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Companies set up by mysterious Russian-Finnish billionaire owe millions in unpaid taxes
Businesses set up by the reclusive Russian-Finnish billionaire Gennadi Timchenko owe the Finnish state in excess of EUR 14 million in unpaid value-added and supplementary taxes.
Oil traders IPP International Petroleum Products owe the taxman EUR 2.2 million, and the holding company Merropoint EUR 12.1 million.
The unpaid VAT sums relate to purchases, use, and sales of aeroplanes. The taxman has also imposed supplementary taxes on the two companies.
In July 2002 and again in July 2004 Merropoint purchased jet aircraft, listing a charter flight company called Airfix Aviation as their operator.
In the Administrative Court’s view the purchase in question falls under the corporate acquisition category, for which VAT has to be paid.
The Administrative Court also ruled that Merropoint was not engaged in international aviation operations and furthermore the company had agreed to the supplementary tax requested by the taxman.
According to law, VAT does not have to be paid if an aircraft is sold to be used by an enterpreneur whose primary business is international aviation. A similar situation recurred in February 2004, when IPP sold an aircraft to Merropoint.
In the Administrative Court’s view the holding company Merropoint does not practice international aviation, and therefore IPP should have paid VAT on the transaction.
Next the matter will be processed by the Supreme Administrative Court, to which the companies have filed an appeal against the Helsinki Administrative Court ruling.
Because of the tangled ownership arrangements and insufficient Trade Register information, the ownership connections of the companies are difficult to unravel.
What is known for sure is that Timchenko acted as the CEO of IPP, which is registered in the City of Espoo, at least until 2001.
According to the IPP chairman Sven A. Olsson Timchenko still has a “substantial interest” in the company. Olsson refuses to reveal how much of the IPP stock Timchenko owns.
Once Timchenko owned Merropoint in its entirety, but again there is no certainty of his present ownership share. At one point Merropoint owned a quarter of IPP.
IPP in turn owns more than 80 per cent of Airfix Aviation’s shares. Timchenko sits on the Airfix Aviation board.
Timchenko is a significant player in the international oil trading business.
Together with the Swedish businessman Torbjörn Törnqvist and a secret St. Petersburg partner, Timchenko owns one of the world’s largest oil trading companies, called Gunvor.
According to The Economist, Gunvor’s net sales are in the region of EUR 50 billion.
Gunvor’s main client is the Russian government’s energy giant Rosneft, which is one of the largest businesses in the whole country.
At one time Rosneft acquired the operations of the oil company Yukos, owned by Mikhail Khodorkovsky, who is now serving a long prison sentence for tax evasion.
Khodorkovsky has denied the accusations. In his view it was all just a political witch-hunt.
Towards the end of last year, the news agency Reuters reported that Rosneft had unexpectedly signed a contract with IPP on trading six 100,000-tonne consignments of crude oil from the Kozmino oil port on the Pacific Coast of Russia.
Compared to Gunvor, IPP is a very small company indeed: In 2008 its net sales in Finland were EUR 12,000. Thanks to the Rosneft deal, IPP’s business is expected to grow vigorously.
According to Olsson, there are also business activities between IPP and Gunvor.
Gennady Timchenko moved to Finland on the collapse of the Soviet Union in 1991.
He and his wife were granted Finnish citizenship in 1999.
He has spent the last nine years living with his wife and children in Cologny in Switzerland.
Timchenko also has a family summer home in Taipalsaari in south-eastern Finland, to which allegedly the Russian Prime Minister Vladimir Putin has been a visitor.