Investigation: Lukashenko’s Serbian associates evade Western sanctions

Brotherly relations between a Serbian oligarch under Western sanctions and the leader of Belarus, Alexander Lukashenko, and schemes to evade sanctions via EU-member Cyprus are exposed in a newly-published investigation by foreign-based Belarusian journalists.

The award-winning Belarusian Investigative Center, based outside of the country after a crackdown in July 2021, in partnership with the Organised Crime and Corruption Reporting Project (OCCRP), published on Tuesday (11 October) extensive details and documents attesting to the properties owned by the Serbian Karić family, as well as connections to Lukashenko.

Dictators’ friends

The Karić brothers – Bogoljub and Dragomir – initially became known as Slobodan Milosević regime sponsors. Their friendship with Lukashenko has yielded extremely lucrative benefits for their operations in Belarus, where they delivered several major real estate developments via their firm Dana Astra, wreaking urban planning havoc in Minsk.

Bogoljub Karić, a businessman and politician, who has even run for president of Serbia, was accused of tax evasion and money laundering in Serbia and fled to Belarus, obtaining a Belarusian passport in 2010. After the Serbian authorities dropped the case, he was able to return home. But in the meantime, his business in Belarus flourished.

Bogoljub’s brother Dragomir is a longstanding honorary consul of Belarus in Belgrade and the chairman of a Belarus friendship parliamentary group.

In 2009, he hosted Lukashenko at a popular Serbian destination Kopaonik. Dragomir has held official meetings with Lukashenko more often than other Karić family members.

His last appearance was in December 2021 when Dragomir praised Lukashenko, calling him ‘his president’ and saying: “Many western companies still work indirectly with Belarus via third countries. Because business is like water: you can’t stop it, it will find its way”.

Over the past ten years, the Karić brothers became one of the biggest real estate property developers in Belarus and siphoned off over €170m across the border thanks to a warm relationship with Lukashenko, whose daughter-in-law Liliya Lukashenko, married to his eldest son Viktar, used to work for the businessmen and was seen with them at several resorts.

Lukashenko even issued decrees releasing the Karić brothers from the necessary land auctioning procedure – costing the taxpayer an estimated $1 billion, according to OCCRP. And contrary to the norm, the taxpayer was forced to foot the bill for infrastructures such as water, electricity, and roads.

To add insult to injury, Lukashenko exempted the Karić business from certain other taxes, letting his friends roam free and make huge profits.

Western sanctions

In December 2020, the EU and the UK sanctioned Karić-founded Dana Holdings (Cyprus) and Dana Astra (Belarus). In August 2021, the USA branded the Karić family as “Lukashenko’s construction wallet” and followed suit with sanctions.

The sanctions targeted Bogoljub Karić’s son Nebojsa and companies Dana Holdings, Dana Astra, Emirates Blue Sky, and Dubai Water Front. Bogoljub Karić, in turn, got sanctioned by the EU in June 2022 for supporting Lukashenko’s regime and benefitting from this affiliation.

Getting around the sanctions

The EU announced the sanctions on 17 December 2020, but merely two weeks before that, Dana Holdings had sold the five Cyprus firms to a United Arab Emirates (UAE) company, Enterprise Developments Holding – a transaction that international experts believe is money laundering.

To evade sanctions, Dana Holdings sold the Cyprus firms to Enterprise Developments Holding in the UAE at €700m, which is in line with experts’ estimates of the actual value of their Belarus assets. However, the book value of the five companies was a mere €21,550 – 30,000 times less than the actual value.

The transaction thus gave Dana Holdings a gain of €700m. Unsurprisingly, by the end of 2020, the real money was still not in sight. Instead, the gain was classified as ‘other accounts receivable’, allowing Dana Holdings to draw considerable cash from their accounts.

According to the OCCRP experts, this transaction has ‘all signs of money laundering. Firstly, Dana Holdings had sold the firms just before the sanctions were announced. Secondly, the controlling stake in the companies was transferred from Cyprus to the UAE. Thirdly, the UAE beneficiaries are affiliated with the Karić family. And lastly, the experts are adamant the transaction has unlocked the ability of the Karić family to keep receiving dividends despite the sanctions.

“The idea was to create a paper trail for the money that legally allows them to access this €700m. This is important because the banks want to know where the money is coming from, so you can explain it is coming from a sale… Automatically, they access €700m in some country where they are not sanctioned, and receive dividends from the assets they hide”, forensic accountant Abdulwaḥed Alobaly is quoted as saying.

The Belarusian Investigative Center has also discovered that the Karić family is still immune to sanctions regarding real estate, including in Western Europe.

Courtesy of Transparency International UK, it was asserted that the Karićs own seven flats in central London and are registered to Dejan Lazarević – Bogoljub’s son-in-law.

Lazarević uses offshore companies to own the real estate assets. Company documents reveal that Lazarević is a ‘politically exposed person’.

According to international standards, this should serve as a red flag for financial organisations and watchdogs, as politically exposed people may have a corrupting influence given their status and authority.

The authors of the research have approached the Karić family to obtain their comments.

A family lawyer has responded, saying the allegations were ‘baseless’ and asked to postpone the publication by three weeks so that he would prepare a comment. The investigation’s authors gave him one week, during which he did not react, but said they are prepared to publish the Karićs’ official statement separately as soon as they receive it./Euroactiv