The ruling "Farmers" leader Ramūnas Karbauskis' Agrokoncernas does not only import fertiliser from the Russian fertiliser producers Phos Agro and Acron. The LRT Investigation Department has uncovered that fertiliser belonging to a childhood friend of Vladimir Putin, who also helped with the construction of the bridge to Crimea is also travelling to Lithuania, lrt.lt writes.
Arkady Rotenberg, who owns one of the largest niter fertiliser factories in Russia Minudobreniya has had international sanctions applied to him. However, the leader of the largest Seimas group R. Karbauskis is in no rush to cease business with the aforementioned fertiliser producer. R. Karbauskis assures that the agronomers working in his Agrokoncernas cannot be aware of all the shareholders.
Buying A. Rotenberg's fertiliser through Dubai
Minudobreniya is a niter fertiliser factory in the Voronezh area in Russia, the city of Rososh. It is also near the border with Ukraine.
More than 80% of the Minudobreniya shares belong to Russian oligarch Arkady Rotenberg. The same, who has had international sanctions applied due to his close connections to the head of the Kremlin.
As the LRT Investigation Department has uncovered, Agrokoncernas purchases mixed fertiliser from A. Rotenberg's Minudobreniya, which contain nitrogen, nitrate nitrogen, ammoniacal nitrogen, phosphorus pentoxide and potassium oxide.
Agrokoncernas does not disclose, how much fertiliser is imported from MInudobreniya in particular. They explain that the amount of fertiliser purchased from Russia last year comprised less than a third of the company's purchased fertilisers and does not even reach a fifth this year. Details about imports from specific manufacturers are a commercial secret. The Lithuanian Customs Department also does not disclose this information.
Nevertheless, the import of fertiliser from Minudobreniya hides further secrets.
The factory is 1400 kilometres from Lithuania. However, as Agrokoncernas assures, they purchase fertiliser from Minudobreniya indirectly, through intermediaries – the United Arab Emirates DMCC free economic zone. It is almost six times further from Lithuania than the factory in Rososh.
"We purchased fertiliser from the manufacturer OAO Minudobreniya in 2017 through Agricultural Minerals DMCC. This company offered us the most acceptable price for the produce," Agrokoncernas writes in its response to the LRT Investigation Department.
Nevertheless, Agrokoncernas admits that while the fertiliser is purchased in Dubai, it arrives to Lithuania from elsewhere.
However, why would Agrokoncernas buy fertiliser in the UAE and then transport it from Russia? Agrokoncernas is silent on this matter, stating it cannot comment on how intermediaries work.
As the LRT Investigation Department has uncovered, Minudobreniya makes most of its sales namely through Agricultural Minerals DMCC. Furthermore, above 50% of the Minudobreniya export production travels through the pipeline Tolyatti-Odessa, which travels through the territory of Ukraine.
Russian and Ukrainian oligarchs in action
This is a curious coincidence, which leads to A. Rotenberg's business partner, Ukrainian oligarch Dmytro Firtash. One of the wealthiest people in Ukraine currently resides in Austria and both the USA and Ukraine itself demand his extradition.
D. Firtash owns the international chemistry group Ostchem and Russian fertiliser producer Uralkali.
D. Firtash made his wealth through the import of Russian gas into Ukraine. He led the now liquidated group RosUkrEnergo, which cooperated with the Russian gas giant Gazprom. D. Firtash supported the now overthrown pro-Russian president Viktor Yanukovych.
In 2011, D. Firtash announced cooperation with Minudobreniya, or more accurately about joint projects with Minudobreniya through the pipeline Tolyatti-Gorlovka-Odessa. The same that his business partner A. Rotenberg's fertiliser now travels through.
Meanwhile, information about Agriculture Minerals DMCC, from whom Agrokoncernas imports fertiliser, is scarce. The company was registered in 2016, right after sanctions were put in place. Its fertiliser trade has grown almost threefold in a year (from 500 tonnes in 2016 to 1400 tonnes in 2017). The company specifies that it works with 20 clients in Europe. The company's official website's domain, curious coincidence, is registered in Russia.
It could be that fertiliser sales through intermediaries is a way to bypass the sanctions levied against A. Rotenberg. And Lithuanian business is part of this game. At least so believes journalist and investigative project munscanner.com author Mikhail Maglov, who the LRT Investigation Department has spoken to. The journalist is persecuted in Russia and currently resides in Lithuania.
