The Nicosia Criminal Court ruling on Thursday exposed problems in police investigations into the “golden passports” scheme. Seven defendants were cleared of charges, while two were convicted of tax offences.
The court acquitted lawyer Fotos Tsangarides, Zavos Group’s financial director Michael Michael, the PHC Tsangarides LLC law firm, FullServe Secretarial Ltd, and lawyer Elli Michaelidou.
Zavos Group CEO Michael Zavos and his company Larina Estates Limited were cleared of charges related to naturalisation but found guilty on six tax-related offences, including evading VAT and filing false tax returns.
The court found they had wrongly declared VAT rates of 5% instead of 19% on apartment purchases, despite knowing there were management agreements. They also failed to report invoices worth €1,280 and €2,098,732.49 on sales of an apartment in Limassol’s Corniche building.
The case involved Mohamed Abdelrahman Mohamed Salem, an Egyptian national, and his children Esra and Baha, who were granted Cypriot citizenship in 2018 after buying €2 million apartments. Prosecutors alleged the developer refunded €500,000 to each buyer after naturalisation.
The defendants faced 18 charges, including conspiracy to defraud, VAT evasion, forgery, and providing false information. However, the court rejected claims they tried to bypass the requirements of the citizenship programme.
Police investigations criticised
In its 181-page decision, the court criticised the investigations, saying police focused too narrowly and asked leading questions during interviews. Judges Nicholas Georgiades and Nayia Oeconomou expressed these concerns, while Judge Maria Loizou gave a minority opinion.
“The investigation must be thorough and unbiased. Convictions cannot stand if there are reasonable doubts,” the ruling stated, adding that investigators had assumed money was refunded to buyers and shaped their questions around this idea.
Defence lawyers, including Tsangarides, George and Christos Papaioannou, Marios Apostolides, and Kostis Efstathiou, will argue for reduced sentences for the tax convictions on 24 February. Meanwhile, the Legal Service plans to appeal the acquittals related to naturalisation charges.
After the verdict, Tsangarides’s law firm criticised the prosecution for presenting “non-existent cases” based on “baseless claims” and accused them of manipulating witnesses, threatening legal action. The Law Office called these accusations “unfounded.”
This case was one of four prosecutions linked to the citizenship-by-investment scheme, which was ‘irrevocably terminated’ after an Al Jazeera investigation uncovered widespread corruption. The programme allowed foreigners to obtain Cypriot passports by investing over €2 million, but it faced heavy criticism from the European Union and caused public outrage in Cyprus.
Two further cases pending
Two further cases relating to the “golden passports” scandal are pending before the Criminal Court in Nicosia.
The first case arose following a report by Al Jazeera, with the accused including the former President of the House of Representatives, Demetris Syllouris, former AKEL MP Christakis Giovani, and a senior executive from Mr. Giovani’s company.
Among the accused in the second case are the former Minister of Transport, Communications and Works, Marios Demetriades, Andreas Demetriades, Dimitris Demetriades, George Demetriades, Eleni Simillidi, Jing Wang, Josef Friedrich Santin, Vasiliki Georgiou-Santin, the company Andreas Demetriades & Co LLC, and Delsk (Cyprus) Business Services Ltd.
The defendants – eight individuals and two legal entities – face 59 charges, including undue influence, bribery, corruption, conspiracy to defraud, money laundering from illegal activities, and violations of the Council of Europe convention on the criminalisation of corruption.
It’s worth recalling that, on 4 November 2022, the Criminal Court in Larnaca acquitted nine defendants – five individuals and four legal entities – in a case concerning the naturalisation of three Iranians. All defendants were cleared of the 36 charges against them.