FIU refuses to reveal names of enterprises belonging to sanctioned oligarchs

“We are not going to give you this list,” announced Matis Mäeker, the head of the Financial Intelligence Unit, after a three-week ping-pong game between the FIU and Postimees. The daily wanted to know the names of the companies whose activities are under sanctions in Estonia, because their major owners have been added to the pan-European sanctions list due to their support for the war in Ukraine.

“You are asking which are the companies under sanctions in Estonia; the European Union has not named such companies, it has listed the individuals,” said Mäeker. “In fact, the European Union does not allow such lists to be kept or released.”

Is there any law prohibiting this? “It is traditionally based on the internal communication and rules of the European Union,” countered Mäeker. When asked to name a specific prohibiting legal provision, he had to admit that there was none.

He explained that financial sanctions do not freeze the entire company's operations, but the funds and economic resources belonging to the sanctioned persons so that they cannot be sold, leased or otherwise used to obtain additional goods, services or money.

Who should be subject to sanctions, is decided by financial institutions (including banks), as well as registrars and others who monitor transactions with Russian-related companies. The FIU must then be notified. “We will check whether the sanction has been applied correctly,” explained Mäeker. If so, the parties to transaction can provide additional data and request a new inspection and in some cases be granted an exception.

Finally, there will be a list of companies whose transactions have been frozen because their owners (including through numerous shadow companies) are on the EU sanctions list.

"It is not possible to keep this list final – supervisory board members change all the time, so do managers who exercise control, owners can change,” Mäeker justified keeping the list secret. “In order to understand whether an Estonian company is under sanctions, you have to go through the management members to the Russian company whose board member is subject to sanctions, to see what his mandate is and whether it has changed in the meantime. This is also the reason why we actually cannot and do not want to release this list.”

Some enterprise are known to be sanctioned

So far it has become public that DBT, a subsidiary of the global mineral fertilizer manufacturer Acron, which maintains a fertilizer terminal in the port of Muuga, is under sanctions in Estonia. The owner of the company is one of the richest men in Russia, Vyacheslav Kantor, a close supporter of Vladimir Putin. When he was added to the list of oligarchs under EU sanctions on April 8, DBT's bank accounts were seized and the import of fertilizer into Estonia was stopped overnight.

Another firm to come under sanctions is EuroChem Terminal Sillamäe OÜ, which belongs to one of the world's largest fertilizer groups EuroChem. Actual beneficiary of the company which runs the liquid chemical and fertilizer terminal is Russian oligarch Andrey Melnichenko, who was sanctioned already on March 8, and whose fortune Forbes magazine estimated at $15.5 billion in 2018.

The oligarch transferred his shares in both EuroChem Group AG and the coal producer SUEK AO to his wife in order to save the companies from sanctions, after which the EU added Alexandra Melnichenko to the list of persons under sanctions in June.

The companies controlled by Kantor and Melnichenko cannot currently earn profit in the EU, and all their legal entities operating in Estonia have been included in the published list of EMTA (see the list).

EMTA sent a list of its customers who have received financial sanctions and pay taxes in Estonia. “This is the current situation, and if the factual circumstances change (e.g. transfer of shares to persons not subject to sanctions) and/or the EU imposes additional sanctions or changes the interpretations related to the sanctions, the list may also change,” emphasized EMTA. "In addition to EMTA's customers, persons or their companies which are not taxpayers in Estonia, but have a bank account in Estonia, are subject to sanctions. In such cases the bank is obliged to implement a financial sanction.”

What about further tentacles which the Russian oligarchs supporting and financing the war in Ukraine have spread into Estonia? The number of companies under sanctions is large in Estonia – according to the FIU, as of July 21, restrictive measures apply to 1,212 individuals and 108 entities in order to influence Russia to end the war in Ukraine.

What about Russian oil and gas giants Novatek, Sibur, Rosneft and Gazprom? Are their subsidiaries and the concern managers’ other businesses in Estonia affected by sanctions?

“The mentioned companies are affected by the sanctions,” read the initial brief comment from Õnne Mets, the FIU’s head of communications. “The main restrictions can be found in the cited five legal acts. They may also apply if the company itself is not included in the sanctions list.”

Find out who is hiding where...

“If a country does this (publishes the list of firms under sanctions – ed.), it does so for certain other considerations,” Mäeker explained. “One of them is Lithuania, but as far as we know, Lithuania is also currently in court with at least one company, which said that publishing the list alone would harm its economic interests. It requires the state to reimburse certain costs. We want to wait and see what these courts will say.”

