One of the main clients of an Estonian company which has hit the headlines due to its links with the husband of Prime Minister Kaja Kallas (Reform) and its continuing to do business in Russia is another Estonian-owned firm, Wolf Group, which is one of Russia's leading producers of polyurethane foam, the company itself reports.
The Wolf Group reported a bumper 2022, the year the current phase of Russia's war on Ukraine began, even posting record revenues of over €150 million.
The company has reportedly has become one of the leading manufacturers of polyurethane foam on the Russian market, thanks in part to expert service and consistent product quality, and the fact that its product range includes some items which have no alternatives on sale in Russia.
It also sells its output in Ukraine.
Wolf Group, formerly Krimelte, has a lengthy association with Metaprint via its Russian arm, going back around 20 years.
The Wolf Group's website states that the company has a production facility in Zhukovsky, just outside Moscow, and it has operated under its current name since last year – as noted the company was called Krimelte until last year.
ERR has been attempting to obtain answers to questions from the company's founders and board members Jaan Puusaag and Jaanus Paevälja, for two days as of the time of writing, but to no avail; the questions were: Whether the Russian plant is still in operation, what the effect, if any, the imposition of sanctions on Russia by the EU have been, and whether the Wolf Group is a client of Metaprint – the company at the heart of the current controversy – at this time.
ERR also asked Puusaag and Paevälja what their current understanding of the ethical aspects of doing business in or with Russia might be.
Wolf Group operates four production facilities, one of them in Russia
In 2022, the Wolf Group's U.S. market turnover exceeded the €5 million-mark, while through last year the company saw a 9 percent growth rate, with continued growth forecast.
The company reported a 2022 consolidated sales revenue in excess of €154 million, its highest in its operational history.
€105 million of this revenue derived from EU countries, while €49 million derived from outside the EU.
Net profit was reported at €7 million for 2022.
With its Russia operations, the company is engaged in the production of high-quality construction foam, Wolf's website states, adding it has a substantial production capacity. The company has pledged to help bring competitive products to the market as soon as possible.
Output is primarily foams, sealants, adhesives, cleaning and surface treatment products, and construction slabs.
Wolf Group says it sells its products in 69 countries, including Ukraine.
In the first quarter of last year, during which time the full-scale Russian invasion of Ukraine began, Wolf Group temporarily suspended its main operations in Russia, but in the second quarter, according to the report, business volumes recovered strongly.
The company says it considers representation in the Ukrainian market important, adding it wants to participate in rebuilding Ukraine's economy.
The Russian production unit, according to the group's report, has seen a reduction in production capacity of approximately 50 percent, due to extraordinary events and the imposition of EU sanctions.
In addition, economic activity in Russia has been reorganized to places risks at the level of the local business unit. This is the result of restrictions on the supply of raw materials and of options for payment by foreign suppliers, as well as the EU sanctions, the company says.
The supply of both raw materials and finished input products has been made independent of the parent company and of EU suppliers, and local economic activity has been localized, the company says, in order to minimize the group's financial risks.
"There are no plans to make investments in the group's Russian business units," the report adds.
Wolf Group East LLC is the Wolf Group company operating the Zhukovsky plant, and was founded in 2005, the company states.
The company has three more production plants, located outside of Russia.
Cooperation Between the Wolf Group and Metaprint, the company at the center of the current controversy, began 20 years ago, in 2003, when Metaprint started producing aerosol packaging for Krimelte, as the Wolf Group then was known.
Martti Lemendik, Metaprint's owner, had previously told ERR that they have not sent completed aerosol packaging body materials to their Russian factory after the sanctions came into force, but the sending of parts, namely the tops and bottoms of aerosol cans, is not subject to sanctions, and this has continued down to the present.
Lemendik also has a stake in Stark Logistics, the company which transports these parts to Russia, and also the company which the prime minister's husband, Arvo Hallik, had a just under 25 percent stake in.
That Stark had continued to provide logistics services to Russia 18 months after the start of the current invasion, along with the fact that the head of government's spouse had a significant stake in Stark Logistics even as the prime minister had been one of the loudest voices in calls for a tougher line on Russia, including disengaging from all business activities with that country, is at the heart of the current scandal.
This was exacerbated by revelations that two loans Prime Minister Kallas had made, of €350,000 and for €20,000, had been in part used by Hallik to set up a sister company, Stark Warehousing.
Hallik has pledged to sell his stake in Stark Logistics, for what the prime minister said was a peppercorn figure, but is retaining his stake in Stark Warehousing. The stake is a 30 percent one, held via Hallik's company, Novaria Consult.
Editor: Karin Koppel, Andrew Whyte