Cyprus Popular Bank: Russian money and a black hole

FT Alphaville this morning is looking at the tax haven of Cyprus, a conduit for floods of often illicit Russian and other former Soviet money, following an earlier post where they noted:

"Cyprus is also counted among the top FDI investing nations in several Central Asian countries (likely Russian capital reinvested via Cyprus, a process known informally as “round-tripping”)."

The current story describes what appears to be serious, economy-threatening problems emanating from a bank called Marfin, whose founder and longtime president, according to a Reuters special report on the subject, said in 2007:

"The aim of the Marfin group is to become one of the biggest European business groups with a market capitalization of over 140 billion euros in the next five years."

That, and facts such as the bank's decision to lend vast sums of money to a bunch of monks to buy up real estate assets at knockdown prices, never seemed to raise enough alarm bells. We can't find out enough about this whole affair in part because:

"In a statement to Reuters, the Bank of Greece said it had provided MPs with "all relevant information," but that legally it had an obligation of secrecy which means "we are not allowed to provide you with any further information on these questions."

The group announced in 2010 what was then the biggest loss ever announced by a Greek company, and FT Alphaville says the problems at the bank, now called Cyprus Popular Bank, are so large as to be "essentially forcing Cyprus to seek a bailout." And there's more:

Reports have suggested that Cyprus may turn to Russia for a loan to bail out the bank. It would make sense considering that, according to Kathmerini, the bank has the biggest share of Russian deposits in the Cypriot banking system and Cyprus in general is a popular place for Russians to stow away their deposits. From the same article in the Greek paper: "During his visit in the fall of 2010, the Russian president had described Cyprus as the most important channel for attracting foreign investment to his country."

More dirty money, more secrecy, and more financial calamities. Cyprus takes over presidency of the European Union next month.