“Orsha Offshore” Is Caught between the West’s Sanctions and Russia’s Discontent

How Lukashenka's "wallets" began to fuss.

Over the past year, businessmen close to Aliaksandr Lukashenka have been subject to sanctions both from the West, on suspicion that they are earning money for the top officials, and from Russia, for the re-export of sanctioned goods.

This is stated in the investigation of the Belsat TV channel.

In 2013, a mysterious company Bremino Group appeared on the Belarusian business field, which received tidbits for the construction of customs and logistics centers right at the main cargo border crossings of Belarus - in Berastavitsa and Bruzgi.

According to documents obtained by Belsat, capital expenditures for the construction of a multimodal complex in Balbasava at the end of last year amounted to almost $ 35 million.

There's more. The company began to create a large multimodal complex in the village of Balbasava in the Orsha District and thus use the airfield of the local aircraft repair plant. In 2018, Aliaksandr Lukashenka offered his help to the owners of the Bremino Group and demanded to speed up the construction of the complex, and, a year later, he legalized, perhaps, the largest intra-Belarusian offshore company - the special economic zone Bremino-Orsha.

There are even more benefits there than in the Sino-Belarusian Industrial Park Great Stone or the Park of High Technologies. Lukashenka appointed his eldest son Viktar as the curator of the project, for whom Aliaksandr Zaitsau, Chairman of the Board of Participants of the Bremino Group Company, had previously worked as an assistant.

In the summer of 2021, Bremino Group came under Western sanctions precisely because of the proximity of the business to the government. The EU decision said that the company received state support for the development of a special economic zone in the Orsha district with its customs and tax privileges.

“The owners of Bremino-Orsha - Aliaksei Aleksin, Mikalai Varabei, and Aliaksandr Zaitsau - belong to the inner circle of businessmen associated with Lukashenka and maintain close relations with him and his family. This is how Bremino Group benefits from the Lukashenka regime,” Brussels said.

After the imposition of sanctions, Bremino Group said they had foreseen such a step and called it an attempt to redistribute the logistics market.

Indeed, about six months before the introduction of Western restrictions, the logistics operator took a proactive step. After one of the co-owners of Bremino Group, Mikalai Varabei, fell under European sanctions at the end of 2020, the company de jure got rid of two affiliated structures - the companies Ruzekspedtsia and Vlate Logistic.

The sole owner of Ruzekspedtsia was its General Director Evgeny Krokhotin. He headed the company long before the departure of Bremino Group - in November 2017. According to Krokhotin, the change of ownership in Ruzekspedtsia is not connected with sanctions.

"In general, we should have been created as a technical partner of the Bremino Group, but then we abandoned this project. Why? Because, roughly speaking, Bremino Group is a management company. This is mainly the construction of a multimodal complex. Plus the management of other existing assets," comments Krokhotin. "We realized that, after all, an ekspedtsia is a separate company, it is a separate type of business that cannot depend on someone, on another company or a holding. But our lawyers did not work as quickly as we would like."

Vlate Logistic manages logistics complexes at the border crossings in Berastavitsa and Bruzgi. From May 2017 to December 2020, Bremino Group was the sole owner of Vlate Logistic. But then a group of individuals became the owners of the company - Oleg Gerasim and Oleg Petrov, Evgeny Krokhotin and Oleg Barabanov, Dmitry Zamulevich and Vladimir Arkadyev.

As it turned out, they are somehow connected with the current owners of the Bremino group. Gerasim and Petrov are listed as top managers of the Syabry hotel and restaurant complex, controlled by Aliaksei Aleksin. Krokhotin is the head and owner of Ruzekspedtsia, and Barabanov is the director of Vlate Logistic. Zamulevich worked for Mikalai Varabei. He was the director of the Interservice company.

By the way, today four residents are working in the special economic zone Bremino-Orsha - Bremino Group, Ruzekspedtsia, the Eurasian Investment Group, and Sokhra. All companies have extensive tax, customs, and other benefits and are also linked.

The change of owners allowed the controlled logistics companies to continue their activities. What did they do? Ruzekspedtsia supplied Belarusian goods to China by rail. And through Vlate Logistic, according to market participants, goods were re-exported to Russia. According to the data of the ImportGenius database, which the Davaite Razbiratsia program received from the OCCRP Corruption and Organized Crime Investigation Center, Vlate Logistic supplied Dutch flowers, German beer, hydrocarbons, French mustard, ketchup, and auto parts to the Russian Federation.

Over the past year, the company's revenue has grown more than 60 times (up to 450 million rubles), net profit - almost nine times (up to 17.8 million rubles). In 2020, the company paid almost 4 million rubles in income tax but did not pay other taxes and fees. This was favored by the law.

Since December 2019, Vlate Logistic has been an authorized economic operator. This status, according to a presidential decree, allowed not to pay VAT when importing goods to Belarus, but on condition of their further export outside the country. Previous investigations showed that due to this preference, Belarusian companies and their Russian partners made good money on the re-export of various goods to Russia. Moreover, the customs value of the goods was underestimated, which made it possible to pay to the budget several times less than it should have been. One of the most sensational stories was the scheme with flowers.

Russian producers of these products strongly advised the authorities to stop the Belarusian re-export scheme.

On September 1 of this year, Lukashenka canceled the decree providing for exemption from VAT on goods imported for further re-export. Soon the Ministry of Finance of Russia reported that the supply of cheap flowers had been suppressed by the abolition of zero VAT by Minsk.

But is the re-export scheme really closed? After all, Kazakhstan introduced similar tax preferences this year.

“We are talking with Kazakhstan on this topic. We report violations to our partners, our colleagues from Kazakhstan give us information when Russian business violates the law,” said Ruslan Davydov, First Deputy Head of the Federal Customs Service of Russia, answering the question of whether the FCS expects the popularity of gray import schemes through Kazakhstan to grow.

The leaders of Bremino Group and Vlate Logistic declined to comment.