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By John Helmer, Moscow

Cyprus President Nicos Anastasiades (lead images, left) has come under intense political and personal pressure to agree to terms of settlement for the future of Cyprus, swapping Turkish military occupation for European Union rights for all Turkish immigrants to the island — the former to be implemented over years; the latter to become effective immediately.  

The sensitivity of that deal, Cypriot, Greek and US sources said this week, is such a political bombshell  for Anastasiades seeking re-election in a year’s time that he wouldn’t be risking detonation, if not for a personal vulnerability he is facing at the same time.

Two New York Supreme Court releases this month reveal that  emails between Nicos Anastasiades’s family law firm and a wealthy Russian client, Leonid Lebedev (left lead, right side), were withheld when Anastasiades’s partner, Theofanis (Theophanis) Philippou, testified in a Cyprus court recently. Philippou has been one of Lebedev’s personal lawyers in Cyprus, and he has made official records of this. Anastasiades was also Lebedev’s adviser at the law firm and at the Imperium group of companies, which Philippou and Anastasiades operated to  manage their clients’ corporate business, personal trusts, and cashflow. Their relationships with Lebedev predate Anastasiades becoming president of Cyprus in February 2013.

It is that record which Philippou was ordered by the New York and Cyprus courts to produce. It is their sensitivity for the president now that has led to a cover-up.

Anastasiades has been vulnerable to disclosure of his involvement with Lebedev because Lebedev is accused in Russia of looting more than $200 million from a regional electricity utility; transferring the funds to Cyprus companies; and then converting part of the cash to his personal trust accounts in New York. The Anastasiades firm has been directly involved in the Cyprus companies, the Lebedev trust, the New York bank accounts, and in litigation of other civil claims against Lebedev and his companies allegedly for stealing $180 million from Commerzbank of Germany.

That is a chain of money-laundering, if the Russian courts convict Lebedev of crimes. They have yet to do that. For background, read this.  

Professing his innocence, Lebedev has sought refuge in the US, where he has negotiated with State Department and other US officials for safe haven. He has also divulged what he knows about Anastasiades to the US officials. Anastasiades, Philippou (right) and the two Anastasiades daughters who also run the law firm in their father’s absence, are aware of the potential legal implications for them in the US.

Lebedev has also been conducting a lawsuit of his own in New York Supreme Court, claiming $2 billion from two of the former shareholders in the big Russian oil company TNK – Victor Vekselberg and Len Blavatnik. They say they paid Lebedev $600 million for his TNK shares to two companies, Coral Petreoklum and Agragorn, between 2003 and 2006,  and owe him nothing more. Lebedev claims he never received their money. The truth to be decided by New York Supreme Court Judge Saliann Scarpulla depends on documents, including emails, exchanged between Lebedev and the Cyprus lawyers. 

Anastasiades has the key to the files confirming Lebedev’s alleged control of Coral Petroleum and Agragorn. He can make, or break, Lebedev’s bid for the $2 billion. But Lebedev has the key to files which threaten Anastasiades with a US investigation of money-laundering. As a reminder,  Lebedev flew secretly to Cyprus last May; local press reported his contact with Anastasiades.

For fresh emphasis, Lebedev flew to Cyprus in November to attend the court-ordered interrogations of Philippou and his employee, Viktoria Henkelmann.  A source at the court (pictured below left) described Lebedev attracting attention by riding up to the courthouse in a conspicuous limousine. A Cyprus airport source confirms Lebedev stayed on the island until he flew out on December 12. To qualify for Cyprus citizenship in 2011 Lebedev bought a home in Limassol  (right); his application for citizenship was managed by the Anastasiades law firm, though Philippou later testified in court that the home, passport and other Lebedev assets in Cyprus did not exist.

In the context of Anastasiades’ role in negotiating for Cyprus with Victoria Nuland, the former US Assistant Secretary of State, the Lebedev case materials have been widely reported as the “Nuland blackmail”. Anastasiades has responded to these reports by saying through a spokesman that all questions relating to the law firm should be answered by it. Nuland’s spokesman at State refused to clarify the circumstances in which State has granted US residency to Lebedev, and what it knows of his relationship with Anastasiades.

