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Cyprus hunts for alleged Russian spy paymaster

NICOSIA, Cyprus — Russian money and influence have long made a splash on this Mediterranean resort island where a suspected spy paymaster vanished after being allowed to walk free on bail. The ties go right to the top: Russian energy giant Lukoil has a big presence, and the Greek Cypriot president, a communist who studied in Moscow, is expecting an illustrious visitor in October — Russian President Dmitry Medvedev.

Embarrassed authorities searched airports, ports and yacht marinas Thursday for the suspect, identified as Christopher Robert Metsos. Freed on $33,000 bail, he failed to show for a required meeting with police on Wednesday.

There's no evidence for now that the deep Russian presence in Cyprus played a role in his release, but the Cypriot government is under pressure to explain the bewildering fumble involving a man wanted for allegedly operating a Russian spy ring in the United States.

Ten suspects are in custody in the United States, where federal prosecutors said Thursday one man had confessed to federal agents that he worked for Russia's intelligence service. Six suspects appeared in courts in Boston and New York, where only Spanish-language journalist Vicky Pelaez, a U.S. citizen born in Peru, was granted bail. A hearing in Alexandria, Va., was postponed. Most of those arrested Sunday are charged with crimes that carry penalties of up to 25 years.

Greek Cypriot police examined surveillance video from crossing points on the war-divided island, fearing their suspect may have slipped into the Turkish Cypriot north, a diplomatic no-man's land recognized only by Turkey.

But the fugitive might feel more at home in the Greek-speaking south, where tens of thousands of Russians own mansions and offshore accounts, read Russian-language newspapers and send their children to Russian schools.

Cyprus is a top gateway of foreign investment into Russia, and is a popular destination for Russian capital because of low taxes. Cypriot firms have been used as holding companies to avoid taxation in Russia. In recent years, Cyprus took steps to open up bank records so Russian authorities could track tax dodgers.

Political links are tight, too. President Dimitris Christofias, the only communist head of state in the European Union, earned a doctorate in history in Russia and speaks the language. He has welcomed Russian support for peace talks with the Turkish-speaking north, and his foreign minister met his Russian counterpart last week. Thursday, as police scoured the island for Metsos, Christofias was hosting an event at the presidential palace to mark the arrival of one of Russia's largest banks, Gazprombank.

The balding, bespectacled Metsos, 54, is wanted in the United States on charges that he supplied money to the spy ring that reputedly operated under deep cover in America's suburbs.

Cyprus hunts for alleged Russian spy paymaster 07/01/10 [Last modified: Thursday, July 1, 2010 11:58pm]

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