Saturday

31st Oct 2020

Investigation

Lukashenko-linked firms active in EU member Cyprus

  • Belarus president Alexander Lukashenko is friends with the Karić family from Serbia (Photo: Prachatai)

Belarus president Alexander Lukashenko has family connections to at least two firms in Cyprus, as EU states prepare to go after his money.

The two Cypriot real-estate companies - Eastleigh Trading and Dana Holdings - both have links to the president's daughter-in-law, Lilya Lukashenko, the wife of his oldest son, Viktor.

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And a closer look at them shines light on a labyrinth of financial ties between Nicosia and Minsk.

The Lukashenko name became freshly toxic after the president spent the last two months brutalising pro-democracy protesters, who came out on the streets following rigged elections in August.

And EU countries, including Cyprus, agreed, on Monday (12 October), to freeze his financial assets if they found any.

The crisis worsened the same day, when Lukashenko authorised police to use live ammunition against demonstrators in future.

And EU sanctions could expand if violence escalates, for instance to also cover business tycoons who enriched the Belarusian leader, an EU source said.

"The sanctions have a very broad legal basis and there are, literally, thousands of names we could add," the source noted.

Belarus police have brutalised protesters (Photo: tut.by)

Family affair

For her part, Lilya Lukashenko was named as a director of Eastleigh Trading by Vyacheslav Dudkin, a former anti-corruption chief in Belarus' interior ministry, who fled the country and spoke to Russia's Kommersant newspaper in 2012.

Dudkin said Lilya Lukashenko and Eastleigh Trading owner, Belarusian tycoon Vladimir Peftiev, had used the firm in fraudulent schemes.

And Peftiev was blacklisted in previous EU sanctions in 2011, on grounds he had been a "key financial sponsor of the Lukashenko regime".

Lilya Lukashenko currently runs an art gallery in a Dana Holdings group shopping mall in Minsk.

But when asked by EUobserver if Lilya Lukashenko was an artist, Valery Tsepkalo, a leading Belarusian opposition figure, said: "She's an artist at making money from him [Alexander Lukashenko] giving huge concessions to his favoured businesses".

Eastleigh Trading was still active in 2019, according to its Cypriot corporate files.

And its "principal activities" were "that of a holding company and the purchase, reconstruction, and rendering of real estate in Belarus", according to a 2013 audit.

Its shares were held "exclusively by non-residents" of Cyprus, the audit said, and its director was a Cypriot financial services firm called Centaur, which does not answer its phones.

Meanwhile, the Dana Holdings group has its HQ in Minsk and is run by two Serbs - Bojan and Nebojsa Karić - who are scions of the Belgrade-based Karić business dynasty, with which Alexander Lukashenko has had friendly ties for years.

Lilya Lukashenko was also named as a "senior officer" in a Minsk-based Dana Holdings subsidiary, Dana Astra, in Belarusian financial records in 2017.

The group's Cypriot subsidiary has not done much business lately, its files indicated, but Nebojsa Karić, who gave his address as Palm Jumeirah in Dubai, where Alexander Lukashenko frequently visits, was one of its main shareholders in 2019.

Dana Holdings got contracts to build blocks of luxury flats in Lukashenko's capital city over the past few years.

It also joined a list of companies, seen on fliers posted in Minsk, voicing support for him at a time when others went on strike in solidarity with protesters.

But it denies Belarus opposition accusations that it got undue favours from the pariah president.

"This claim is categorically false. Dana Holdings ... obtained building permissions via open, competitive processes, in strict accordance with Belarussian legislation," a spokesperson for Dana Holdings from its London and Moscow-based PR agency EM, told this website.

And it tried to distance itself from Lilya Lukashenko, saying she had been a mere "designer" and had not come back to work for Dana Astra after she went on maternity leave three years ago.

Dana Holdings director Bojan Karić in Dubai (Photo: Instagram)

Labyrinths

The Minsk-Nicosia-Belgrade-Dubai connection sheds light on one strand of the complex financial ties between Belarus and the EU.

But Cypriot authorities would have their work cut out if they wanted to really delve into Belarus financial flows.

The small island, on paper, handles more foreign investment in Belarus than any other EU country.

The close ties stem from a double-taxation treaty in 1998, which lets Belarusian firms benefit from lower Cypriot taxes via brass-plate subsidiaries.

And the tax perks see up to €1bn a year moving back and forth in good years, such as 2013, according to Belarusian statistics.

Some major Belarusian companies have also invested in Cyprus.

Asbis, a Belarusian IT firm, which has revenues of €1.6bn a year according to its annual report, has its global HQ in the Cypriot town of Limassol.

Wargaming Group, a Belarusian video-game company valued at €1.3bn by US news agency Bloomberg, has its HQ in a glass tower in the Cypriot capital.

Wargaming Group has also bought the largest chunk (20 percent) of Cyprus' second biggest lender, Hellenic Bank, according to Cypriot media.

And at least 19 Belarusians, including businessmen and their families, bought Cypriot passports between 2017 and 2019, the Al Jazeera news agency told EUobserver, based on leaked Cypriot files.

"Wargaming Group has become very influential in Nicosia," a former Cypriot central bank official, who asked not to be named, said.

But for the Cypriot finance ministry, there was nothing untoward about the situation.

"The financial flows from Cyprus to Belarus are limited," the ministry said in a statement.

"There are no other Belarusian investors [apart from Wargaming Group] in the Cyprus banking system," it added.

"It should be noted that Cyprus is an international business services and financial centre with an extensive network of double-tax treaties. As this is the case, FDI [foreign direct investment] flows towards other jurisdictions are a common phenomenon," it also said.

Cyprus declined to say if it knew of any Lukashenko-linked firms on its soil.

And it declined to say if it froze any Belarusian assets the last time the EU imposed sanctions on people like Lukashenko and Peftiev between 2011 and 2016.

But Lukashenko has salted away "more than $1bn (€850m)" in his private fortune, Tsepkalo, who used to manage a business park in Minsk before he joined the opposition, estimated.

Wargaming Group's HQ in Nicosia (Photo: Nikolasphotography)

Deep pockets

Tsepkalo urged EU countries to put pressure on the regime by targeting what he called "companies which act as his [Lukashenko's] personal pockets".

But it is not easy, even for EU institutions, to pierce the opacities of the Belarusian structures.

The last time around, Peftiev, for instance, won a landmark case at the EU court in Luxembourg in 2014, which said the EU Council had failed to gather enough evidence for his listing.

And it is not easy for journalists to get answers.

When EUobserver asked where Peftiev now lived and if he was still involved with Eastleigh Trading, his Minsk-based law firm, Revera, declined to say and threatened to sue this website if it mentioned his previous EU asset-freeze.

"To ... create an image that contradicts the decisions of the general court of the EU is wrong, misleading, and will cause great damage," the law firm's Dmitry Arkhipenko said by email.

Peftiev and his wife, Olga Makarova, used to live in Malta and Makarova created several companies in the British Virgin Islands while he was still under EU sanctions, according to the so-called Panama Papers revelations.

But "we do not entitle you [EUobserver] to publish ... any information about Mr Peftiev or his family members," Revera's Arkhipenko said.

"Mr Peftiev has not visited Belarus for many years, does not manage any business - neither in Belarus, nor in the EU - does not own any shares of EU firms, and, according to my information, he is, at the moment, writing books," Arkhipenko also said.

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