Fr, 2.12.2022

Port of Tallinn trusted dubious investors and got entangled in disputes

Anastasiya Tido
, portaali Rus.Postimees ajakirjanik
Port of Tallinn trusted dubious investors and got entangled in disputes
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Port of Muuga.
Port of Muuga. Photo: Sander Ilvest

This story began in 2018, when the state-owned company Port of Tallinn leased out a large parcel of land with quays. There used to be a coal terminal there, but the operator of the terminal, Coal Terminal AS, went bankrupt in the spring of 2017.

A tender was announced for the development of the terminal area, but no proposals were received. Valdo Kalm, chairman of the management board of the port, then explained that the terminal should be restarted as soon as possible, Rus.Postimees reports.

The port managed to find a tenant for the coal terminal area in the summer of 2018. MPG Agroproduction OÜ (MPG), which was registered six months before the transaction, signed an agreement with the port and received a 99-year lease of the land with construction rights for five plots. MPG promised to build a soybean processing and oil pressing plant there.

The port announced in a press release that MPG will invest 200 million euros in the factory and at least 300 jobs will be created in the Muuga port.

“An empty shell” with a director in name only

The factory was supposed to start operating in 2020. It is now September 2022 and construction has not even started yet. There is reason to believe that the management of the state-owned company should have investigated the investor more carefully before concluding the deal.

The exact size of the investment required for the factory was unknown even to the initiators of the project. In the press releases after the signing of the contract, it was written that 200 million will be invested, but in the 2019 financial year report of MPG Agroproduction, it was already about 100 million.

It seems, however, that even 100 million was too much for MPG. Decide for yourself: the company has an address in the business center, but there is no working office or staff in Estonia, and the director's personal gmail address is given as the official address. Besides the right to build on the plots leased from the port, the company does not own any property, and has never had any.

British resident Vadim Karpezov became the first director. Interestingly, in 2018, a similar oil plant project was also started in Latvia, in the port of Liepaja. For this purpose, the project company MGP Agroproduction SIA was also registered, the director of which was the same Karpezov.

The project in Liepaja has not been implemented to date. We contacted Karpezov in 2019, but he was unwilling to talk about the project. The director of both MPG Agroproductions referred to the fact that the company had just started operating and there was nothing to talk about.

In January 2020, Aleksandr Repalo became the director. Mr. Repalo responds to letters but has not answered questions about the factory.

Minus two million instead of 100 million

According to the 2020 financial data, MPG Agroproduction has a huge hole in its balance sheet: negative equity exceeded 2.2 million euros. This means that the equity does not comply with the law, and the head of the company noted this in the report. The capital is planned to be recovered from the company's future profits, but it is obvious that no profit can be expected in the coming years.

An empty shell of a company with a hole in its budget undertook to make payments to rent a very large plot of land. Money previously arrived on MPG's balance sheet as a loan from Bittance Limited, a Cyprus-registered company, but it is not clear how the lease payments are made now with negative equity.

Undoubtedly, the bank should already have questions about the origin of the money coming from Cyprus. If the “loan” from the offshore company did not arrive again in 2021 (and there is no report for 2021 yet), then our national port is a partner of a company whose equity decreased by two million and is not in compliance with the law.

This article was read by representatives of the port and MPG director Aleksandr Repalo before publication. They were offered the opportunity to comment or correct any inaccuracies, but neither the port nor the investor denied anything.

The “Greens” unexpectedly joined the game

In 2021, when the plant was supposed to start working, according to the plan, opponents of the project emerged among the environmentalists. The NGO Roheline Rist (Green Cross) challenged in court the municipality's permit to build the oil factory. According to Jõelähtme municipality secretary Leho Kure, the permit was issued on July 1, 2021, and it was immediately challenged in the administrative court.

In the application submitted to the court, it is claimed that the factory poses an explosion and fire hazard. The NGO's lawyer asks the court to assess the oil plant project’s environmental impact.

The opposition of environmentalists could be considered a random obstacle to the successful implementation of the investor's plans, but the history of this environmental dispute is unusual. The Green Cross NGO was registered 20 years ago, and so far there is no mention of its participation in nature conservation projects. It looked like it had been sitting idle for a long time. There is no 2021 report yet, but previous years' reports are empty. They say that the NGO had no activity or cash flow, there were only meetings.

The Green Cross obstructed the construction

The head of the NGO – former president Arnold Rüütel – left for health reasons. We called the other co-founder of the NGO, Jüri Kann, former rector of the Maritime Academy. Professor Kann said that he does not deal with the Muuga factory.

The only representative of the NGO who is familiar with the circumstances is Professor Jüri Martin, a member of the Estonian Academy of Sciences, Doctor of biology. He reviewed the material and commented briefly on it. This is the second year Martin has declined an interview, which is unusual for an environmental activist. When environmental activists want to draw public attention to some hazardous project, they use every opportunity to communicate with the media, but NGO Green Cross does not want to communicate.

The NGO is represented in court by the law firm Cobalt. It is a large firm and the NGO had no receipts until the end of 2020. We do not know where the NGO received the money to pay for the lawyer in 2021 – there are no reports in the register yet. The only thing that Jüri Martin told us by phone recently is that the court case has not progressed during the year, which means that the construction of the factory has been frozen.