"It is clear – the company was registered in 2016, just in the middle of the existing sanctions. They were emplaced in the second half of 2014. This shows that the sanctions struck those Russian businessmen, individuals linked to V. Putin and curtailed their business. They had to take time and effort to create new sales schemes. Considering everything, this was registering a company in Dubai, which becomes the "intermediary" for these deals. This just confirms that this is an effort to circumvent the sanctions. Why Dubai? Where's Dubai, where's Lithuania and where's Russia," M. Maglov mused.
The Lithuanian penal code specifies fines, arrest or five years of incarceration for the breach of international sanctions. Legal entities can also be responsible for this criminal activity.
However, Agrokoncernas itself assures that by importing fertiliser from A. Rotenberg's Minudobreniya, it is not in breach of any legislation.
"The European fertiliser market depends on Russian goods – potassium, phosphorus, gas. We understand that this business interests you only to the extent that politics does, however we emphasise that we operate based on high business standards and ethics, we are business representatives and do not participate in politics, do not pursue any goals, except to present our clients information and necessary agriculture products in time and suitably. We work and operate based on Lithuania and EU laws and legislation," the group's response reads.
R. Karbauskis: I know nothing, I do not participate in business
R. Karbauskis, the chief shareholder of Agrokoncernas, assures that he did not know of either A. Rotenberg, nor that his business imports fertiliser from the oligarch's company Minudobreniya.
"I do not know, of course I do not know. I am saying that I cannot explain to you because I do not know, where from it is imported, how much is imported, but to my knowledge, a number of companies in Lithuania import, no one has any exceptional rights," he told the LRT investigation department.
R. Karbauskis believes that questions over fertiliser imports from A. Rotenberg's company should not be posed to him.
"This question should primarily be posed to our institutions. If the company receives a report that they cannot import from another company in Russia or some other country, they would most likely not do so then. Because most likely it would not be an option to import from that company, but you start questioning if I know... It isn't me, who has to know, state institutions should know. They have to inform companies that such activities are not an option," the "Farmer" leader stated.
Furthermore, R. Karbauskis assures that he has recused himself from matters of his business: "What do you mean know? I have not really participated in the activities for some 20 years."
When asked if he, as a politician, finds it moral to do business with companies, whose owners are in sanctions lists, R. Karbauskis stated, "You are posing a very odd question to me. If no sanctions are placed on the business, then they are not in place due to someone's decision. That of the European Union or something else."
Seimas National Security and Defence Committee chairman Vytautas Bakas also assures he had no knowledge of fertiliser imports from A. Rotenberg's company. He stated that he needs to prepare for this question.
After preparing, this was the comment he had: "The committee is not aware of who imports fertilisers to Lithuania, the committee does not analyse every company, which cooperates with Russia. However, the information you presented is worth more detailed analysis. Nevertheless, I believe that the time has come for our companies, which cooperate with companies, whose owners are included in sanctions lists or that are linked to businesses included in sanctions, I believe it is time for business itself to consult."
Connected pro-Kremlin individuals
A. Rotenberg obtained the controlling share package of the fertiliser plant in 2011. He purchased the shares through two off-shores located in Cyprus – Yaibera Holdings Limited, which obtained 79.31% of the Minudobreniya stock and Laguz Management Limited (3.45% of the shares). The shares were obtained from the international Norwegian capital group Yara International. That A. Rotenberg obtained Minudobreniya shares was confirmed by his press service in 2011.
The other fertiliser factory shares – 17.24% - belong to the Russian oil group Gazprom.
Thus the sanctioned duo of A. Rotenberg and Gazprom are what's hiding behind the Russian fertilisers imported to Lithuania.
However, more pro-Kremlin individuals are linked to Minudobreniya.
It is important to note here that upon A. Rotenberg appearing on the blacklist, he began to conceal his wealth. The Cyprus-based companies linked to him were re-registered with new owners and heads specified. Part of the property was directed to the Virgin Islands.
Based on current records, 100% of Yaibera Holdings shares belong to Laguz Management. The latter's shares belong to the Cyprus-registered Sparomov Enterprises, while it belongs to Dremion Holdings, which is based in the Virgin Islands and this is where the final benefactor lies.
