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2021.10.29 09:00

Lukashenko's metalists: Minsk regime makes millions via steel company in Lithuania – LRT Investigation

Rūta Juknevičiūtė, Indrė Makaraitytė, LRT Investigation Team, LRT.lt2021.10.29 09:00

While Lithuania is considering sanctions on the Belarusian fertiliser giant Belaruskali, another government-controlled company – Belarusian Steel Works (BMZ) – is generating hundreds of millions of euros in revenues in the country. Through the BMZ branch in the northern Lithuanian city of Šiauliai, Belarus exports steel products to other European countries. LRT Investigation Team reports.

BMZ was not hit by sanctions after the disputed 2020 presidential elections in Belarus. On the contrary, the steel company’s exports to the EU has increased. The Lithuanian BMZ branch – BMZ-Baltija – is also overseen by Yury Khilinsky, who was previously appointed to the regional government positions by Alexander Lukashenko.

Read more: Due to US sanctions, Lithuania to cut off Belaruskali exports

Trade via Lithuania

BMZ is one of the five largest Belarusian state-owned companies. It is responsible for 15 percent of Belarusian exports. The company is a valuable source of foreign currency reserves for the regime.

Meanwhile, Lithuania is one of the top five export directions of the Belarusian Steel Works. A joint Belarusian-Lithuanian company BMZ-Baltija was founded in Šiauliai in 2008. It is involved in the wholesale of Belarusian metals and metal ores.

BMZ controls 55 percent of BMZ-Baltija’s shares. The company has 12 employees in Lithuania. In 2020, it generated 174 million euros in revenues from selling Belarusian metal products.

Read more: EU hit Belarus regime lifeline running via Lithuania – but to what effect?

Andrius Šedžius, a Lithuanian businessman and former member of parliament, was one of the founders of BMZ-Baltija. In 2007, together with his business partner Artūras Gavėdas, Šedžius established the company Steelland which supplied Belarusian metal products.

In 2008, BMZ-Baltija was founded, with Steelland keeping 45 percent of its shares.

“Together with my business partner, we imported metal products from Belarus,” Šedžius told LRT Investigation Team. “We suggested that we could serve as representatives of the Belarusian Steel Works in the Baltic region and Scandinavia. After long negotiations, BMZ agreed and established BMZ-Baltija under the condition that they owned 55 percent of shares.”

According to Šedžius, he withdrew from this business when he became a member of the Lithuanian parliament in 2008.

But according to data of Lithuania’s Centre of Registers, Šedžius served on the BMZ-Baltija’s board from 2008 until October 2012. He was an MP throughout this entire period.

Read more: EU's 5th Belarus sanction package to target officials involved in migrant trafficking – official

In the words of Šedžius, serving on BMZ-Baltija’s board was only a “formality”. He transferred all his company shares to Gavėdas in 2008 when he was elected to the parliament, he said.

Gavėdas has served as director of BMZ-Baltija since the company was founded in 2008. He is also the sole shareholder of Steelland.

Minsk’s man in Lithuania

In the summer of 2019, Lukashenko initiated reforms in state-owned enterprises, replacing some executives. At that time, Dmitriy Korchik, a former Belarusian industry minister, assumed a leadership position at BMZ.

The Lithuanian branch of BMZ also received support from Belarus. In 2019, Yury Khilinsky, a former Belarusian official, moved to Lithuania with his family and started working at BMZ-Baltija.

Khilinsky received a permit to come to Lithuania as a “highly skilled employee”. He was employed by BMZ-Baltija as a sales manager, although the Belarusian registry states that he holds the position of the company’s deputy director.

Before moving to Lithuania, Khilinsky was head of the Bobruisk Pervomaisky district administration. He was appointed to the office by Lukashenko in 2012.

The director of BMZ-Baltija, Gavėdas, said that he invited Khilinsky to come to Lithuania on his own initiative and that he was not instructed to do so.

“We aren’t under any pressure to employ anybody. The director decides whom to hire. It is difficult to find specialists knowledgeable in metallurgy in Lithuania,” Gavėdas told the LRT Investigation Team.

But according to Khilinsky’s biography, he held only one position related to metallurgy, back when he worked as an engineer at the Mogilev elevator construction company at the beginning of his career. Later, he held different positions at different governmental institutions.

“I don’t know… But he knows those things,” Gavėdas said when asked where Khilinsky obtained experience in metallurgy.

Khilinsky did not answer his phone and said through his wife that he did not want to talk to journalists.

In 2017, the Belarusian Development Bank issued export loans to BMZ-Baltija. The loans were used to prepay for rolled metal sold by the Belarusian Steel Works. Similar loans were also issued in 2018 and 2019.

Gavėdas refused to comment on BMZ-Baltija‘s liabilities, saying these were “business secrets”.

No sanctions

Despite being an important Belarusian state-owned company, BMZ escaped sanctions after the 2020 presidential election. The Belarusian Steel Works was not included in the sanctions list even after it started harassing its employees.

After the election, some BMZ workers joined the nationwide strikes on August 10-12. Riot police were sent to the factory. BMZ fired the company’s union leaders. Last February, the court sentenced three BMZ employees to up to three years in prison. Others did not wait for their sentences and left Belarus. Around 35 former BMZ workers currently live in Lithuania.

Last year, BMZ reported record export volumes. In 2020, the company’s turnover was more than 925 million euros. It has increased its export to 13 EU countries.

BMZ exported more than 925,000 tons of metal products to the EU in 2020. The company doubled its export volumes to Spain, Slovenia, and France. Exports to Austria, Ireland, Romania, and Finland increased by a third.

Exports constitute around 85 percent of BMZ's production, with Lithuania being one of the main export destinations. Around 7 percent of the Belarusian Steel Work’s exports come to Lithuania, with 18 percent going to Russia, 10 percent to Germany, and 9 percent to Egypt.

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