Switzerland’s Svizraa files protest against limiting its operations in Latvia & More Latest News Here – Up Jobs

The Swiss chartering and transportation company Svizraa S.A. has sent a letter to Latvia’s foreign affairs, economics and justice ministries in protest over their de facto prohibition on the company to conduct business in Latvia.

Svizraa – which works in the movement of fertilizers, grain, coal and steel, with a cargo turnover of more than 10 million tons per year – called the authorities’ decision to stop the operation of two of the company’s mineral fertilizers and ammonia trans-shipment terminals in Riga and Ventspils legally unfounded and demanded that their operations resume immediately. 

The company said the decision by Latvia’s state authorities has caused “catastrophic damages” to Svizraa. 

Svizraa’s letter states that on March 1 it acquired the Cypriot company Uralchem Freight Limited (UFL), which owns shares in two Latvian port operator companies in Riga and Ventspils – SIA Riga Fertilizer Terminal (RFT) and SIA Ventamonjaks (VA). According to Svizraa, the two infrastructure objects are in critical condition, which has caused the company to suffer major losses.

One of Uralchem Freight’s former indirect shareholders is Russian businessman Dmitry Mazepin, who was included on the EU’s sanctions list on March 9, following Russia’s invasion of Ukraine.

After Svizraa acquired UFL, VA and RFT, it applied to Latvia’s national registry to update information about the companies’ true beneficiaries. They requested that Mazepin, as the beneficial owner, be removed as the beneficiary and replaced with Aamer Atta Bhidwal as the new RFT and VA beneficial owner. Latvia’s registry, however, refused due to Mazepin’s inclusion on Europe’s sanctions list.

Svizraa has also drawn attention to the fact that its acquisition of Uralchem Freight Limited was concluded on March 1, a full eight days before Mazepin was sanctioned on March 9. The company believes that the refusal to register a new beneficiary has no legal basis according to Latvia’s legislation, as well as the EU’s. 

This was further confirmed by the fact that the change of ownership for Uralchem Freight Limited was also duly registered in the public registers of Cyprus, after which, it was renamed Svizraa Management Limited.

RFT and VA appealed the Register’s refusals to update information on the beneficial owner, while the relevant administrative cases are currently under consideration in the courts of Riga and Liepaja, with Svizraa involved in the proceedings as an interested third party.

Meanwhile, according to Svizraa’s appeal, the incorrect and outdated data currently registered in Latvia’s Register of Enterprises continue to cause catastrophic losses to both SIA Riga Fertilizer Terminal and SIA Ventamonjaks. 

None of these companies is included on any list of sanctions, but, due to the fact that the Latvian authorities have set actual restrictions on the operation of terminals, the majority of banks, insurance companies, service providers, suppliers of equipment and spare parts have refused to cooperate with RFT and VA. In addition, at the end of May, the Latvian State Environmental Service decided to suspend the operations of RFT and VA.

This has created a dangerous situation in Ventspils. Due to the refusal of banks to accept payments for electricity, 40,000 tons of toxic ammonia, which requires specific storage conditions, could enter the environment at the port. The situation was eventually resolved, but residents and the city’s authorities were subjected to several weeks of extreme stress. 

The situation has also worsened within RFT, where tens of thousands of tons of ammonium nitrate are still being stored. On March 11 Swedbank closed RFT’s accounts, which meant terminal employees could not their receive salaries for June and July. As a result, some workers did not go to work, leaving the dangerous cargo unattended. According to information provided by sources from RTF, it was possible to re-open the accounts for the payment of salaries due to the fact that these accounts had yet to be accessed by their listed beneficiaries.

Svizraa believes that the current situation is unprecedented mainly because the legal interests of the European parties, their employees and customers and the legal interests of the parties, are not respected. This is particularly aggravated by the fact that the operations of the terminals concern the supply of agricultural products, including fertilizers and materials, to third countries.

According to EU documents, companies that guarantee that they are not controlled by persons included on the sanctions lists must be granted permits by the relevant national authorities to do business in the respective country.

Svizraa has said that RFT, VA and Svizraa and its parent company – Quest Group DMCC – are not associated with any sanctioned individuals. Svizraa asked Latvia’s authorities to allow for the completion and registration of the acquisition of companies and has offered various ways in which the issue could be resolved.

Much of this is unfolding amidst extensive discussions about the impact of the sanctions on food security in the world. The EU made it clear on July 21 that the bans, even those that are part of the measures aimed at Russia following its ongoing unprovoked invasion of Ukraine, should not affect the sale of agricultural products in order to avoid further deepening the issue of starvation in underdeveloped Third World countries. 

“None of the measures adopted today, in view of Russia’s actions in destabilizing the situation in Ukraine, target the trade in agricultural and food products, including wheat and fertilisers, between third countries and Russia,” an EU statement to the media said.

On July 22, documents on the shipments of Ukrainian grain via the Black Sea and the export of Russian agricultural products and fertilizers were signed in Istanbul wherein the initiatives for the safe transportation of grain and food from Ukrainian ports and a memorandum on the agreement between the Russian Federation and the UN Secretariat on the promotion of trade in food products and fertilizers on world markets were agreed.

A few months earlier, the United States issued a general license for transactions with Russia related to the supply of fertilizers, food, seeds, as well as medical equipment and drugs. The question, however, of the financial, insurance and service companies that should service these transactions has yet to be resolved, it is clear that the green light has been given.

European Commission Vice-President and the EU’s Trade Commissioner, Valdis Dombrovskis, recently commented on the changes in the EU’s agricultural policy and Europe’s approach to policy green corridors amidst the sanctions regime. Among the issues mentioned by Dombrovskis, and the most vital for Latvia, revolves around the question of increasing food production. 

Food availability and rising food prices are currently a global problem, which is being acutely felt in Europe. For Latvia, boosting the fertility of its soil is impossible without mineral fertilizers.

As can be seen from the Svizraa case, from the current standpoint, fertilizers and raw materials, along with certain types of medicine and food,  should be included in the category of humanitarian aid cargo. Finding solutions to the uncontrolled increase in food prices is likely to be found in encouraging state authorities to support the transit and domestic trade of fertilizers and their components.

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