How EU Firms Are Sidestepping Sanctions And Making Money On The Peninsula

In December 2014, Serhiy Khodko, a local official under Moscow-installed authorities in Crimea, received a medal from Russia’s Defense Ministry “for the return” of the Ukrainian peninsula to Russian control.

Khodko, who has since passed away, was not only a deputy in the city council of the Crimean city of Kerch. He was also the director of a company called TIS Krym, which operates ferries from a Russian port across the Kerch Strait — and brought Russian personnel and hardware into Crimea as it seized and annexed the peninsula in March 2014.

“We took the first, second, and third waves, as we call them, of these mass transports. The guys [Russian servicemen] were brought across in organized groups, in plainclothes, but they had their uniforms and whips with them,” Khodko later boasted in an interview with, which described the passengers as Cossacks from southern Russia.

“Gradually,” he added, “the task was completed. In the course of two to three days, a large number of human reserves were transported across.”

Russia President Vladimir Putin later conceded that Crimea was secured thanks to the surreptitious deployment of Russian soldiers — widely referred to as an invasion of “little green men” — across the peninsula. The land grab subsequently triggered waves of U.S. and European Union sanctions, including prohibitions on doing business in Crimea.

But nearly five years after Khodko received his medal from Russian Defense Minister Sergei Shoigu, the TIS Krym ferry company he ran continues to operate in Crimea despite an ownership chain that leads to a company in Cyprus — an EU member required to enforce the bloc’s sanctions legislation.

Serhiy Khodko (second left) receives a medal in December 2014 "for the return" of Crimea to Russian control.
Serhiy Khodko (second left) receives a medal in December 2014 “for the return” of Crimea to Russian control.

And it’s not the only EU-domiciled company that has operated and invested in Crimea since the adoption of EU sanctions in response to the Russian land grab.

Scores of European companies — primarily offshore holding firms — have continued to do the same, according to a new joint investigation by Current Time, the Russian-language network led by RFE/RL in cooperation with VOA, and the anti-corruption project Municipal Scanner.

The multipart investigation has revealed that these include EU firms owned by tycoons and former officials in both Russia and Ukraine, many of which have invested and conducted business in sectors prohibited by EU sanctions, such as tourism and transportation.

Shares in one Cyprus firm that controls a hotel in Crimea are held by a British subsidiary of the U.S.-based Bank of New York Mellon Inc., the world’s largest depository bank, with assets amounting to $33.1 trillion as of December 2018.

Russian officials have claimed publicly that both EU and U.S. companies are operating in Crimea despite the sanctions but that they are doing so under the radar.

“These are representatives of European countries, Italy, German, and Eastern Europe. There are representatives of the United States of America, as well. Not all of them would like to have their names made public” due to the sanctions regime, Andrei Kulik, at the time a senior economic-development official for the Russia-installed authorities in Crimea, said in November 2018.

In June 2019, the Russian government allowed information about Crimean businesses to be hidden in the official public registry if they have been hit by foreign sanctions or maintain branches or other affiliated entities on the peninsula.

Petras Austrevicius, a Lithuanian lawmaker in the European Parliament, has previously criticized Cyprus — long an attractive offshore destination for Russian money — in particular over what he has described as its lax approach to sanctions enforcement.

In response to questions about numerous Cypriot firms doing business in Crimea, authorities in Cyprus said they were in full compliance with current sanctions-related legislation and refused to provide information about the companies in question.

Cypriot Ferries For Little Green Men

TIS Krym, the ferry company that brought Russian “human reserves” to Crimea ahead of the annexation, is just one firm in the empire of Aleksandr Annenkov, a shadowy former Russian deputy transport minister.

Annenkov is the owner of AnRussTrans, a leading Russian transport group that has been in the maritime transport business for nearly 20 years. It works with state agencies and large private companies, but neither the group nor its owner are widely known to the public.

Aleksandr Annenkov (file photo)
Aleksandr Annenkov (file photo)

As this joint investigation discovered, Cypriot firms controlled by Annenkov operate on the peninsula to this day in sectors specifically barred under EU sanctions. Neither the Cypriot nor Ukrainian authorities responded in substance to journalists’ questions.

EU sanctions implemented five years ago this month specifically prohibit “all foreign investments” in Crimea, as well as services there “related to tourism activities, including in the maritime sector, and in the sectors of transport, telecommunications, energy, and exploitation of oil, gas, and minerals.”

TIS Krym moved its incorporation from Ukraine — where it was owned by a Kyiv-based company left untouched by Ukrainian sanctions — to Russia a year after the annexation. But beginning in March 2016, a Cypriot company called Avimalink Enterprises Ltd. gradually bought up nearly all of the ferry company’s shares.

Avimalink, in turn, was owned by another Cypriot firm, Anrusstrans Limited, which Annenkov controls through a nominal owner named Christiana Savva, according to a document related to Annenkov’s Crimea-based bank that was posted on the Russian Central Bank’s website.

It wasn’t until December 2018 — nearly four years after the EU sanctions prohibiting investment activities in Crimea’s tourism, transport, and maritime sectors — that Annenkov transferred full ownership of TIS Krym into his own name.

