Vélfag Faces EU Sanctions Amid Russian Ties
Vélfag has become the first Icelandic company to face trade sanctions imposed by the European Union on Russia, primarily due to its connections with Norebo, a company owned by Russian billionaire Vitaly Orlov. While Vélfag had previously managed to operate under a temporary exemption from the Ministry of Foreign Affairs, that reprieve has recently been revoked, as confirmed by the Ministry’s press office.
A Controversial Acquisition
The saga started in 2022 when Norebo acquired a 50% stake in Vélfag, aiming to help the company establish a foothold in the Russian market. The following year, Titania Trading Limited—owned by Orlov’s son, Nikita—secured around 80% of Vélfag. Controversially, this transaction occurred just days before Norebo was blacklisted by the EU, and Nikita sold Vélfag to businessman Ivan Kaufman. However, the details surrounding this sale remain murky, raising suspicions from the Ministry.
The Ministry’s examination revealed that the purchase price in the agreement was cited as €12 million, but critical details regarding payment terms were notably absent. According to Arion Bank, no payment was made; instead, the transaction appeared to be a mere mutual settlement within the Orlov family. “These terms defy normal business practices, and it remains inadequately confirmed how, if at all, payment was made,” stated the Ministry.
Questions Surrounding the Sale
Upon Nikita Orlov’s sale of Titania to Kaufman, the purchase price suddenly dropped to a meager $750,000. The Ministry found this amount suspiciously low, especially considering Kaufman’s assertion that this represented only a fraction of the actual cost, with the remainder to be settled through a debt assumption. Despite repeated requests for clarification, documentation regarding this arrangement surfaced only six weeks after Vélfag’s accounts were frozen.
As a result, the Ministry suspects Kaufman may merely be a figurehead. Vélfag has not provided adequate evidence to prove that Norebo is not the company’s true owner, contributing to the ongoing freeze of its assets.
Troubling Connections
The Ministry also unearthed alarming associations linking Kaufman to Russian security services. During his tenure with BiZone Cyber Innovations from 2019 to 2022, Kaufman served as both manager and power of attorney holder for a company implicated in providing cybersecurity services while operating under a license from the Russian Federal Security Service (FSB). Such ties raise eyebrows, particularly considering the FSB’s role in Russian governmental operations that threaten stability across Europe.
Vélfag has since clarified that Kaufman is not an employee but rather serves as the company’s board chairman, attributing the decision to liquidate to him. Kaufman rejects the Ministry’s implications regarding his past associations, describing them as unfounded.
Financial Maneuvering Under Scrutiny
In its decision, the Ministry highlighted other activities by Vélfag that it believes serve to undermine the exemption’s objectives. Notably, the company resumed using inactive accounts at Landsbankinn merely two days after its funds were frozen by Arion Bank. These accounts facilitated transactions that should have remained halted.
While the Ministry allowed Vélfag to continue receiving customer payments through Arion Bank, it confirmed that Titania’s loan facility would remain frozen. Vélfag’s failure to report using another banking channel is viewed as an attempt to sidestep regulatory oversight.
Leadership Ties in Question
Additionally, the Ministry has expressed concern over Alfreð Tulinius, the chairman of Vélfag, suggesting he has deeper ties to Russia than previously acknowledged through his firm, Nautic ehf. Vélfag sought permission to conduct regular business with Nautic without needing prior Ministry approval for each payment. Nautic is majority-owned by Alfreð, complicating the narrative further.
Investigations into past contracts reveal Nautic designed a new ice fishing trawler for a Russian company affiliated with Norebo. Alfreð’s recent appointment to Vélfag’s board, via Titania (then controlled by Nikita Orlov), raises additional flags regarding potential conflicts of interest.
The Ministry firmly rejects claims that Alfreð lacks connections to Russia and notes that he has actively influenced key company decisions, effectively stepping into roles typically held by the managing director. This interconnection with entities subject to EU sanctions adds further complexity to an already precarious situation.
The story is still developing.
