Saturday, May 18, 2024
 
 

Lukashenko’s sanctioned ally continues to do business in the EU

Slapped with EU sanctions as Lukashenka’s money-bag, Alexander Shackutin still runs a profitable business in Germany. He covertly manages a company through a Lithuanian firm, whose activities are banned in Lithuania and whose assets are frozen.

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In 2020, businessman Alexander Shakutin came under EU sanctions for supporting Belarus’ dictator Alexander Lukashenko.

The activities of his companies in the EU were supposed to have been terminated. Shakutin, however, has a company based in Germany which continues to operate and profit.

SV MASCHINEN supplies agricultural machinery to Eastern Europe, including Belarus. Its partners include Amazone, New Holland and Lemken. The company’s German office manager confirmed, after a series of calls, that they offered such services to several Belarusian destinations. The company’s financial statements show that its 2020 gross profit amounted to €3.5 million.

Experts interviewed by BIC believe that SV MASCHINEN managed to circumvent EU sanctions legislation due to a confusing ownership structure. It changed in September 2020, shortly before restrictions were imposed on Shakutin. Initially, he owned the company together with his long-time partners: Yaroslav Buyalsky, Igor Subbotin, Vitaly Vorotnitsky and Valentin Yagorov.

The restructuring only left Yahorau among the owners with a share of 30%. The remaining 70% belongs to the Lithuanian company EM SYSTEM.

This company has been hit by Lithuanian national sanctions and its €8 million worth of assets have been frozen, along with another €6 million of undistributed profits.  Another Lithuanian company, Amkodor Baltic, was sanctioned because of its connection with EM SYSTEM. Its accounts were blocked precisely because of the firm’s ties with Shakutin.

In Germany, however, EM SYSTEM’s subsidiary has not been traced back to Shakutin and thus has avoided restrictions. Its representative office in Minsk is fully functional, and in 2021, its net profit was about $1 million, further evidence that Shakutin has been doing business in the EU for two years despite all of Brussels’ sanctions.
The flower squad

In 2017, Shakutin married for a second time to a 22-year-old named Maryia Sakirkina, an economics graduate. A week after their wedding the newly married couple went to the United Arab Emirates with Lukashenko. As early as 2020, Sakirkina launched a business venture with her father and stepson, Alexander Shakutin Jr. She became a co-owner of the company Beltamozhvilia with a 71.25% share. The remainder belonged to a company owned by the Shakutin family and a Hungarian firm, Lucky Trade Group Hungary, that was liquidated last year.

Beltamozhvilia was registered in Vilejka, and in 2020 – when the Shakutsins became shareholders of the company – economic activity in the area increased sharply. In January-September 2020, exports rose 7 times ($94 million) compared to the same period in 2019, while imports increased 47 times ($204 million).

In the same period in 2021, the district continued to build up its foreign trade. By September 2021, total goods turnover amounted to $362 million, with $125 million in exports and $236 million in imports.

But at the end of 2021, the town stopped demonstrating the abnormal economic activity, and this coincided with the relocation of Beltamozhvilia.

The company had been operating in the Belarusian city of Vileyka since its founding in 2007, but its activity remained modest to marginal in 2019. With the Shakutins in charge, the firm grew dramatically as revenues rose 1,878 times, reaching almost €110 million, with a net profit of €4.2 million.

In 2021, Beltamozhvilia’s revenues amounted to €133 million.

According to Russian arbitration court records, the firm’s business profile is the re-export of flowers to Russia. This business blossomed in 2011 when Lukashenko issued a decree that offered import privileges for re-export. The decree completely exempted importers from paying value-added tax (VAT), provided that the goods were further exported from Belarus. This allowed Belarusian re-exporters to avoid paying taxes to the state budget while also earning excessive profits.

The mass re-export of flowers from Belarus to Russia started with that ruling. However, VAT was still obligatory in the Russian Federation, so the goods were significantly undercharged. Shakutin and his son actively participated in this scheme with another firm they owned called Logex.

A Resolution of the Belarusian Council of Ministers classified the financial statements of this company.

However, the Belarusian Investigative Center managed to estimate the excess profits of the Shakutins’ new flower business. The revenues of Beltamozhvilia in the two years of the Shakutins’ management amounted to $264 million. Shakutsin’s wife, son and father-in-law were supposed to pay 20% of this amount to the state budget as VAT on imports, but Lukashenko personally exempted them from payments.

Shakutin (right) with Belarus’ President Lukashenko in Minsk.

Backscratching

Shakusin has repeatedly been spotted among Lukashenko’s cronies, including having gon to visit the latter’s mother-in-law to go potato picking.

In 2020, Shakutin was among the guests at Lukashenko’s “secret inauguration”. Lukashenko also helped Shakutin financially when the latter decided in 2016 to build a 140,000-square-meter multi-purpose complex in the Belarusian capital, Minsk. The main investor in the project was the Chinese company Citic Group, which paid $120 million, which Shakutin noted as being “on favorable terms” and with “a good length”.

It is all about technicalities

The Shakutin family spends most of their time in Belarus, living in on a prestigious estate in Minsk as well as having a $1 million cottage.

Shakutin is known as the only major player in Belarus’ industrial sector. For over 20 years he has co-owned the Amkodor holding which produces lift trucks, asphalt pavers and reclamation equipment. Almost a third of those products are exported, mainly to Russia.

Before Shakutin became the manager, the company had been in business for some 70 years. For the past decade, it had been in private hands, with a small state shareholding. Together with Nepalese partners, Shakutin gradually bought out individual shareholders’ interests and thus gained a controlling stake in Amkodor.

The privatization significantly strengthened Shakutin’s position, and in 2013 he was named the second most influential businessman in Belarus. For Amkodor itself, however, this had the opposite effect in the long run as the company started operating at a loss. The holding compensates for its losses with loans from the state budget. By the end of 2021, its long-term debt reached almost $120 million. Uncovered losses amounted to $42 million.

Around the same time, Lukashenko issued a decree “on the stabilization of the financial situation of enterprises”, granting Shakutin a loan of some $50 million at half the refinancing rate (about 4% per annum). Moreover, this loan does not have to be paid back in cash. The decree stipulates the possibility of mutual settlements and repayment in shares.

The regular state subsidies refute the common notion that Amkodor acts as a “good corporate citizen” since it incorporates unprofitable state enterprises into the holding. It is, in fact, partly financed at the expense of taxpayers.

*This article was developed with the support of Journalismfund.eu.

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