After Current Time contacted Annenkov’s Russian-incorporated firm, AnRussTrans, for comment, all information about TIS Krym disappeared from the group’s official website. The company did not respond to repeated requests for comment.

An AnRussTrans ship named the Annenkov on the Russian side of the Kerch Strait. (file photo)
An AnRussTrans ship named the Annenkov on the Russian side of the Kerch Strait. (file photo)

While TIS Krym is now fully Russian-owned, company records show that Annenkov personally owns 1 percent of AnRussTrans and the other 99 percent via Anrusstrans Limited, the Cypriot firm he controls through a nominal owner.

Another Russian subsidiary ultimately owned by Anrusstrans Limited transported people and equipment from Russia to Crimea for a period of time between 2015 and 2016 under a procurement contract from the Russian Defense Ministry. Public records do not show the precise nature of the cargo.

Annenkov also controls a Cypriot firm — Ugtrans Terminal Co Limited — that is part of the businessman’s transport empire. In the summer of 2018, it emerged that a ferry owned by the firm had its hull fractured during the unloading of railway cars after crossing the Kerch Strait.

An AnRuss Trans ferry on the Kerch Strait. (file photo)
An AnRuss Trans ferry on the Kerch Strait. (file photo)

Dockworkers were able to prevent a possible oil spill, industry publications reported. AnRussTrans declined to comment on the incident.

Meanwhile, Annenkov’s wife and daughter are the owners of a Cypriot firm called Sandray Trading Limited, which controls a company also called Sandray that is based in Sevastopol, the Black Sea port in Crimea that Russia has designated a federal subject.

The Russia-incorporated Sandray states that it is involved in a range of business spheres, including maritime passenger and freight transport, construction of port facilities, ship rentals, and storage of oil and gas products.

"Little green men" -- Russian military forces in Crimea in March 2014.
“Little green men” — Russian military forces in Crimea in March 2014.

In August 2017, Sandray purchased a Crimea-based firm called Invest-Region Krym that sells fuel and crude oil. And until May 2017, it owned the Crimean company Sevastopol Transport Systems (STS), which Annenkov’s holding describes as a company providing maritime transit for passengers and vehicles.

STS was later bought by Annenkov’s Sevastopolsky Morskoy Bank, which was hit by U.S. sanctions in 2015. At the time of the acquisition, Cypriot companies controlled by Annenkov were still the ultimate owners of the bank through a chain of Crimea-based companies. However, he transferred ownership of the Crimean companies directly to himself in November 2018.

After Current Time contacted AnRussTrans for comment, all information about STS disappeared from the company website.

A Rosé By Any Other Name

The owners of well-known wine and spirit brands have also continued operations in Crimea using EU companies after the 28-member bloc imposed sanctions in 2014 following Russia’s takeover of the peninsula.

After the annexation, one of Ukraine’s largest alcohol producers, Alef-Vinal, divided its business into Ukrainian and Russian segments. The company sends its wines to the Russian market from four facilities, all of which are located in Crimea, while the Ukrainian division says its products are sold outside Russia.

The person behind these companies is Vadym Yermolaev, a Ukrainian businessman from the city of Dnipro. In 2018, Focus, a Ukrainian weekly Russian-language magazine, estimated his assets to be about $100 million and ranked him the 64th-richest Ukrainian.

The press service of the company’s Ukrainian division — Alef-Vinal Private JSC — said that it didn’t have any assets in Russia-controlled areas of Ukraine and did not conduct any business there.

But the investigation by Current Time and Municipal Scanner tells a different story.

The Ukrainian company — owned by firms incorporated in Cyprus and the British Virgin Islands — is part-owner of a Crimea-based grape supplier called PJSC Burlyuk, which counts three Cypriot firms as its other main shareholders.

PJSC Burlyuk, in turn, controls a Crimea-based spirit producer called Alef-Vinal-Krym, which was incorporated in Russia in November 2014, a few months after the EU introduced sanctions prohibiting a range of business and investment activities in Crimea.

Cypriot authorities responsible for the implementation and enforcement of EU sanctions declined to provide information about Cypriot companies involved in the Alef-Vinal ownership structure.

A similar split into Ukrainian and Russia-oriented branches was launched by the famous Ukrainian winemaker Inkerman. Inkerman brand wines are bottled at a plant in Crimea’s capital, Sevastopol, for export to Russia. Wines for the Ukrainian and other markets, meanwhile, are bottled in the mainland Ukrainian city of Nova Kakhovka.

For nearly five years after the EU adopted its Crimea sanctions, however, both companies were controlled by the same Swedish company headed by the Ukrainian millionaire Valeriy Shamotiy. In 2013, Forbes estimated his assets at nearly $77 million, placing him 99th in its rating of Ukraine’s richest people.

Shamotiy’s Swedish firm, Inkerman International AB, is formally owned by three companies based in Cyprus, Finland, and Hong Kong, respectively.

The Inkerman winery in Ukraine
The Inkerman winery in Ukraine

Sweden’s Foreign Ministry referred questions on potential sanctions violations to prosecutors and the Finance Ministry. Officials there declined to answer questions about Inkerman International and referred questions back to the Foreign Ministry.