We can understand the caution, but isn’t this withholding information? “This is not withholding information!” Mäeker argued. “I am very sorry, but the term you just used is a bit harsh. I do not think it is appropriate to say that.”

He asked what Postimees wanted to achieve by publishing the list. Hearing that the daily wants to investigate the extent of influence of the Russian oligarchs under sanctions on the Estonian economy and to inform about companies which have been overlooked but are under sanctions, Mäeker replied: “It is a very good discussion, I am very grateful for what you are trying to do, but there are many gaps in your approach, there are holes which the press should be aware of in this military situation.”

He cited the article in Postimees “The family of Putin's right-hand man has their own corner of paradise in Lohusalu, Estonia" (PM 26.09). The head of President Putin's administration, Anton Vaino, is on the sanctions list, hiding assets through close relatives is prohibited. In 2014, Vaino registered the Lohusalu house in his mother's name. “I read in the newspaper what your hypothesis is; I cannot comment on the other side. Economic resources must not be made available to Vaino, but no one will take away this cottage,” Mäeker said.

He has his problems with the enterprises. EuroChem Terminal Sillamäe has sent a letter to the Ministry of Foreign Affairs and the FIU, in which it is stated that Alexandra Melnichenko is neither directly nor indirectly the owner of EuroChem Terminal Sillamäe nor has control over the applicant, and therefore the frozen funds and economic resources of the company should be released, Äripäev reported on September 8.

The Consumer Protection and Technical Regulatory Authority has issued an injunction regarding the explosive cargo of fertilizer belonging to AS DBT, held in the Muuga fertilizer terminal, on the basis of which the owner can request an exception from the FIU to remove it, ERR reported on September 6. The FIU is currently assessing whether the received information complies with the exception allowed in the EU Council regulation. The EU allows for an exception to be requested if it is necessary to comply with a national administrative body or a court decision, as well as to avoid or prevent an environmental threat or situations hazardous to people's lives and health.

Journalists sent to carry water in a sieve

Both Mäeker and Mets advised Postimees to find out the companies under sanctions on its own – by studying the EU sanctions list and comparing it with the Estonian business register.

“You can find two of the four mentioned companies (Rosneft and Gazprom) in the previously mentioned EU Sanctions Map portal, which also provides direct references to the applicable EU legislation, where the restrictions are provided in all details,” said Mets. “In case of the others, as in the case of every natural and legal person, all transactions are considered separately. The e-Business Register provides information on companies operating in Estonia and private individuals related to them.”

Unfortunately, by making inquiries by the names of individuals, it is not possible to reach, for example, the information that Gazprom owns Baltic Marine Bunker AS, which as late as in April carried oil cargos between Russia and Estonia as regularly as a streetcar. The information from the Estonian business register ends with the announcement that the company's shares are located in the representative account of Raiffeisen Bank International AG in Switzerland, and the investigation must be continued in foreign information registers. The reported owner of EuroChem Terminal Sillamäe OÜ is the Cypriot company Harvester Shipmanagement Ltd, etc.

Moreover, there are Russian-owned companies which are operating in Estonia but registered, for example, in Latvia or the Netherlands, which have not been entered in our business register at all.

Mäeker knows very well what can be done in the business register: “If you look at all the Estonian companies in the business register and go all the way to their owners, I think there may be further subjects to sanctions which have not been identified.” However, approaching a database of over 282,000 companies this way would be a huge task, equivalent to carrying water in a sieve.

FIU head: I have my own laws

“At least once a year, we have to make public the list of companies on which we have applied sanctions,” said Mäeker. “Since the public's interest is great, we published this “list” in March – we compiled a sort of hybrid version – and we have agreed among ourselves that we will now publish something. We will probably announce next month how many sanctions have been applied.”

Why not release this information a little earlier? “It follows from the law that it should be done once a year. Look, I am governed by the law, I cannot be governed by the press,” Mäeker answered.

Hearing that the press does not want to govern him, but to receive public information, Mäeker replied: “I am a lawyer, I read the law, and the law tells me that I must publish once a year who has come under sanctions.”

We are talking about the Public Information Act, but aren’t you governed by all the laws of the Republic of Estonia? “Yes, but I have my own laws which govern me the same way,” Mäeker answered.