Dark waters “Santa Bremor”
Offshores, a credit carousel and tax tricks of the Belarusian “fish king” Alexander Moshensky associated with Lukashenka
June 2023, northeast France, Strasbourg. The Parliamentary Assembly of the Council of Europe met on the second day of the summer plenary session. From the rostrum stands the deputy from Iceland Torhildur Sunna Evarsdottir. She speaks about Belarus, or rather, about an outstanding businessman in the modern history of our country. This is not a laudatory speech about his merits. On the contrary, the deputy believes that this Belarusian businessman should have been on the EU sanctions list:
“I am ashamed of the information that Iceland used its diplomatic power in the European Union to remove him from the sanctions list. I hope that soon we will become a state that shows full solidarity with the people of Belarus, regardless of whether it affects our economic interests in one way or another.”
We are talking about Alexander Moshensky – the “fish king” of Belarus. Its main assets are Santa Bremor and Savushkin Product. Moshensky has almost two decades of diplomatic and business relations with Iceland. In 2006, he even became the country’s honorary consul in Belarus. These connections could have saved him from European sanctions, our colleagues from Heimildin found out. According to them, representatives of the Icelandic Foreign Ministry made more than 30 calls to the EU, lobbying for Moshensky’s interests. He really was under attack: he flew with Lukashenka on a government liner, supported him in the elections, received an order from his hands.
A likely reason Moshensky has been spared sanctions is that he does not benefit economically from ties with the Belarusian authorities. Investigators of the BRC found out whether this is actually the case.
offshore octopus
The Santa Bremor enterprise, known for its fish products, appeared in 1998. It was founded by the former head of the design bureau of the Brest Electromechanical Plant Mikhail Moshensky. In 2000, he died, and the business passed to his son Alexander.
Santa Bremor positions itself as a Belarusian-German enterprise, which implies foreign investment in the project. At first glance, it is. According to official data, the main share in the company is controlled by Alexander Moshensky: 50% – directly, another 15% – through the controlled Belarusian company “Santa-Service”. The remaining 35% of Santa Bremor belongs to the German company Bre Meer GmbH. Thanks to our partners at OCCRP, we learned that this company has its roots in offshore jurisdictions.
From 2014 to 2018, the German Bre Meer GmbH was owned by the Alpha Mar Foundation, which is registered in the Seychelles.
This jurisdiction is a classic offshore with a bad reputation, where taxes are practically not paid. The beneficiary of the Seychelles Alpha Mar Foundation at that time was Alexander Moshensky. This became known from the reports of the Cypriot company Alpha Mar Limited, which was controlled by the Seychelles offshore. That is, he managed Bre Meer GmbH himself, and not some German partner.
Bre Meer GmbH changed hands in 2018. The place of the Seychelles company Alpha Mar Foundation was taken by the Santa International Foundation, which is located on the island of Jersey.
This British jurisdiction is also considered offshore and does not disclose the owners of companies registered there. But we did find links from the Jersey firm to the Cypriot company Newride Services Limited.
She is owned by the daughter of Alexander Moshensky – Yana.
As you can see, behind the sign of the Belarusian-German enterprise “Santa Bremor” there is an octopus from offshore companies, traces of which lead to the Moshensky family.
Why do businessmen create companies in offshore zones, explains the auditor Abdulvahed Alobali:
“Offshore companies can sometimes be used for illegal purposes such as tax evasion, money laundering or other financial crimes. Offshore jurisdictions often create a favorable environment for such activities due to several factors: secrecy and confidentiality, low or no taxes, complex corporate structures, weak regulation and enforcement, banking secrecy.”
We do not claim that Alexander Moshensky is involved in any financial crimes. However, the presence of companies in offshore jurisdictions is an occasion to take a closer look at his business.
Credit catch
BRC has studied the scheme of work of “Santa Bremor”. The company buys fish raw materials for production in Norway, Iceland, South America and Asia. Cargo is delivered through the port in Klaipeda. To do this, in 2016, Santa Bremor founded a subsidiary company Santa Trade in Lithuania. This firm imports fish to Lithuania and then resells it to Belarus to the parent company Santa Bremor. At the same time, only three people work in Santa Trade, it follows from the company’s reports, which we received thanks to Lithuanian colleagues from LRT.
In 2016, Santa Trade took out a loan from the British firm Max Credit Investment Limited “to make urgent payments and meet the need for working capital.” Initial terms of the deal: more than €28 million at 2% per annum. In 2017, the loan amount was increased to almost €38 million, but the interest rate remained the same – 2%. Which is well below market rates in the UK and the EU: they usually exceed 4% per annum, says auditor Abdulvahed Alobali.
We studied the activities of Max Credit Investment Limited, a generous lender to the Lithuanian subsidiary of Santa Bremor.
It follows from the reports of Max Credit Investment Limited that in 2016 and 2017 its parent company was the same Seychellois company Alpha Mar Foundation. But the links between them were established even earlier.