The land where the oil plant was supposed to be built is by no means empty now. The sites of the former coal terminal are filled with high piles of gravel, clearly a commodity rather than building material for the plant. MPG has probably subleased the site and someone handles the gravel there.

The project and the dispute raise doubts

None of the parties except for the local government – Jõelähtme municipality – want to comment on it, but the municipality knows little about the project. The most important question: why do the partners stubbornly refuse to talk about the project with journalists, now that the construction project has stalled and the litigation is going on for the second year?

The port of Tallinn told its investors that the Muuga factory will import and load raw materials, thus increasing the cargo turnover of the port. Instead, the state-owned company has an absolutely opaque partner whose money is of Russian origin, but it is not known how legal it is. It is not known if MPG pays the lease payments.

It is possible that currently the rent is covered by sublease and not by the “loans” from Cyprus. The stalled project is a bad option for the port, but it is also difficult to terminate the 99-year lease. Yes, the investor is not transparent, but that was also the case in 2018. We posed questions to the port management, pointing out that the public has a right to know to whom the national port gave the land and trusted its reputation. The port is unwilling to comment on the issue.

After the litigation began, it became clear that no environmental impact assessment was conducted for the construction of the Muuga oil plant.

Who promised the port millions?

In 2018 and later, the port announced that MPG Agroproduction was founded by capital from European investors. Once, Valdo Kalm said on the radio that a very experienced oil industry investor had come to the port, but Kalm never mentioned his name.

Since its registration, MPG Agroproduction has been owned by the Cypriot company Bittance Limited, which in turn is owned by another offshore company. The registered beneficial owners or beneficiaries are Svetlana Bazhanova and Roman Artemyev residing in the United Kingdom.

Artemyev worked as a public relations manager at the Russian oil refining company Yukos. Vadim Karpezov, the first director of MPG Agroproduction, also has business relations with its former employees Andrei Leonovich and Ramil Burganov. In the United Kingdom, he was listed as the head of several companies; the register lists them among related persons.

Bazhanova is the ex-wife of businessman Alexey Bazhanov. He worked as the Deputy Minister of Agriculture of the Russian Federation and was the owner of the agricultural company Masloprodukt; the company also owned oil factories. This fact fits well with Kalm's words about an investor with experience in the oil industry.

The current director of MPG, Alexandr Repalo, also has experience in the oil industry – he was the production director of the Yevdakovski oil and fat plant, part of the Blago group. Now the owner of the Blago group is trying to recover money from Bazhanov, but to no avail.

Criminal record?

Alexey Bazhanov is accused in several criminal cases in Russia. In particular, he is accused of fraud and money laundering and was on an international wanted list. According to the Ministry of Internal Affairs of the Russian Federation, Bazhanov resides in the United Kingdom, but Britain refused to extradite him to Russia.

According to the investigators, in 2013 Bazhanov, the former deputy head of the Russian Ministry of Agriculture, together with a financial consultant, submitted fictitious collateral documents to Svyaz-Bank to obtain a loan. The bank transferred 400 million rubles to Bazhanov's company, which he stole, according to the version of the investigation.

We cannot be certain that Bazhanov committed all the crimes that the investigators accuse him of, but we cannot be convinced of the legal origin of his money either. If Bazhanov is the mysterious investor, neither the media nor the management of the Port of Tallinn can know for sure whether he earned the money honestly, because Bazhanov was a businessman and deputy minister in the same sphere in which he served, and a criminal case was initiated in the Russian Federation regarding his activities.

Our anonymous sources claim that the head of the Port of Tallinn, Valdo Kalm, knows perfectly well whose money was to be invested, and met the investor personally. From the point of view of corporate management, this is in any case correct: the head of a state-owned company cannot enter into a long-term deal with a random person.

If Alexey Bazhanov is behind the project, he decided to invest money through an offshore company, which is related to another offshore company, which is related to his ex-wife. It is convenient for him, but we cannot understand why the port management hides the names of the partners from both the shareholders and the taxpayers.

During the entire time of the 200- or 100-million “implementation of the project”, no one has seen or heard from the investor or his representatives or received an understandable explanation of what kind of money is being invested. And these are the questions the media has been asking the port management for all these four years.

JÜRI MARTIN, representative of Green Cross NGO, doctor of biology

Green Cross, as a non-profit organization, has the right to raise issues related to environmental hazards. According to the Aarhus Convention, we have the right to go to court. Our NGO does not deal with the financial affairs of the Port of Tallinn and its business partners. In recent years, our NGO has participated in risk assessment discussions of high-risk companies. This is why the oil plant caught our attention. This is a matter of social importance.

SIRLE ARRO, Head of the Press Service of the Port of Tallinn

Thank you for sending us the text for review. As the case is not yet closed, we do not wish to comment further on this case.

ALEXANDR REPALO, head of MPG Agroproduction

Alexandr Repalo, director of MPG Agroproduction, was the production director of Yevdakovski Oil and Fat Combine, one of the largest fat producers in Russia. MPG plans to invest 100 million euros in the Muuga factory, but has so far not been able to invest even two million.

The company has carried out (respectively financed) design works and received a construction permit. Therefore work was being carried out. The Green Cross was created just after this fact. The number of people who work in our company at this stage is not the main issue. What matters is that the company is operating. The ongoing litigation adds additional risks to the project.