Larisa Shimchuk, current director of Inkerman’s Russia-incorporated firm — Inkerman Vintage Wines Factory Ltd. — declined to comment. The company was formally sold by the Sweden-based Inkerman International AB in October 2019 to a St. Petersburg-based company called Optima JSC.

For shoppers perusing the website of German retail giant METRO, the largest supermarket chain in Ukraine, the first wine displayed under the Inkerman brand is one called Bastardo Old Crimea. A closer inspection of the label shows that the wine was produced in Sevastopol, despite Ukraine’s ban on imports from Russia-controlled Crimea.

An employee in METRO’s customer service department told Current Time that the label might show a “legal address” but that the wine was bottled in Nova Kakhovka.

When Current Time inquired with the supermarket chain about the wine’s origin, it was told that the wine was bottled in Nova Kakhovka, and that the label was probably a mistake.

An online listing of the Inkerman wine brand Old Bastardo Crimea. The label states that the wine was produced in Crimea
An online listing of the Inkerman wine brand Old Bastardo Crimea. The label states that the wine was produced in Crimea

An identical bottle of Bastardo Old Crimea can be found on the website of W!nestyle, a Russian chain of wine shops. The bottle’s label is exactly the same as that seen on the website of Ukraine’s METRO.

A W!nestyle customer-service representative assured reporters that the wine was produced in Crimea.

“It’s probably a marketing ploy. In general, we have very little from Ukraine in particular…. It’s all from Crimea,” the representative said.

Welcome To The Hotel Sevastopol

In the resort of Yalta in southern Crimea, the Hotel Sevastopol offers guests an outdoor swimming pool, a gym, and rooms with views onto the Black Sea. A video posted on YouTube last year showed a Russian tricolor affixed to the balcony of one such room.

But while the direct owner of the hotel is a Russian-registered company, its main beneficiary is a Ukrainian businesswoman who controls it via a chain of companies in the EU, which specifically prohibits opening new businesses and investing in Russian-controlled Crimea’s tourist industry.

The firm that owns the hotel, Pansionat Sevastopol Ltd, was incorporated in Russia in August 2016, well after the EU sanctions were implemented. That firm, however, is ultimately controlled by a Cyprus firm called TMM Holdings Limited, owned by Larysa Chyvurina.

Chyvurina owns a large share of a Ukrainian construction and development company called TMM, where she serves as chief financial officer. Her husband is comedian Andriy Chyvurin, who once told the online newspaper Segodnya that he had never returned to Crimea after it was seized by Russia.

“To be honest, I would feel uncomfortable even thinking of a trip there. I’m not sure if I will keep calm seeing numerous tricolors,” said Chyvurin, chief editor of League Of Laughter, a comedy show produced by current Ukrainian President Volodymr Zelensky’s production company.

Chyvurina confirmed to Current Time that she owned the Cypriot companies that control the hotel, and another TMM executive — Yuriy Isayev — also confirmed his small stake in the Cypriot firm that controls it.

But they denied conducting business in Crimea, saying they had to open the Russian firm Pansionat Sevastopol in order to keep the property after their Ukrainian holding lost control of its asset due to the Russian annexation.

“The Ukrainian company is not in violation of either EU or Ukrainian sanctions regarding the conducting of business in Russia. We aren’t [doing business],” Isayev said.

The Hotel Sevastopol in Crimea. (file photo)
The Hotel Sevastopol in Crimea. (file photo)

After Current Time produced evidence that the Cyprus-based TMM Real Estate Public Limited incorporated and invested nearly $1.2 million in the Russian firm Pansionat Sevastopol in 2016, neither Chyvurina nor Isayev responded.

A 13 percent stake in a Cypriot firm in the hotel’s ownership chain is held by the British firm BNY (Nominees) Limited, a subsidiary of Bank of New York Mellon.

BNY Mellon told Current Time that it managed assets on behalf of its clients and refused to comment on the issues related to TMM and possible violation of EU sanctions.

“BNY (Nominees) Limited holds assets purchased by clients on their behalf. We employ rigorous checks and screening to ensure we comply with international and local regulations wherever we hold assets on behalf of clients and, where necessary, raise any concerns with the relevant authorities,” BNY Mellon spokeswoman Sorrel Beynon said.

The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), which monitors and imposes U.S. sanctions, did not respond to a request for comment on potential sanctions violations, nor did Britain’s Office of Financial Sanctions Implementation.

Erich Ferrari, a Washington-based lawyer specializing in sanctions law, said BNY Mellon’s connection to the Crimean hotel’s ownership chain through its British subsidiary did not necessarily put the bank in violation of Washington’s Crimea-related sanctions.

“It might not be a violation. It’s very fact-specific, so I cannot for certain say, ‘Yes, this is a violation’ or, ‘No, it’s not.’ It would be determined by OFAC whether or not they believe they have a jurisdiction to impose a penalty, but not necessarily by a court,” Ferrari said.

There is no longer any mention of a hotel called Sevastopol on the TMM website. But the site does mention a project called TMM-Yalta.

Photographs for the project show the same building as the Hotel Sevastopol.

Source: RFE/RL

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