Thursday, October 29, 2020

Finland to probe Trafigura over allegations of money laundering through tax havens

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Government plans an investigation into Trafigura, a minority owner in state-owned mining firm Terrafame, amid suspicions that it laundered hundreds of millions of euros through tax havens, according to Economic Affairs Minister Mika Lintilä (Cen).

The revelations emerged from a major leak of confidential documents to US news site Buzzfeed, indicating that big banks and the international financial system were used to launder money worldwide.

“These kinds of suspicions are extremely unfortunate. They should not be part of business culture,” Lintilä said during a visit to Oulu on Monday afternoon.

He added that government has launched an investigation into the Singapore-based company.

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“The ownership steering unit has a probe ongoing. I am relying entirely on the information reported by Yle. I have no information about the possible irregularities that are now public,” Lintilä added.

Assurances of due diligence in 2017

Trafigura is a commodities trading company with operations in dozens of countries. The firm became a significant investor in Terrafame, when it snapped up a 30-percent stake in the then-beleaguered mining firm in 2017. The Finnish government remained a majority shareholder with 70 percent ownership in the mining outfit.

Mika Lintilä was Economic Affairs Minister in 2017, when Trafigura came forward to plough much-needed cash into the loss-making nickel mine in eastern Finland. The deal was brokered amid media reports about Trafigura’s ties with Russia, suspected tax evasion and toxic waste scandals.

At the time, Lintilä vowed that government had conducted background checks on its new investment partner. He said that an external consultant had been hired for the due diligence but did not disclose the name of the firm, citing trade secrecy. On Sunday, Lintilä said he did not recall anything about the due diligence report.

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Yle had previously reported on Trafigura’s shady operations, including allegations of bribery in its oil trading division as well as market manipulation.

Majority owner: Allegations don’t affect Terrafame

On Monday, Terrafame’s majority owner, Finnish Minerals Group, which represents the Finnish state, said that the new suspicions of corruption swirling around the company will not affect the mine’s operations.

“This is not related to Terrafame per se. When Trafigura became an owner in 2017, the related issues and tax considerations were carefully investigated. Based on the reporting by Yle so far, this entire manner has nothing to do with Terrafame’s operations in Finland,” Finnish Mineral Group CEO Matti Hietanen said.

Hietanen added that Trafigura’s background was “carefully and juridically vetted in accordance with normal [business] acquisition protocol.”

“The investigation was conducted in cooperation with law firms and investment banks. In Trafigura’s case several law firms were involved in both Finland and London,” Hietanen noted.

The mining boss said that Trafigura is closely involved in developing production at the mine.

“It has also brought additional expertise to the operation. For example, the initiative to begin constructing a battery chemicals plant came from Trafigura.”

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