Based on unofficial data, the Cyprus-based offshore Laguz Management may be controlled by V. Putin's friend together with the aforementioned Ukrainian oligarch D. Firtash.
"It was spoken that D. Firtash also participated in the deal when buying the factory's shares. But when the deal was made, A. Rotenberg's press service announced that the controlling shares belong to his companies. However, after this deal, there were many agreements with D. Firtash's companies. If I am not mistaken, this is in order to make use of the transit pipeline controlled by D. Firtash travelling from the Voronezh fertiliser factory to the port of Odessa. IN essence, they have a joint production chain. Minudobreniya produces and D. Firtash's companies process and make the final product," M. Maglov explains.
Who are the Rotenberg brothers?
What did Russian oligarch A. Rotenberg do to be included in the blacklist by the European Union and the USA?
Both A. Rotenberg and his brother Boris are seen as close friends of V. Putin. Arkady Rotenberg has been friends with V. Putin from childhood. 12-year-old Arkady and 11-year-old Vladimir met in the Leningrad area where they attended judo training.
In the year 2000, when V. Putin became president of the Russian federation, his childhood friend A. Rotenberg was a relatively minor businessman in St. Petersburg. However, it so coincided that with V. Putin in power in the Kremlin, A. Rotenberg began to put together a business empire valued in the billions.
He founded the SMP Bank in 2008 from five companies purchased from Gazprom and formed the company Strogazmontazh. They began to lay federal roads in Russia. One after another, valuable state tenders were won by A. Rotenberg's business without any competitions.
Based on US Department of Treasury data, when preparing for the Sochi Winter Olympics, the Rotenberg brothers' business won contracts worth a total of 7 billion dollars. One of the Rotenberg brothers' partners, businessman Vladimir Shestakov has even publically mentioned that the brothers manage to settle matters that normally take months and months within a single phone call.
However, the Rotenberg brothers have had sanctions emplaced for more than just their close friendship with V. Putin. The reason is another project patroned by V. Putin and opened with pomp this spring – the Crimean bridge. This is a symbol of his personal victory against Ukraine and the West for the owner of the Kremlin. And V. Putin's old buddy A. Rotenberg contributed to the construction works.
After the peninsula was annexed, V. Putin asked A. Rotenberg to construct the Crimean bridge, which linked the Kerch peninsula and Taman peninsula in Russia. The 228 billion rouble (3 billion euro) bridge constructions were financed by Russia and the contract was signed with A. Rotenberg's company Stroygazmontazh despite it having never constructed any significant bridge before.
A. Rotenberg also led the public relations company, which sought to justify Russian rights to Crimea.
The USA maintains for A. Rotenberg's brother Boris Rotenberg as well (he avoided EU sanctions due to his Finnish citizenship). The American blacklist also features A. Rotenberg's son Igor Rotenberg, who was granted a part of his father's business.
Starting this year, the EU has begun applying sanctions for individuals outside the blacklist and included certain companies controlled by them. These are six in total that have contributed to the construction of the Crimean bridge. Among them are PJSC Mostotrest and Strogazmontazh LLC (SGM) belonging to A. Rotenberg.
How the sanctions work
The nitre fertiliser producing Minudobreniya has managed to avoid sanctions. At least regarding the EU.
However, the USA views Rotenberg businesses and other "apostles" of V. Putin present on the blacklist with far more principles.
The US leadership has recommended its citizens to be especially cautious when performing operations with organisations linked to individuals included in the list, if the aforementioned organisations own less than 50% of the company's capital. US physical and legal entities are recommended to review whether companies are not controlled by individuals included in the blacklist.
When the USA implemented sanctions, American businesses had to cease purchases of A. Rotenberg's fertilisers. Prior to the sanctions, one of the main export destinations for Minudobreniya was namely the USA.
A. Rotenberg is also unwanted in Ukraine, however the Ukrainians missed the opportunity to be fully principled. After placing an embargo on all fertiliser imported from Russia, they noticed this summer that Russian fertiliser still enters Ukraine. It turns out that the country's security service, having included A. Rotenberg into the Ukrainian sanctions list, did not include Minudobreniya itself. And only in 2017, some 168.3 thousand tonnes of nitre fertiliser was imported into Ukraine from Russia.