Last October Limassol District Court Judge Stalo Tsivitanidou-Kizi ordered Philippou and Henkelmann “to disclose to the advocates for the parties in Cyprus, and provide them with copies of any document referred in paragraph 11 of the judicial assistance request (Letter of Request).”   The request was signed in New York by Supreme Court Judge Scarpulla. Here is an excerpt of what it required:

Source: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=9wVsT0umd9icfGGDgMDgOA==&system=prod

Judge Tsivitanidou gave Philippou a deadline of November 7 to produce the documents, and an order to appear in person for questioning in the courthouse on November 21, 22, and 23. Henkelmann was ordered to appear on December 5-7.

Lebedev has told the New York court he won’t reveal the record of their advice and communications because this is “information protected by the attorney-client privilege and work-product doctrine.”

Cyprus sources at the law firm, as well as at the Limassol court, and a professional acquaintance of Henkelmann’s husband, a Cypriot lawyer, have provided details of the attempt Philippou made to avoid being questioned himself, and to prevent the release of the Lebedev documents. Henkelmann no longer works for Philippou, though he and she are both still directors of Coral Petroleum, which is registered in Ireland.

Philippou met Henkelmann at a Swiss spa, claims a source who knows them both. “He was impressed by her Russian and offered her a job at his firm. She was born in East Germany.” The interrogations of Philippou in November and Henkelmann last month were conducted by lawyers from New York and Cyprus behind closed doors.  A source close to Philippou acknowledges he tried to avoid being served with the summons at his office, but he was eventually served at his home.

“That he tried to avoid it is one hundred percent,” said a police source. “But in Cyprus if you do not respond to a court appearance order, an arrest warrant is immediately sent out for you. You cannot play hide and seek. Philippou arranged a theatrical display of his innocence. As for Lebedev’s appearance in court, I don’t know — it may have been theatre on his part too, plus vanity.”

Philippou and the Anastasiades law firm refuse to respond to telephone and email requests for their response to the allegations in the case. Lawyers in New York refuse to respond also. Limassol court functionaries who witnessed the proceedings claim Philippou said he knew nothing because as a busy lawyer he was daily required to sign a large stack of papers, marked with yellow sign pointers which he followed, without reading. Philippou said Henkelmann was in charge of the Coral Petroleum file. Henkelmann, it has already been revealed in a Dublin court proceeding, had attempted to get (and pay) an Irish director of Coral Petroleum to testify that Lebedev was unconnected to Coral Petroleum.   In the Cyprus court last month, Henkelmann claimed she didn’t know herself.

By claiming client privilege for the Anastasiades emails and law firm documents, Philippou is  confirming that Lebedev was,  and remains,   a client. If the New York judge concludes he is concealing everything else, she may dismiss Lebedev’s claim. Until she does that – no trial is likely until late this year or early in 2018 – Anastasiades can conclude the case by encouraging the Cyprus Attorney-General, Costas Clerides, who has also been investigating Lebedev’s business on the island, to compel disclosure. Clerides would require a Russian or US application for investigation of a crime.

“Anastasiades, it is well known on the island, responds to pressure by weighing his private interest with the public one,” a retired Cyprus presidential officer says. “He always favours the first, but tries to keep that hidden from the public. In his negotiations for a resolution of the Turkish occupation, the Americans and British are pressuring him in private to do what he cannot defend in public. That’s why the Lebedev case has given the Americans so much clout. Nuland’s ouster by the Trump Administration hasn’t exactly relieved the pressure on our president. Her role has been taken up by the UN representative in the negotiations, [Espen Barth] Eide.”

Eide (lead image and below) is a former Norwegian defence minister who has been ambitious for advancement at NATO now run by his Norwegian patron, Jens Stoltenberg (below, left).

Left image: Eide with Stoltenberg; right image: US Secretary of State John Kerry with Eide

Cyprus and Greek observers accuse Eide of promoting the 50-year NATO strategy of keeping Cyprus under NATO military control, through a combination of British bases in the south of the island and Turkish military occupation of the north. For an exposé of British government records of this strategy, read this work by a former UK diplomat, William Mallinson.   As Mallinson reports, “from 1957, the USA had convinced Britain that independence [of Cyprus from British colonial rule] was necessary to avoid [Russian] disruption to NATO’s southern flank. Thereafter, both countries’ primary focus regarding Cyprus was military strategy. It remains so today.”

