Izovac Photonics, a subsidiary of a Belarusian high-tech company in Lithuania, attempted to transfer 1.2 million euros received from the sanctioned Russian state-owned defence conglomerate Rostec after the start of the war in Ukraine, LRT Investigation Team has found. These funds were frozen.
Izovac Photonics, a branch of the Belarusian high-tech company Izovac, was established in Lithuania at the end of September last year with the assistance of Invest Lithuania, the government’s foreign investment promotion agency.
Izovac is a group of companies operating not only in Belarus but also in Russia and Taiwan. It focuses on photonics technologies used in screens, solar panels, lasers, and microelectronics.
“There is almost no market for our products and technologies in Belarus for a variety of reasons, mainly lack of investment, high-tech manufacturing, and science.” Vitaly Khomich, Director of Izovac Photonics, told the LRT Investigation Team.
According to him, the company expects to grow in Lithuania because transactions with international clients have become impossible when working from Belarus and Russia.
But according to data collected by LRT Investigation Team, Izovac Photonics sought to expand its business in Lithuania with money received from Rostec, a Russian state-owned defence conglomerate included in the EU sanctions list.
On February 24, when Russia invaded Ukraine, an attempt was made to transfer 1.2 million euros from Izovac Engineering, a related company in Russia, to Izovac Photonics in Lithuania. This money was received from a research institute Polyus, which is owned by Rostec.
Khomich confirmed that the loan agreement between the Russian and Lithuanian companies was signed on the first day of Russia’s war against Ukraine. The aim was to “evacuate” money earned in Russia and use it to develop business in Lithuania.
“On the morning of February 24, when the news [about the war] broke out, Izovac’s board decided to move all the money out of the Russian company’s account very quickly. This could be called a rescue and evacuation of money from Russia,” he said.
“The payment was made in the form of a loan agreement, as this is the fastest way to transfer money. Nobody is planning to repay this loan or to make any payment to Russia,” Khomich added.
According to him, most of the company’s money was transferred to Lithuania, while the rest was moved to other firms related to Izovac.
Lithuania’s Financial Crime Investigation Service (FNTT) confirmed to the LRT Investigation Team that it seized the funds of the Belarusian company due to the sanctions against Rostec and its CEO Sergey Chemezov, who is close to Russian President Vladimir Putin.
“Because the funds have been transferred to the account of the above-mentioned company from a firm related to Sergey Chemezov, a citizen of the Russian Federation, who is on the EU sanctions list, a decision was made to freeze these funds,” FNTT said in a written response.
According to Khomich, Izovac Photonics is still planning to expand in Lithuania, transferring around 30 of its employees from Belarus to the country.
In his words, the company was considering expanding in the EU even before the rigged Belarusian presidential elections of August 2020.
“We had been thinking about expanding the group and setting up a company in the EU for a long time. We looked at a number of countries and decided to choose Lithuania,” he said.
Lithuania’s Economy and Innovation Ministry invited skilled Belarusian specialists and businesses to move to Lithuania in the wake of the pro-democracy protests and political persecutions in Belarus after the 2020 election.
According to the data from Invest Lithuania, 44 companies have moved to Lithuania from Belarus since then. In early April, Economy and Innovation Minister Aušrinė Armonaitė announced that the scheme was being put on hold.
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