"This is a political question. In May, Ukraine began to seriously implement sanctions, this including V. Putin's entourage. Then, some High Rada deputies criticised P. Poroshenko that D. Firtash's partner was not included among the individuals under sanction. This declaration was made by former journalist-investigator deputy Sergei Leshchenko. After a few months, A. Rotenberg and his family were in the end included in Ukraine's sanction list, but the legal entities belonging to them, which deal in fertiliser transit into Ukraine, did not have sanctions applied," M. Maglov explains.
The journalist believes that P. Poroshenko is faced with a political dilemma – he could include Minudobreniya into the sanctioned companies list, however this would mean that the work of factories belonging to A. Rotenberg's business partner D. Firtash would be obstructed. "They will not receive raw materials, which means that thousands would lost their jobs. I believe that this is the problem looming over P. Poroshenko. On one hand, it is easy to include the fertiliser factory into the sanctions list, but what will he do with thousands of people, who live in those small towns and work in those factories," M. Maglov muses.
Experts – EU sanctions are ineffective
The journalist believes that the case of Minudobreniya shows that the implemented sanctions are not effective and the individuals included in them remain unpunished.
"I believe that any European, regardless if they are in Lithuania, Poland or Germany, companies' deals or other actions that circumvent the sanctions undercut this EU political tool of sanctions. If they (businessmen) attempt to circumvent sanctions and continue working with A. Rotenberg or misters Kovalchuk, any others of that entourage, this shows that politically the Kremlin views these Western "sanctions" as posturing before voters, but really a desire to continue to cooperate. This is a usual European sell-out. It is the usual desire to earn further income and profits," M. Maglov mused.
Political analyst Marius Laurinavičius also sees no excuse for business with V. Putin's friends.
"It is a simple matter – one question is whether Lithuania will purchase Russian fertiliser. Another question is whether those directly linked to this business, are they in Lithuanian politics. It is not a question, whether Lithuania or Lithuanian companies can in principle purchase fertiliser from Russia. I am wonder if people in Lithuanian politics and even making some of the most important decisions can have a business, which is linked to individuals, whose business is directly linked to corruption or individuals, who one way or another influence those countries' politics," the analyst stated.
Fertiliser from D. Mazepin also to Lithuania
Russia remains the leader in fertiliser imports to Lithuania. By the way, fertiliser is imported not only from Minudobreniya, PhosAgro and Acron, but also from another company belonging to an oligarch close to V. Putin – Uralchem. This company belongs to Dmitry Mazepin, a Belarussian-born Russian billionaire.
He heads the Uralchem board since 2007. Before this, D. Mazepin led the Russian energy company Sibur, which partially belongs to V. Putin's former son in law Kirill Shamalov and Gennady Timchenko – a friend and business partner of the Kremlin's leader, who has also had US sanctions applied.
D. Mazepin was also a member of the Kirov regional parliament belonging to V. Putin's United Russia party.
"He was even described as President Alexander Lukashenko's wallet. D. Mazepin is very close to president Lukashenko in various matters. What is most curious though – in an analytical report leaked and published in Russian news media (and many such reports surface), they talk what to do with Latvia... The report clearly states that the main individual, who should seek to influence in Latvia is D. Mazepin, who now has major business interests there – he is related regarding the port. This is how direct political influence is made," M. Laurinavičius explains.
D. Mazepin controls two cargo terminals in Latvia – 55% of SIA Ventamonjaks and 51% of Riga Fertiliser Terminal. Latvia is also home to D. Mazepin's Uralchem Trading.
By the way, good relations with V. Putin are also revealed by belonging to a select club of oligarchs. This is a circle of business figures, who are invited to an annual dinner with the head of the Kremlin. V. Putin invites over 40 oligarchs to this occasion. In 2015, after the Crimean annexation, D. Mazepin also received an invitation.
D. Mazepin's Uralchem sells fertiliser to Agrokoncernas as well as several other Lithuanian companies – Scandagra, Baltic Agro and Agrochema.
However, D. Mazepin's name is not familiar to R. Karbauskis. He assures that it is not security specialists, who work in his business, thus it is not they, who need to know about his business partners' links to the Kremlin.
"Companies are not security organisations. Agrokoncernas, just like other companies, has agronomists, veterinarians and zoo-technologists working. People, who have their own specialities. They are not security specialists. That's not their function," the politician said.