The only drawback from the British point of view, according to Mallinson, was that “a confident and stable [Cyprus] government that was a NATO member could well have questioned the necessity – and the morality – of the British Sovereign Bases, and this must have weighed – as it still does on British considerations.”

Left: the location of the British military bases on Cyprus; right: William Mallinson, whose blog can be followed here: http://williammallinson.blogspot.com.au/

Early this month Greek Foreign Minister Nicos Kotzias publicly rebuked Eide and the new United Nations (UN) Secretary-General Antonio Guterres for exceeding the powers of their UN jobs,  and violating the UN resolutions requiring the withdrawal of Turkish forces from the island.  Kotzias (below, right) warned Eide (left) he is a go-between, not more. “Mr. Eide, you are a UN employee; you are not a mediator, and you must adhere strictly to the decisions of the international organization. You must understand that the occupation army must leave. ”

Supporters of Anastasiades in the Cyprus press have attacked Kotzias for creating stumbling blocks to the agreement terms Anastasiades has assured his supporters that he, Eide, US and British officials are ready to make. Anastasiades has also encouraged his backers to attack Russia for the same thing.

On Sunday of this week, Kotzias publicly revealed detailed proposals for acceptance by Anastasiades and the Turks. Kotzias is leaving no room for them to avoid responsibility for their terms, or for accountability to the Cypriot electorate which must approve whatever terms are agreed in a referendum.  

“In contrast with the other sides, Greece, like the Republic of Cyprus, has submitted a number of proposals. Among these is a ‘Temporary Stationing Agreement’ of the foreign armed forces on the island. Something similar to (though not exactly the same as) what was agreed between Germany under unification and the Soviet Union. This agreement determined the legal status of the withdrawal of the Soviet military forces and the manner in which the flow of their withdrawal was to be monitored. For the same period of time [five years], the same will hold for the Greek army as well. I note, of course, that the Hellenic Force in Cyprus (ELDYK) is legal on the island, while the many-times-larger occupation army is illegal.”

A Greek Cypriot analyst comments: “As for Kotzias and the temporary troops stationing, it makes sense to me. There needs to be a proposal which can be accepted by all sides. Greek Cypriot rejectionists and not only them, need something to rationalize the fact that Turkish troops will not be leaving the same day of a potential solution. Turkey needs a rationale to explain withdrawing their troops. Turkish Cypriots, on the other hand, get their security ‘guarantee’.”

The implication in Kotzias’s proposed terms is that Britian, too,  may be compelled to agree to phased withdrawal from its bases – and that’s a red line for both the British and the Americans. Kotzias again:  “this necessitates the end of the occupation of Cyprus, the elimination of the system of guarantees, which is colonial in nature, and the withdrawal of foreign forces from Cyprus… The solution we agree on — and we want there to be a solution — will be good… If there isn’t a solution, it won’t be our fault. In any case, we will not become the agents of shoddy ‘solutions’.”

“That’s an interesting analogy with Germany”, says a veteran Cyprus presidential advisor and international negotiator. Kotzias “is setting out a position which is a reasonable one – the best one for Greece and Cyprus to take. He expects Turkey to reject it explicitly, with the British staying in the background to hang on to their bases, and the US backing the British and the Turks.”

“In this situation Anastasiades will be against the Greek position, but he cannot say so in public.”

Eide’s role is viewed in Athens and Nicosia as a cover-up for this alignment of forces.  A report in Greek by George Kastrioti  reveals that the conditions which the Turkish Cypriots have tabled in the negotiations so far are an attempt to create “backdoor membership” of the European Union(EU) for Turkey, which Germany, France and a majority of EU members refuse to allow.  “EU pressure from Brussels got Anastasiades to agree to terms of the Cyprus bank bailout in 2013 which cost everyone large sums of money —  except for the Anastasiades family. Let’s see if the EU wants to allow Cyprus to become the new jumping-off point for Turkish migration into western Europe.”

