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Company part-owned by Estonian PM's husband continues deliveries to Russia

Arvo Hallik and Kaja Kallas.
Arvo Hallik and Kaja Kallas. Source: Siim Lõvi/ERR

Stark Logistics, a transport company partly owned by Prime Minister Kaja Kallas' (Reform) husband Arvo Hallik, has continued doing business with Russia since the start of the full-scale invasion of Ukraine. This is despite government criticism of companies that have done so.

Last week, Kristjan Kraag, CEO of Stark Logistics, told ERR that the company had practically stopped transporting freight to Russia, though had not completely ceased its operations.

"Customers in Estonia, our haulage partners, have dialed back. Our volumes have fallen so much that we've been forced to reorient our activities. We have trucks going to the Baltics, Scandinavia and Poland instead," Kraag said.

In addition to almost all goods groups being covered by sanctions, the company has not made an effort to maintain its business in Russia. The few trips we make now are largely the last loads. "A part of it is moving factory fittings out or bringing them back home so companies can wrap up," he remarked.

Deliveries to Russia, meanwhile, have been continuing since February 24, 2022.

The CEO did not want to say how many deliveries the company has made to Russia during that time.

Below, are the answers to questions, which were originally intended for company part-owner and board member Arvo Hallik, but were answered by CEO Kristjan Kraag.

At the same time, Hallik told ERR, that as CEO, Kraag follows the guidelines laid out by the company's supervisory board, including those related to the direction of the business.

Can you specify what type of deliveries Stark Logistics makes to Russia? And what kind of factory residuals are we talking about?

We are not able to specify the specifics of the deliveries by customer. It is a question of moving stock residues. That is, goods that are not subject to sanctions.

To what extent have you delivered to Russia between February 24, 2022 up to today?

I do not wish to comment.

Your company still has a separate logistics manager for Russia, why is this necessary? What are their current tasks? (Up until last week, Stark Logistics' website listed its business focus as Western Europe and Russia. Under this, it stated that the logistics manager for Russia was Kristina Ermakova, who is now listed under its Western Europe business line - ed.).

We do not wish to comment on the company's HR policy and assignment of people. We had outdated information up on the web. We have restructured our operations and made the necessary corrections for the time being.

After the start of the war in Ukraine, did you, as a member of the board and as an owner, not have the idea that you might completely stop doing business in Russia or with Russia? Please explain your response.

Historically, our deliveries to Russia have been related to the supplying of groups based in Estonia. As the beneficiaries of these deliveries are not Russian citizens, the deliveries we carry out do not involve spending any money in Russia. If these deliveries had been ordered by a local Russian carrier, the Estonian customer would have been paying directly to the beneficiaries in Russia for these services.

Up to two deliveries per week

In addition to the earlier response, within a few hours, Kraag sent an additional reply, which had been coordinated with the only customer the company still delivers to in Russia.

"We are a logistics company that previously exported or brought goods, products and equipment from Russia to our Estonian or international customers. Estonia's geographical location meant that, according to the Estonian Logistics and Transit Association (LTA), Western trade with Russia was an important part of our economy. Before the war, it was normal for us to make 60 to 70 deliveries a month to and from Russia. Today, this has been reduced to around one or two deliveries a week, all of which are related to one customer – the Estonian company AS Metaprint, which has also spoken publicly to the media about the progress of closing down its operations in Russia. This data and the content of the deliveries is also available to the Estonian Tax and Customs Board. This company is in the process of winding up its business in Russia, they have not signed any new contracts, and they are only fulfilling expiring contracts – producing aerosol containers, a significant part of the refining of which takes place in Estonia, and where the final customers are multinational groups. We have also set clear rules for supplying this one customer, with whom our company has a partially overlapping ultimate beneficiary, Martti Lemendik. No services will be bought from Russia, the trucks are only fueled in Estonia, and so on," the additional commentary reads.

Asked whether Stark Logistics has any plans to stop doing business with Russia, Kraag said, "We have only one Estonian customer that we are helping to fulfil its previous, valid and legal international contracts with Russia, and that is AS Metaprint. We are not creating new customer relationships for deliveries to Russia."

Metaprint is one of Europe's largest producers of steel aerosol containers. Founded in 1995, the Estonian-owned company has plants in Tallinn and Pärnu, as well as in the Netherlands and Russia.

Kaja Kallas' €350,000 loan to her husband

In early June, ERR reported that Estonian Prime Minister Kaja Kallas' (Reform) annual declaration to the Estonian Tax and Customs Board revealed that she had lent €350,000 to Arvo Hallik's company Novaria Consult. According to the Estonian business register, the company provides financial services.

Hallik told ERR in June that Novaria Consult was a holding company whose main activity relates to financial instruments and holdings. According to Hallik, together with his wife, the prime minister, he has invested in several companies via Novaria.

Hallik is the sole shareholder of Novaria Consult OÜ. The company owns 24.8 percent of Stark Logistics AS and 30 percent of Stark Warehousing OÜ.

Stark Logistics' 2021 annual report showed the company made sales to Russia worth €572,038 that year, and €572,474 in 2020.

The company's annual report for 2022 does not include figures on sales to Russia for that year or for 2021. The report states that in 2021, the company made €572,038 worth of sales to the U.K., the same amount as the sales to Russia as outlined in the company's 2021 annual report.

Kallas: There must be no business dealings with Russia

In December 2022, Prime Minister Kaja Kallas told news portal Delfi that there must be no business done between Estonia's state-owned companies and Russia. At that time, Kallas said that she did not consider it right for state-owned rail transport company Operail to want to start transporting Russian nickel, which is not subject to sanctions, in Finland. She noted that the government had also issued a directive to the company to this effect.

"[The government] has given clear instructions that neither Operail, nor any other Estonian state-owned company must have any business with Russia," the prime minister said.

Kallas: My husband has no clients from the Russian Federation

Early Tuesday morning, ERR forwarded a request for comment to Prime Minister Kaja Kallas via the government's communications office early. As of midday on Wednesday there had been no response.

On Wednesday afternoon, Kallas commented on the issue on social media.

"ERR published a news item today, suggesting a company connected to my husband was doing business in Russia. I would like to emphasize that my husband has no clients from the Russian Federation," Kallas said.

"I remain of the view that all trade and business with Russia must cease for as long as the Russian invasion of Ukraine continues. My husband has a stake in a logistics company. He has explained that this company is helping one of his Estonian clients to end its production activities in Russia, in accordance with the law and the sanctions. Any further questions will have to be addressed to those companies," Kallas wrote.

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Editor: Michael Cole

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