From the same documents, we learned that as of 2014, Max Credit Investment Limited had more than $170 million in loans from the same Seychelles-based Alpha Mar Foundation, whose beneficiary at that time was Alexander Moshensky. It turns out that one businessman’s company issued loans to another, and at a lower rate.
“Charging excessively high or low interest rates on intercompany loans may be an attempt to manipulate the taxable income of the companies involved, leading to tax evasion or other financial irregularities,” auditor Abdulvahed Alobali told the BRC.
On the Baltic coast
In Lithuania, where Santa Trade is registered, it is allowed to take a loan from a related company, but the amount of the loan should not exceed the equity capital of the company by more than four times. Such a law was adopted so that businesses do not underestimate the tax burden. We checked if Santa Trade complies with it by examining the company’s reports. The company’s equity in 2016, when it received the loan, was negative – about €1 million. This is 25 times less than the loan amount.
In 2020, Max Credit Investment changed its owner, and on paper the company lost contact with Moshensky. The new beneficiary of the British firm is Icelandic asset manager Karl Konradson, who has been with the firm for 15 years. According to a BRC source, Moshensky knows Konradson personally.
In 2022, Santa Trade returned the loan to Max Credit Investment. For five years, she paid about €3.6 million percent on this loan.
Since its inception, Santa Trade has been operating with negative capital, but has not been bankrupted by a loan from a British firm.
The Lithuanian tax authorities explained that negative equity can occur for various reasons, but does not in itself mean that the company is tax evader. If a company has a tax loss for several years, inspectors may question whether it was created for economic gain.
“There are situations where it is determined that a company is artificially incurring only tax losses for a continuous period that are unreasonably deductible under income tax law, or that the company’s activities are contrary to economic logic (for example, were artificially included in a group of companies). This may lead to additional income tax charges,” explained Ruta Asadauskaitė, Head of Communications at the Lithuanian Tax Administration.
Thus, Alexander Moshensky owns the fishing business in Belarus, partly directly, and partly through offshore companies. Norwegian and Icelandic fish enter Belarus through a company established by Santa Bremor in Lithuania, which exists on loans from the same Moshensky offshore companies. Transactions between firms are like a credit carousel with signs of tax understatement. The businessman carries out these manipulations abroad. To understand how this affects the work of Alexander Moshensky in Belarus, you first need to look at his personality.
In the same boat with the authorities
Alexander Moshensky is one of the ten most successful and influential businessmen in the country. Another of his assets, along with Santa Bremor, is the Savushkin Product enterprise, which produces dairy products.
Running such large businesses in a country where the state dominates many sectors of the economy can be challenging. The examples of other big businessmen show that sometimes political loyalty is needed to be successful. Moshensky showed it. In 2010, he was Lukashenka’s confidant in the elections and supported his policies.
“I believe that it is more correct for us to move through some current changes with the current government than to go into some kind of revolutionary business. I am interested in stability,” Alexander Moshensky said in November 2010.
Two and a half years after those elections, the businessman received the Order of Merit for the Fatherland from Lukashenka. At the same time, by personal order of Lukashenka and without holding an auction, Savushkin Product bought up state-owned factories: the Baranovichi Dairy Plant and the Berezovsky Cheese-Making Plant. The price of the latter, according to some estimates, could be underestimated.
BRC contacted Alexander Moshensky for a comment on the details of these transactions. In a response letter, the businessman noted that since 2010, shares of state-owned enterprises processing agricultural products in Belarus can only be bought upon agreement with Lukashenka. The conditions of sale must first be approved by the regional executive committee to which the production belongs.
“Contrary to your [БРЦ] suspicions about the preferential purchase price, the company [“Савушкин продукт”] had to pay for the state share four times more than the shares were worth on the stock exchange. The purchase decision was influenced by two main reasons: an acceptable average price for the entire block of shares, our expectation to increase the efficiency of enterprises through synergy and specialization of production,” Alexander Moshensky wrote.
Surrounded by Lukashenka – like a fish in water
After the 2010 election campaign, relations between Moshensky and Lukashenko did not end. BRC investigators analyzed the businessman’s flights and found several interesting flights among them.
In 2016, a government Boeing 767 flew from Minsk to Doha. Lukashenka went on an official visit, first to Qatar, then to the United Arab Emirates. Only Lukashenko’s close circle was on board: his assistant Nikolai Korbut, personal bodyguard Nikolai Latyshenok, press secretary Natalya Eismont, personal doctor Svetlana Konoshenko, younger son Nikolai and eldest son Viktor. They were accompanied by several businessmen: Alexander Shakutin, Sergey Teterin and Alexander Moshensky.
We also found two flights of Alexander Moshensky in the company of Dmitry Lukashenko and his family. In March 2013, they flew together from Istanbul to Minsk, and in August 2019, from Minsk to Pisa.
Moshensky’s ties with the Lukashenka family do not end there. He is a member of the central board of the Presidential Sports Club, which is headed by Dmitry Lukashenko.
For close ties with Lukashenko and members of his family, many Belarusian businessmen paid the price. The same Alexander Shakutin and Sergei Teterin, who, like Moshensky, flew to Doha with Lukashenka, fell under EU sanctions. They were included in the black list not only for their connections with the current Belarusian authorities, but also for receiving personal benefits from them for their businesses. Moshensky was not reproached for this.
