Ternavsky’s oil schemes. How do businessmen close to Lukashenko move millions of dollars offshore and avoid EU sanctions?

The Russian oil subsidy is the main engine of the current economic model of Belarus. In exchange for gradual concessions to sovereignty, Moscow sells oil to Minsk at a substantial discount, and Minsk sells its petroleum products abroad at world prices. These profits help to cover state industry losses. But are oil revenues used solely for state needs?

This is an investigation into Anatoly Tsiarnauski (Anatoly Ternavsky), the so-called oil baron of Belarus. At one time he was closely connected not only with government agencies, but also directly with the family of Alexander Lukashenko.

Ternavskyʼs name in Belarus is always associated with that of Lukashenkoʼs more famous friend, Mikhail Gutseriyev. In the late 1990s and early 2000s, Gutseriyev ran a Belarusian-Russian state company Slavneft, which bought almost half of the Mazyr Oil Refinery. Ternavsky was his deputy and representative in Belarus.

In 2002, after Slavneft got under private Russian entitiesʼ control, Ternavsky became an independent player in the Belarusian oil market. Over time, his enterprises became the largest taxpayers to the Belarusian budget after two state oil refineries.

«They started the company »Univest-M«, it was the 2000s. And everything went upward for them, supplies through Belarus were through these connections. They supplied oil here for refining, and made money on sales. They invested that easy money in Belarusian real estate, in Belarusian enterprises», says Alexander Zayats, economic commentator at TUT.BY.

In Belarus, Ternavsky also owns UnivestStroyInvest, Yuvarograd, Smaliavichi Reinforced Concrete Products Plant, Unis Oil, U-stroy, and a number of other enterprises. The businessmanʼs biggest project to date is the construction of the residential district Nottingham near Kalodzishchy.

Source: kolodischi.by

The project was originally to be run by a joint venture owned by Ternavsky’s entities and presidential sports club run by Dmitry Lukashenko.

Dmitry’s wife, Anna Lukashenko, worked in one of Ternavsky’s companies, Univest-M. They received a huge allotment of scarce capital land for construction through Alexander Lukashenko’s special decree.

In April 2012, the European Union imposed sanctions on Ternavsky. The reason was his proximity to Lukashenko’s family, and the European Union attempted to make Lukashenko ease the repressions against political opponents.

The sanctions caused significant inconvenience to Ternavsky, affecting his business in Russia. Over there, he fell out with his former partner Alexei Laktionov over Nefttrans LLC, which controlled the transshipment of Chechen oil.

Ternavsky won the lawsuit in Cyprus, where Nefttrans’ offshore owners were registered, but the decision, beneficial to him, was overturned because the EU sanctions banned any transactions in which Ternavsky would be a beneficiary.

But, as our joint investigation with the Organized Crime and Corruption Reporting Project (OCCRP) found out, sanctions have not always been effective against Lukashenko’s wallet, as the European Commission called him.

The investigation was made possible by access to the Panama Papers provided by the German publication Süddeutsche Zeitung and the International Consortium of Investigative Journalists.

These documents are leaked internal correspondence of the company Mossack Fonseca, one of the world’s largest providers of the offshore profits hiding services. As this correspondence revealed, Anatoly Ternavsky used the Mossack Fonseca offshore services since 1995.

“The Panama Papers is a huge leak of information from the now defunct Panamanian company that used to provide all kinds of services to various rich people around the world. These are opening and owning offshore companies, control changes, contracts. They did everything necessary for the offshore business,” says the Organized Crime and Corruption Reporting Project (OCCRP) editor Sharunas Cherniauskas.

According to Belarusian official statistics, one of the largest recipients of Belarusian oil products is Great Britain.

In actual fact, no significant volumes of Belarusian oil products have been observed there. England is an international logistics centre for sea freight, oil in particular. There, smaller batches from various suppliers arriving from the shallow ports of the Baltic are reloaded into supertankers that transport the product overseas.

“Fuel oil traditionally goes to Singapore, gasoline – either to Latin America, or to the US. Diesel fuel – by sea to Poland and Germany. We work with major global traders. They use the practice of increasing petroleum products consignments in the ports. Sometimes they change direction in the ports. That’s why we may not even know where our oil products go,” said Siarhei Hryb, former BNK (Belarusian Oil Company) Deputy General Director for Commercial Affairs.

That is why a subsidiary of the Belarusian Oil Company is registered in Britain. There are also offshore firms, previously unknown to the general public, trading in oil products in the interests of Alexander Lukashenko’s inner circle. Some of these companies were discovered by Sharunas Cherniauskas, the OCCRP editor, and head of the Lithuanian portal Siena. He turned to Belsat to conduct a joint investigation of the discovered documentation.

Unitrade was registered in the UK and showed annual revenues of up to half a million dollars. This is one of a number of Ternavsky’s offshore entities.

Two weeks after Ternavsky came under sanctions, the Swiss firm Steval Management, which represented his interests, asked Massack Fonseca to change the Roping Marketing company’s owner in the Virgin Islands. But the deal’s registration had to be backdated as though the change had taken place two weeks before the sanctions’ imposing.

Belsat investigation documents

The owner was changed, from one Panamanian company to another. Apparently, because the previous owner’s ties to Ternavsky had been blown, which meant that Roping’s subsidiary, the aforementioned British Unitrade that traded in petroleum products, could be subject to sanctions. But the fake ownership date change did not work out.

As it turned out later, the Virgin Islands’ Roping Marketing, the owner of the British Unitrade, belonged to Natalia Ternavskaya, the well-known businessman’s daughter. But Natalia claimed that she was the only beneficiary of the company.

At the same time, Anatoly Ternavsky himself had a power of attorney to conduct any operations on behalf of this company. It is clear from the leaked correspondence between Mossack Fonseca employees that they knew about Ternavsky’s connections with Roping Marketing.

But when the British Virgin Islands Financial Investigation Agency asked Mossack Fonseca for information about the firm, they lied and said that the nominal beneficiary, Switzerland’s Steval Management, was the real beneficiary. About a year later, the Virgin Islands authorities learned that Roping Marketing was linked to Ternavsky, but did not inform official London. As a result, Unitrade, the subsidiary of Roping Marketing, has not been affected by EU restrictions.

The full text of the investigation is available in pdf, mobi, epub formats.