International research threads in Lithuania: For an entrepreneur’s company – millionth income from trade with separatists

On Monday we wrote about the trade of the largest Lithuanian company, Orlen Lietuva, with the Sheriff Corporation, which controls the politics and economy of Transnistria, and is accused of smuggling various goods. Not only Orlen Lietuva negotiated with the Sheriff.

The international FinCEN Files investigation, based on a BuzzFeed News leak and coordinated by the International Center for Investigative Journalism ICIJ, reveals another major recipient of funding from the Sheriff of Transnistria. It is a trading house run by the famous businessman, designer Ramunė Piekautaitė’s husband, Kęstutis Verslovas.

Kerslov does not reveal what and to what extent he sold to the Transnistrian oligarchs. However, in the international trade data we only find one product from the assortment of K. Verslov’s company, which managed to travel to the breakaway region in large quantities during the analyzed period. This sugar is a very attractive product for smuggling between Transnistria and Moldova.

To be and not to be

According to a leaked HSBC USA report on suspicious transactions, Transis received about $ 1.71 million. Sheriff Corporation dollars. This corporation, founded by two former KGB officials, is often referred to as the de facto ruler of Transnistria. The sheriff’s merits range from controlling Transnistrian politicians to organizing smuggling. The leaked document does not indicate the exact time of transactions between Sheriff’s K. Verslov’s company, it is only known that the payments were made between 2012 and 2015.

What exactly Transis supplied to the Transnistrian corporation is not indicated in the document. However, in the international trade data, only one product sold by Transis was detected, whose export volumes from Lithuania were quite large at the time. It is sugar.

Lithuania states in 2013 and 2014 it exported 1,716 million tons of sugar to Moldova. dollars, almost the same as in the HSBC document for Transis.

K. Verslov’s company announces that it will supply sugar to Moldova. However, Lithuania’s export statistics show higher figures only in 2013-2014, when Moldova itself practically did not feel Lithuanian sugar imports.

Sugar in Moldova is an extremely sweet snack for smugglers. After all, Moldova, under the auspices of its producers, imposed a huge import duty on sugar at that time, up to 75%. However, the market protection mechanism was as narrow as the border between Moldova and Transnistria.

When the sugar gets hot

Imported sugar from Transnistria and of course the Sheriff Corporation is a huge headache for Moldovan producers.

“They are buying sugar for their own needs. But in fact, they are buying it to smuggle it to Moldova, Ukraine,” Alexander Koss, director of the Moldovan sugar producers association, told Siena.

It was in the year that Lithuania exported the largest amount of sugar to Moldova, but Moldova did not see it, that the country’s sugar producers looked for contraband products from Transnistria in the markets.

“Together with journalists, we raided the markets. People ran away leaving a lot of sugar. They just ran, they didn’t have any documents,” recalled A. Koss.

When asked if the smuggled sugar found during the raids could have been of Lithuanian production, A. Kossas emphasized that the smuggled suppliers had taken steps to remove traces of the origin of the product.

“They were brought to market in unmarked bags. He was probably there too [t.y. lietuviškas cukrus]. They deliberately repackaged the sugar, even in packages made of rice or buckwheat, “said the director of the association.

You can see what the smuggling sugar hunt was like in this report from Moldovan television:

“Support the separatist regime”

International trade statistics refer only to dollars, not kilograms. According to A.Kosso’s calculations, 1.7 million. equivalent in dollars: about 6,000 tons of sugar. Annual sugar consumption in Transnistria is said to be about 7,000 tonnes, so in 2013 and 2014, Lithuania was able to meet almost half of the demand in the breakaway region.

“It just came to our knowledge then.” They transport from Poland, from Austria – wherever, “said the interlocutor.

The representative of the sugar producers does not believe that the relations of the Lithuanian producers with the Sheriff could have more serious consequences. It is said that only moral questions can be raised about supporting, in the words of the interlocutor, the “bandit regime”.

“They are contracting with a Moldovan entity. But that entity is in Transnistria. The payment of the duties is the obligation of the recipient. The money does not smell. They sold the sheriff, he” eats “sugar, they sold sugar. So what? On the moral side of such transactions. On the fact that by participating in such agreements, you are actually supporting this separatist regime. But no more, “summarized A. Koss.

Trading with separatists is a trade secret

We contacted K. Verslovas and asked about sugar and 1.7 million. Sheriff’s dollars. The businessman said he did not remember 2013-2014. business details and written questions. At the same time, he said that he could not take responsibility for paying customs duties in Moldova.

“Are these questions directed at me? From point A to point B, I deliver, and that’s it. (…) You see, I don’t sell to any market within. (…) I sell on the walls. My obligations end at the border, “said K. Verslov.

The businessman did not specify which of the company’s shipments to the bailiff crossed the separatist-controlled border in Moldova or Transnistria, but promised to take an interest in it.

K. Verslov’s company responded to written questions, but did not provide any details about the exchange with the Sheriff.

“K. The commercial firm Transis Trading House is subject to contractual obligations, therefore the data related to the clients, the contracts and the commerce of the company are confidential information, including a commercial secret, therefore it cannot be provided to you ”The company said in a comment.

Smuggling returns to Lithuania

We applied to the Customs Department with a request to assess the details of the trade between the Lithuanian and Transnistrian entities. Customs confirm that smuggling is one of the purposes of trade with the separatist region.

“Customs knows when excise goods, other consumer goods, are exported to Transnistria. Some of these exported goods, which are then illegally, are being smuggled back to European countries (including Lithuania),” the company said. in a comment.

In 2014 the Customs Department observed alarming trends in the tobacco trade, when Lithuania may have been involved in the smuggling of Belarusian cigarettes.

“A new trend is observed, when cigarettes produced at the Grodno Neman tobacco factory in Belarus arrive in Lithuania regularly and legally in transit and are resold after customs warehousing to companies registered in Moldova (Transnistria), from where they leave from the EU again after completing transit procedures. Cigarette route unknown, but cigarettes from Transnistria may be smuggled into the EU, where tobacco prices are much higher than in Russia, Belarus, Ukraine or Transnistria, ”said the Customs Department.

When analyzing the specifics of the tobacco trade, Lithuanian Customs stated that it noted “illogical and economically unjustified” peculiarities of the trade.

“Such transport of cigarettes from Belarus to Transnistria through the territories of Lithuania, Belarus, Ukraine and Moldova by land is illogical and economically unreasonable,” said the Customs Department.

As we announced in a previous study, the situation in Transnistria began to change dramatically in 2017. in the middle. Ukraine and Moldova began introducing joint border controls at the two-state border, which had been controlled by Transnistrian separatists for decades. After 2018. The official volumes of fuel exports from Lithuania to Moldova were drastically reduced. According to data from the Customs Department, the total Lithuanian exports to Moldova since 2017. fell by almost a third.

Vladimir Thorik (Rise Moldova) contributed to this post.