In March 2022, the European Union (EU) decided to impose strict sanctions on Belarus. These sanctions were a response to Belarusian leader Alexander Lukashenko’s support for Russia’s invasion of Ukraine. Potash sanctions targeted the export of potash, a vital ingredient used in fertilizers. Potash is a significant product for Belarus, and before the sanctions, much of it was exported to the world through the Lithuanian port of Klaipeda.
The Background of Potash Sanctions
Potash sanctions made it illegal for Belarus to use EU ports for exporting potash. This forced the Belarusian state-owned company, Belaruskali, which produces potash, to find alternative routes for its exports. As a result, Belaruskali shifted its operations to the Russian port of St. Petersburg, hoping to continue its trade despite the restrictions imposed by the EU.
The Role of a Cyprus Company
As Belaruskali tried to reroute its potash exports through Russia, a Cyprus-based company named Dimicandum Invest Holding came into the picture. According to an investigation carried out by the Belarusian Investigative Centre (BIC), a network of Belarusian journalists, this Cyprus company played a crucial role in helping Belarus evade the potash sanctions. The investigation revealed that Dimicandum Invest Holding was hired by Belaruskali to assist in the transportation of potash from railway wagons to ships at the Russian port.
Cyprus Witnesses Growth in GPS Spoofing Incidences
However, this arrangement raised serious concerns. The contracts between Belaruskali and Dimicandum Invest Holding appeared to be highly inflated. Documents showed that Belaruskali agreed to pay the Cyprus company $68 million for moving 3.4 million tons of potash, which translates to about $20 per ton. This was significantly higher than the market rate, which was around $11 per ton, according to the BIC.
The investigation suggested that this scheme may have been designed to divert funds from Belarus to the benefit of individuals linked to the Belarusian leadership. This raised alarms about potential corruption, as the excessive fees charged by the Cyprus company did not align with the actual cost of the services provided.
Hezbollah Leader Hassan Nasrallah Issues Warning to Cyprus Amid Rising Tensions with Israel
Potential Violations and International Concerns
The findings of the investigation have raised questions about whether the Cyprus company violated EU sanctions. According to experts, EU sanctions prohibit companies registered within the EU from providing services or products to Belaruskali, a state-owned enterprise in Belarus. By facilitating the transportation of potash through Russian ports, Dimicandum Invest Holding may have directly violated these potash sanctions.
The European Commission, which oversees the enforcement of EU sanctions, has stated that it will investigate the matter further. The Commission may liaise with Cypriot authorities to ensure that the sanctions are being upheld and that any violations are addressed.
Cyprus Model of Sanctions Evasion and Role of PWC Cyprus
Cypriot law enforcement has also been informed about the findings of the investigation. The case has been referred to the relevant agency, which will likely conduct its own investigation into the activities of Dimicandum Invest Holding.
This situation highlights the challenges faced by the international community in enforcing sanctions, especially when companies and individuals seek to circumvent these measures through complex and secretive arrangements. The case of the Cyprus company and its involvement in the Belarusian potash sanctions evasion underscores the importance of vigilance and cooperation among nations to prevent the evasion of sanctions.
EU Implements 14th Sanctions Package Against Belarus to Block Russia Sanctions Evasion
The revelations about the involvement of a Cyprus company in the evasion of potash sanctions imposed on Belarus have drawn international attention. As the investigation continues, there is growing concern about the potential violations of EU sanctions and the implications for global trade and accountability. This case serves as a reminder of the ongoing challenges in enforcing international sanctions and the need for rigorous oversight to prevent such schemes from undermining the effectiveness of these measures.
