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Cypriot firm accused of profiting from EU potash sanctions against Belarus

An investigation by Belarusian journalists has identified a Cypriot company as being at the center of a contract markup scheme.

In March 2022, the European Commission banned the import and transit of Belarusian potash. | Viktor Drachev/AFP via Getty Images
August 9, 2024 1:19 pm CET
By Alessandro Ford


Belarusian journalists have found that a Cypriot company linked with a former top aide to Belarusian leader Alexander Lukashenko is profiting through inflated contracts related to new export routes of the fertilizer ingredient potash, which were set up as a result of EU sanctions.

In March 2022, the European Commission banned the import and transit of Belarusian potash in the bloc following Lukashenko's support for the Russian invasion of Ukraine. The EU ban forced Belarus’ state-owned potash maker Belaruskali to shift its roughly €2 billion-per-year exports from the Lithuanian port of Klaipėda to the Russian port of St. Petersburg.

An investigation published Thursday by the Belarusian Investigative Center (BIC) said the new arrangements to shift the potash out of Russia involved heavily marked-up contracts between Belaruskali and a Cyprus-based holding company.

In 2023, Belaruskali hired a Cypriot subcontractor called Dimicandum Invest Holding to transfer cargo from rail wagons to ships at the Russian port, even though the terminal operators could do the job far cheaper, according to BIC — a network of Belarusian investigative journalists in exile.

Documents acquired by BIC show that in 2023 Belaruskali agreed to pay the Cypriot firm $68 million for 3.4 million tons of potash — $20 per ton moved. The Cypriot firm then paid the port to do the job. Figures provided to BIC show the port's market rate for these services is $11 per ton.

"Our investigation has shown that this scheme may have been organised to divert funds from the domestic monopoly producer of potash fertiliser to the benefit of Aleksandr Lukashenko’s proxies," the BIC writes.

The journalists found that the man listed as signing on behalf of Dimicandum Invest Holding — financial director “A.G. Svirydau” — was Andrei Svirydau, deputy head of the Belarusian Department of Presidential Affairs from 2019 to 2021. Svirydau admitted to being the company's financial director to BIC reporters over the phone, but denied signing any contracts with Belaruskali.

The EU has previously come under fire for sanctioning Belarusian potash. U.N. Secretary-General António Guterres traveled to Brussels last year to plead for a transit exemption for Russian and Belarusian fertilizers, arguing the bans were indirectly increasing food prices and hunger across Africa.

Most EU countries, led by Portugal, were willing to grant the special dispensation, particularly after complaints from agricultural powerhouses like Brazil that they were struggling to get enough fertilizer. Yet fierce opposition from the Baltic states ultimately killed the idea, which was soon buried amid another round of sanctions against Minsk.

The investigation highlights “that a significant part of the [higher potash logistics] costs might be due to schemes with signs of corruption rather than the consequences of sanctions,” the BIC writes. After reaching an all-time high in 2022, global potash prices have also dropped by 75 percent as of this May.

According to three experts interviewed by the BIC, even if the potash shipments did not enter the bloc, Cyprus-based Dimicandum Invest Holding has still violated EU sanctions.

Gunnar Ekeløve-Slydal, deputy secretary-general of the Norwegian Helsinki Committee, told BIC that “EU sanctions prohibit companies registered in the EU from providing services or products to Belaruskali, and transshipping the potash in St Petersburg would be a direct violation.”

Cypriot law enforcement told the BIC their findings had been referred to the competent agency.

The European Commission told POLITICO: “The Commission will look into this case and liaise with the Cypriot authorities if and as needed.”

Belaruskali did not reply to a POLITICO request for comment. POLITICO attempted to contact Andrei Svirydau, Dimicandum Invest Holding and its director, but was unable to reach them.