A Belarusian investigation unveils a trading scheme that circumvents sanctions

Aliaksandr Yarashevich, Buro Media.

In 2022, when Western sanctions targeted Belarusian entities for the country’s military support for Russia in its war of aggression in Ukraine, a large auto parts company had to scramble for alternative solutions to continue operating.

Armtek, an international holding of Belarusian origin, made a name for itself by selling auto parts for foreign cars. Despite sanctions, the trade continues, with companies related to Armtek supplying dual-use goods to warring Russia.

The Business

The Armtek group of companies was created by brothers Vadim and Oleg Grinkevich. They are among the top 20 most successful businessmen in Belarus. Since the mid-1990s, their business gradually gained recognition both at home and in the larger markets such as Russia and Kazakhstan. In Eastern Europe, Armtek is the largest auto parts distributor, with hundreds of stores across several countries, selling parts for passenger cars and trucks of European, American, Japanese, Korean, and Russian brands. The group’s annual turnover amounts to $1 billion.

Today, Armtek is a branched network of dozens of companies not only in Russia, Belarus, and Kazakhstan, but also in Germany, Ireland, Hong Kong, the UAE, and other countries. This group of companies does not produce auto parts but rather acts as an intermediary between the producers and the car shops. Until recently, the German company ATH&S GmbH was responsible for Armtek’s trade flows.

ATH&S GmbH has no website or social media presence, but it regularly publishes corporate reports in the German register, which were useful to understand the intricacies of the Grinkevich family’s business.

ATH&S GmbH head office is located in the German city of Bielefeld, while their 10,000-square-meter general cargo warehouse is in Poland, near Warsaw. In its 2022 report, the German company said it placed orders for the production of auto parts at other plants in 12 countries, mainly in China, Turkey, and the EU. Then it sold the finished parts in Eastern Europe through a distribution network. Under the brand name Stellox, ATH&S GmbH continued to serve as an intermediary.

The sole owner of the German company is Maria Taylor. Buro Media found that she is Oleg Grinkevich’s daughter.

Russia has traditionally been ATH&S GmbH’s key target market. There, it worked closely with another company, A.P.R., which is the Grinkevich family’s main asset in Russia. The company has 85 subsidiaries throughout the country and employs more than 5,000 people.

Customs data showed that in 2020 and 2021, A.P.R. purchased approximately a third of all imported auto parts from the German company ATH&S GmbH directly or on a commission, for a total of more than $100 million in two years. Business was gaining momentum, but the situation changed dramatically in 2022 when Russia attacked Ukraine.

Kazakhstani Brother

After the full-scale invasion began, Western car brands left the Russian market. The European Union (EU) has banned the sale of luxury cars and auto parts to Russia to deprive the Russian elite of the opportunity “to enjoy their lavish lifestyle while bombs fall on innocent people in Ukraine”.

The sanctions have become a threat to Armtek because Russia is the holding’s main sales market. Losing access to this market would result in substantial damage to the business, which had a pre-war annual turnover of hundreds of millions of dollars.

But the shrewd businessmen found a way out. They organized the supply of auto parts through third countries, which are not subject to economic restrictions. This scheme helped them earn even more than before the war.

In 2022, ATH&S GmbH and A.P.R. almost stopped engaging in direct deals. The former switched its key customer, and the latter changed its key supplier. Surprisingly enough, it turned out to be the same company from Kazakhstan, ​​ZapchastTrade. The Stellox brand name, however, remained and continued to travel to Russia, but now by roundabout routes.

Unlike Russia and Belarus, Kazakhstan is not subject to Western sanctions. Only a handful of companies headquartered in Kazakhstan have been targeted by the US and the EU. These were singled out for being used as a front for delivering goods in circumvention of trade restrictions. Data showed that this is exactly what happened to the Grinkevichs’ business.

In its latest report, ATH&S names ​​ZapchastTrade as its main customer. According to customs data, in 2022, ​​ZapchastTrade sold goods worth almost $20 million to A.P.R. in Russia, and in 2023, the volume grew to $60 million.

Unsurprisingly, ZapchastTrade is part of the Grinkevich brothers’ universe. Kazakhstan is thus playing a major role in their efforts to circumvent sanctions.

Sensitive Goods Through Third Countries

A.P.R. also buys auto parts from other countries, such as Turkey, China, the UAE. These jurisdictions are also used to circumvent sanctions. Last year, A.P.R. imported into Russia thousands of auto parts under sanctions, including brakes, suspension kits, radiators, shock absorbers, clutches, starters, generators, bumpers, mufflers, gearboxes, spark plugs, and mirrors. The total volume of imports last year exceeded $270 million.

One particular category of auto parts that A.P.R. imports into Russia are bearings. These are considered dual-use goods that could be employed in military equipment on the battlefield and are under a special sanctions list.

“The EU and its international partners responded to Russia’s war of aggression against Ukraine on 24 February 2022 with massive and comprehensive restrictive measures. The sectoral sanctions aim at curtailing Russia’s ability to wage the war, depriving it of critical technologies and markets and significantly weakening its industrial base," the European Commission said in a statement.

Based on customs data, last year A.P.R. imported over 17,000 bearings of European origin into Russia in circumvention of sanctions. The total amount of deliveries exceeds $340,000.

This year, A.P.R. continued to purchase bearings through third countries. Customs data revealed that the main supplier is the Emirati company Texco FZE, which was established in May 2022, shortly after the full-scale invasion. Its CEO and Managing Director are or were employed by Armtek.

"The Emirati company was established to circumvent sanctions. Key executives who manage supplies are currently based in the UAE, ensuring work with suppliers in Belarus and Russia. This applies to both Stellox and other brands," a former employee of Armtek told Buro Media.

The United Arab Emirates has now become a haven for Armtek, as well as other companies trading banned goods with Russia and Belarus, because of its weak enforcement of Western sanctions.

NOTE: The text was adapted from Aliaksandr Yarashevich’s original article that appeared at Buro Media’s website. The article was prepared with the support of OCCRP ID and based on data provided by CyberPartisans. Vlast and the Lithuanian investigative center Siena assisted in the reporting.

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