There remain significant negotiating differences between the Turkish Cypriots and the Ankara administration of President Recep Tayyip Erdogan.  For a detailed analysis by Nikos Mondouros, read this. Turkey’s power structures are “falling apart”, Mondouros says, both in northern Cyprus, and also in Turkey itself.  The Turkish Cypriots want to escape from the control imposed on them by Ankara and by the Turkish military, so a settlement with the Greek Cypriots is an opportunity. For Erdogan (below, left), however, polarizing the situation is a tactic design to smoke out his adversaries before he liquidates them.  A Cyprus settlement is not so much a priority for him as an opportunity to exploit.

The Kremlin is in an awkward position, too, according to Russian and Greek intelligence assessments. Publicly, Foreign Ministry spokesman Maria Zakharova (above, right) has countered the propaganda of the Anastasiades press. At the same time, it is Russian strategy to deter NATO expansion through the British bases on Cyprus, and through future troop deployments in the north.

“We clearly see the discontent of certain pro-US and pro-UK political circles with the principled Russian stand,” Zakharova said last week in Moscow. “We would like to once again emphasise our conviction that a long-term and lasting resolution to the Cypriot issue is only possible if it reflects the political will of Greek and Turkish Cypriots, and if it is accepted by the entire population of the island… Claims about any Russian attempts to block, obstruct or hamper the negotiating process are not backed by fact and are unreasonable. We would like to note that anti-Russia insinuations are like a smokescreen for obscuring the real problems that need to be resolved in a Cypriot political settlement. For example, Russia only maintains a cultural-humanitarian and economic presence in Cyprus. At the same time, sovereign UK bases are still maintained on the island under the 1960 Zurich-London agreements. This is an obvious anachronism in the current situation.”

Zakharova speaks for the Foreign Ministry; the Kremlin speaks differently. There is a line being pressed on President Vladimir Putin by Russian business interests, including the state oil and gas companies, to put Erdogan and Turkey first, and consign Cyprus to the failure of negotiations on the Kotzias terms. “If there is to be blame, the Kremlin prefers Kotzias and Anastasiades to cop it,” quips a Russian strategist. “Right now what Putin’s intelligence and military advisors care about is keeping Erdogan sweet, before the Trump Administration starts handing out sugar for the Turks.”

Although Lebedev is on the run from Russia, the Kremlin and the Prosecutor-General have been reluctant so far to reveal what they know about Lebedev’s connexions to Anastasiades. They are leaving that to the New York Supreme Court. On January 13 Judge Scarpulla ordered the cover-up to stop:

Source: https://iapps.courts.state.ny.us/fbem/DocumentDisplayServlet?documentId=dPy0sSQ9bwWEgdWrWz6c2g==&system=prod

She issued a fresh order for document search and disclosure on January 20.  

Anastasiades is buckling under the cross-pressures. On Monday of this week, he told the Parliamentary Assembly of the Council of Europe (PACE): “We are still at the beginning… positions have not changed, so we cannot express optimism. But the fact that Turkey has come to the negotiating table to discuss guarantees is a sign of progress. Of course, it all depends on the final outcome, on whether Turkey agrees to the abolition of guarantees and the withdrawal of troops.”

The next day he got his spokesman, Nicos Christodoulides (right), to open the backdoor to a different outcome.   “Political equality, effective participation in the federal government, effective deadlock-resolving mechanisms, the guarantee of all the rights enjoyed under the EU treaties,” the spokesman wrote in the Greek press, “are some of the provisions that will sufficiently safeguard the security of united Cyprus. These are parameters that render the maintenance of the 1960 system of guarantees obsolete.”  When Christodouldies says “all EU treaty rights”, Anastasiades means to offer Erdogan a swap of his troops in exchange for EU access for as many Turks as he can despatch through the island.

If the Turkish troops stay, or if they go, political independents in Cyprus ask, why is Anastasiades so keen for a deal, and what is he keeping under wraps? “Others may care,” Anastasiades told the British High Commission in Nicosia last week: “I do not feel insecurity, I do not care about the elections, I care about what everyone cares about, to achieve through unity is possible, the ultimate objective we all have in mind.” 

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