supporter of terrorism?