Russian cigarette king guided millions through the Netherlands, just before sanctions

• Gidi Pols

  editor Economics

Russian billionaire Igor Kesaev, who has ties to the Kremlin and the Russian arms industry, guided millions through the Netherlands more than a month after the Russian invasion of Ukraine (February 24, 2022). Sanctions were imposed on him by the EU on April 8.

This is evident from the temporary annual report of his Dutch letterbox company that was recently submitted to the Chamber of Commerce. In this Hague company he keeps his shares in Megapolis, the largest distributor of cigarettes in Russia.

Megapolis does not only belong to Kesaev, cigarette manufacturers Philip Morris and Japan Tobacco also have large shares. The Russian owns about 40 percent through his Megapolis Investment BV.

This provides him with annual profit distributions. In 2021, for example, around 80 million euros. Through the Netherlands, Kesaev transferred those millions every year to a small company of his in Cyprus.

In 2022, that flow of money came to an end – at least partially. A month after the Russian invasion of Ukraine on February 24, Kesaevs Haagse bv received a profit distribution of almost 8 million euros. Almost all that money ended up in Cyprus afterwards.

Sixteen days later, the EU put the Russian on the sanctions list. The EU accuses him of having close ties with the Russian government and security services and of being a major shareholder in an arms factory that supplies the Russian army.

Due to the sanctions imposed on Kesaev, the assets in the Hague company have been frozen. From that moment on, he or she may no longer receive or pay out winnings. About 650 million euros in assets are therefore ‘trapped’ in the Netherlands.

Another consequence is that PwC – the company’s accountant – no longer audits the annual accounts. Kesaev also failed to find another accountant for his Dutch piggy bank. The annual report that the company submitted to the Chamber of Commerce is therefore formally a temporary version.

A Dutch director of the company is still employed, according to Chamber of Commerce data. The same applies to a Russian director. The third director was also Dutch, but he resigned in 2022.

In the same year, the company paid out tens of thousands of euros to its directors.