Corruption Watch in Belarus: Belarusian oligarch Mikalai Varabei and his EU property holdings

Despite coming under EU sanctions in late 2020 for being labeled an "oil billionaire" by Belarusian strongman Alexander Lukashenko, Micalai Varabei and his family have somehow managed to keep their wealth in the EU. This is evidenced by a new investigation by the Belarusian Investigative Center (BRC) and Dossier.

Who is Mikalai Varabei?

Mikalai Varabei is a Belarusian businessman who became known in the 2010s as the co-owner of Interservice, a Belarusian company involved in trade schemes to re-export Russian oil products in the early 2010s. Russian petroleum products were specifically categorized as "solvents" and "diluents" so that they could be exported through a legal loophole to the EU, thereby evading the export duties of the joint customs union between Russia and Belarus. When the scheme was uncovered, Russia demanded $1.5 billion in compensation from Belarus until Minsk could somehow mitigate the tension. In 2014, Interservice also acquired other major Belarusian companies, such as Absolutbank, an oil refinery in Minsk region, and increased its stake in the machine-building plant Amkodor. Varabey and his partner Alexander Shakutin later split the assets between them.

In late December 2020, the EU imposed sanctions against Varabei. Last June, two of his companies were also sanctioned by the EU, and this time both Varabey and his two companies were also sanctioned by the UK, Switzerland and Canada. In August 2021, the U.S. Treasury Department's Office of Foreign Assets Control also added Varabei and companies owned by or related to him to its SDN list.

The Warabei family's real estate

Like many other Russian and Belarusian oligarchs and government officials, Varabei and his family frequently visited Western Europe, and when Varabei came under EU sanctions, his wife and daughter's property came in handy. The family's largest property is a chalet in the southeastern Austrian region of Carinthia. This estate is not only a palace of 300 square meters, but also has 19,000 square meters of meadows, forests and gardens. Power Chemical Trading formally owns the property. However, the owner of the company is Varabey's daughter Katjarina Smušković. Katharina gained control of the company from her father, who in turn acquired it from Maximilian Christoph von Habsburg-Lotharingen. The firm's own records indicate that it has not had more than one employee since its inception. In 2020, its financial result was a net loss of €1.5 million, so this clearly indicates that it is a shell company set up only to own and maintain property. In addition to this chalet, the Warabei family also owns apartments in Vienna.

Varabey's connections to oligarchs, Swiss bank and security services

Maximilian Christoph von Habsburg-Lotharingen, from whom Varabey bought Power Chemical Trading, is a prominent Austrian businessman and president of the Austrian-Russian Friendship Society (ORFG), so he has close ties to Russian businessmen and government officials. Founded in 2000 by Florian Stermann, according to one BRC source, ORFG is "very notorious" for its ties to foreign intelligence services, such as Russia's GRU, and has long been a target of Western intelligence agencies. Also part of the ORFG was Austrian businessman Jan Marsalek, a man with "mysterious" connections to foreign intelligence services in Libya, Russia and Austria, according to a German investigative journalist. Together, Stermann and Marsalek ran the German Internet payment company Wirecard. In 2020, when the company was found to have a huge hole worth several billion dollars, Marsalek disappeared. His last trip was actually Belarus, from where he probably headed straight to Russia to seek protection from his Russian intelligence connections.

The former Russian oligarch Yakov Golodovsky now owns an Austrian investment company called Petrochemical Holding. However, 20 years ago he owned Russia's largest petrochemical holding company, Sibur, but sold all his Russian assets to Gazprom and moved to Austria after being released from prison in Russia. In a 2005 interview with the Vedomosti newspaper, Golodovsky said his move to Vienna was "not without the help" of his "Belarusian business partners," possibly a reference to Varabei's family.

In addition, Katjarina changed her last name to Smuszkowicz when she married Eugene Smuszkowicz in 2017. At that time, Evgeny managed the Russian, Central and Eastern European branch of the Swiss investment bank Julius Baer. In 2022, Eugeni was forced to resign from Julius Baer with the official reason "to protect the bank"; however, the BRC is confident that this resignation should be understood in the context of sanctions against Eugeni's father-in-law Mikalai Varabei and his ties to Ukrainian oligarch and politician Viktor Medvedchuk.

This BRC and Dossier investigation further emphasizes the close financial as well as security ties between Russia, Western countries and people who are Lukashenko's wallet, such as the Varabei family. Earlier BNE IntelliNews also reported on BRC investigations into corruption schemes in Belarusian private schools and real estate of civil servants in Bulgaria.