Benefits are flowing
In the late 90s, the Belarusian authorities began to create free economic zones. They did this to boost the economy of the regions and develop high-tech, export-oriented industries in the country. Now, in fact, it is a kind of offshore within the country. The enterprise “Santa Bremor” has been located in the free economic zone “Brest” since its foundation. At that time, the company was really producing a new product for the country – vacuum-packed herring fillets. Now you will not surprise anyone with this, but Santa Bremor is still a resident of the Brest FEZ. This allows the company to receive various benefits from the state. For example, it does not pay income tax if it sells its products for export.
Moshensky admitted to journalists that he achieved success thanks to state support, among other things:
“As for Santa Bremor, if we were outside the SEZ, the company’s growth would be slower. The benefits provided increase competitiveness in Russia, Ukraine, in countries where customs and tax legislation differs from the legislation of Belarus.”
Over the years, Santa Bremor has grown. Today the company consists of six workshops, which employ about five thousand employees. Moshensky’s competitors cannot boast of such a scale, but they are not residents of free economic zones either. At the same time, their contribution to the Belarusian budget is comparable to that made by Santa Bremor, which receives benefits from the state.
For example, the Novogrudok enterprise Leor Plastik, which also produces preserves with herring, has paid more than $4.5 million in income taxes to the treasury over the past three years. Santa Bremor spent $946,000 more on the state budget in the same period, even though its pre-tax profit was eight times that of its competitor. Alexander Moshensky in his letter explained to the BRC why this happened:
“The amount of income tax paid is determined not only by the tax rate itself, but also by a number of other factors. The main one is investment. Tax legislation stimulates investments in the development of production through the use of investment deductions by payers. In addition, the amount of income tax paid is reduced by sponsorship of healthcare organizations. For the period of activity that interests you [последние три года]about $6 million was sent to charity by the enterprises of the Santa group of companies.
According to our estimates, thanks to this principle of calculating income tax, Santa Bremor has “saved” almost $32 million over the past three years alone. With this money, you can build a new fish factory or a well-equipped clinic for 800 visitors and a school for 720 places. Santa Bremor has been enjoying benefits for 25 years.
Bring to clean water
Let’s go back to the beginning of our publication – to the sanctions. The figure of Moshensky has repeatedly aroused the interest of European regulators. He could have been blacklisted by the European Union immediately after the 2020 elections, which were accompanied by mass protests by Belarusians and their harsh suppression by the authorities. How the businessman managed to avoid Western restrictions on himself and his assets, he explained in a commentary for Nasha Niva, but did not elaborate on the details:
“I think those who make these lists have certain inclusion criteria. Probably correct to raise the question of whether the “Santa Bremor” these criteria? Maybe we shot demonstrators? Maybe we are “purses”, in the terminology of the authors? I don’t think. I think they make decisions not based on information about who exports how much fish, but on other criteria that Santa Bremor does not meet.”
Our investigation showed that Alexander Moshensky’s business is not as clean as he tries to present it: the BRC found offshore companies, possible tax manipulations in Lithuania, connections with Lukashenka and his family, purchase of state-owned enterprises without bidding, and benefits that competitors do not have.
Apparently, realizing the precariousness of his position, Moshensky has already taken steps to protect his business from the consequences if he is included in the sanctions lists. The Lithuanian company Santa Trade, which exists thanks to a loan, changed its owner a month and a half after the start of a full-scale conflict in Ukraine. Now Santa Trade is not owned by Santa Bremor, but by the Cypriot company Newride Services Limited. Thanks to OCCRP, we learned that this company is owned by the daughter of a businessman, Yana Moshenskaya.
According to the documents, Yana Moshenskaya lives in London. There she studied at the School of Economics. The Cypriot firm of Moshensky’s daughter owns another firm in Spain, to which a cottage near Barcelona is registered. Bought for almost €3 million, the three-story building is located about two hundred meters from the sea.
But the interests of a business woman extend not only to Lithuania and Spain. After the start of a full-scale conflict, Moshensky’s companies in Ukraine also rewritten her. Now they are in limbo, as local authorities seized their property due to the Belarusian origin of the owners.
This may be the reason for further inspections of Alexander Moshensky’s business assets. Other businessmen close to Lukashenka have long been subject to EU sanctions. Moshensky managed to avoid them, with the support of Icelandic diplomats. Judging by the speech at the plenary session of the Parliamentary Assembly of the Council of Europe, there are already opponents of such actions among them.
The BRC asked Alexander Moshensky to comment on his joint flights with Alexander Lukashenko, the management of offshore companies, the presence of business in Lithuania and the credit carousel with signs of understating taxes, in which firms associated with him participate. He refused to answer these hzikhidtidekrt questions:
“I will leave aside those of your questions that affect me personally and my family, as well as questions whose purpose is to harm me and other people. In this part, I can only clarify that all the companies to which I am related were created and operate in accordance with the law.”
