A Dawn Raid in the Archipelago

The day started with what sounded like a rare but not unique message on Twitter by the Finnish National Bureau of Investigation, the KRP:

The current search by the KRP in the premises of a company located in the Turku Archipelago may attract attention amongst boaters and holidaymakers.

However, the archipelago has seen some interesting developments during the last few years, and the innocent sounding tweet quickly caught the attention of Finnish security wonks. The developments of the day would soon show that the knee-jerk reaction was warranted.

But let’s start from the beginning: Airiston Helmi Oy was founded in 2007 as a non-public stock company for trading in real estate, and a number of the key persons behind the company were Russian nationals. The company has had just a handful of employees, and has consistently been showing figures in the red (as far as I know, it has never managed a single positive year). What has set the company aside from other failing attempts is however that a number of the real estate deals have taken place at strategic locations in the archipelago outside of Turku in southwestern Finland. The main location is Ybbersnäs in Pargas on the Finnish mainland, with another key location being the island of Säckilot.

Location of Säckilot

The sea lane to Turku and Naantali passes just four kilometers south of the island, with a direct line of sight in the south-east. The ports of Turku and Naantali are of vital importance to Finland in peacetime, but would be of even greater importance in wartime thanks to their location as far away as possible from the Russian border. Naantali also houses one of Finland’s two petroleum refineries, with a daily production capacity of 50,000 barrels.

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Naantali refinery. Source: Markus Rantala/Wikimedia Commons

However, companies and individuals buying houses in the Finnish archipelago for vacation homes are nothing out of the ordinary, and the large archipelago coupled with winding sea lanes means that quite a number of these are situated “strategically close” to the routes. Russian investments in Finnish real estate has also been rather high, owing to a number of reasons including Finland being a popular destination for Russian tourists and the stable markets coupled with rule of law making Finnish real estate an attractive investment opportunity for what used to be described as the emerging Russian middle class. The level of investment has gone down with the oil price, but numerous objects are found all over the country. 2016 an official report noted that a large number of Russian-owned real estate were situated in strategic locations and/or had other suspicious indicators connected to them. These included not only the real estate in the archipelago, but also locations close to airports and key mobilisation routes. The term “Hybrid War” was mentioned.

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M/S Hessu, former Kala 5, transporting a concrete mixer. Note decidedly non-naval colouring and new name. Source: MKFI/Wikimedia Commons

However, for Airiston Helmi things had turned even stranger when they in 2010 through the Finnish company Rederi Ab Fakir (part of the Alfons Håkans Group, a major player in Finnish towage and general shipping) bought two surplus Finnish naval vessels, the workboat Kala 4 and the launch Hakuni. When the Finnish Navy sells older vessels, they demand that the buyer repaint the vessel and change the name to avoid people mistaking them for active duty vessels. This is even a requirement when the vessels are operated by the naval reserve, but in this case Airiston Helmi was in a hurry and Rederi Ab Fakir left the vessels unpainted. The name was also kept, as Airiston Helmi “preferred it” over Rederi Ab Fakir’s suggested Kronos. Notable here is that in this case Airiston Helmi did nothing illegal, as the contract with the Navy only bound Rederi Ab Fakir to change the colour and name (it wouldn’t be the last time the Alfons Håkans Group and the Navy had a bit of a quarrel). Kala has however been modified and stripped of paint since, as is visible in photographs from today’s raid.

But things didn’t stop there. Airiston Helmi soon got into trouble with the local authorities, as the single-family homes they were building in Ybbersnäs and another location in Pargas both featured eight bedrooms each with their own bathroom, in what looked suspiciously much like a small hotel layout. The fact that one of the houses was actually marketed as one further raised eyebrows, and the company had to give official explanations to the city. The helicopter traffic between Ybbersnäs and other locations, mainly Latvia and Helsinki airport, in turn caused the neighbors to complain, but the complaints were dismissed. In addition questions have been raised regarding the exemptions that the company has received for buildings and dredging (though it should be noted that Finnish building exemption policies are notoriously chancy), as well as if they actually have permission to do some of the works that have been performed. And where does the money come from, considering that the company can’t show anything close to a profit?

Cue today’s dawn raid, executed by over 100 persons from the KRP, local police, Tax Administration, Border Guard, and Finnish Defence Forces. Simultaneously a numbered of locations were searched, and a no-fly zone was created over a sizeable area including both Säckilot and Ybbersnäs. No-one is saying much.

Searches are a normal part when investigating financial crimes. Assistance from other authorities has been required due to the geographical locations and the number of places where the search is conducted. Everything has gone smoothly and according to the plans. We have seized such material as is usually seized in searches investigating financial crime.

KRP doesn’t even mention the Finnish Defence Forces in the press release quoted above, but the Finnish Defence Forces confirm that they have “certain skill sets” which they are assisting with. The crimes investigated are money laundering valued at “millions of Euros” and serious tax fraud. The Finnish Defence Forces spokesperson denies that they have any interests in Airiston Helmi, but an anonymous military source contradicted the statement when asked by Helsingin Sanomat. According to the source, both FDF and SUPO (the Finnish Security Intelligence Service) have been keeping an eye on the company for years.

Again, operations of this scope are rare, but entirely plausible.

The Border Guard regularly cooperate with the Police, both sort under the Ministry of Interior in peacetime, and it is not far-fetched that the former would assist with boats and helicopters if there is an operation with several targets in the archipelago. The Finnish Defence Forces also have tight cooperation with the Police, often providing vehicles and special equipment when the need arises.

But it is hard to come up with a suitable need for FDF know-how or equipment in a white-collar raid. And what about the (unconfirmed) reports of the Border Guard having one of their two maritime reconnaissance aircrafts patrol the area of operations? And why is the no-fly zone in effect until Monday?

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OH-MVO, one of two Dornier Do-228 operated by the Finnish Border Guard in the maritime patrol role. Was she in the area today? Source: Own picture

Edit 230918 1100 GMT+2: It turns out that OH-MVO did visit the location before landing in Helsinki in the early afternoon.

Happy enthusiasts have already decided that Airiston Helmi is a GRU-run operation, complete with vessels for false-flag operations and barracks for spetsnaz units to stay in after infiltrating the country prior to war. It is a possibility, but I am unconvinced.

It is clear that GRU is far from the omnipotent force some authors would like them to be, if nothing else then Salisbury is the final proof. As such the hap-hazard nature of Airiston Helmi isn’t proof of them not being involved. However, it should also be remembered that money laundering is in itself a lucrative business, and there are a numerous reasons for people to want somewhere to stay for a night or two without having to sign a hotel ledger. And if you run a lucrative but highly illegal business, you might want to have some firearms handy in case the competition suddenly comes knocking. This would explain why the KRP chose to ensure that they have the necessary tools to subdue any resistance, including heavier protection and personal firearms (and FDF backup). On the other hand, the Russian cleptocracy makes the dividing lines between crooks, spies, and businessmen somewhat blurred, and even if Airiston Helmi would prove to be a non-political criminal enterprise (it should be noted that no-one is convicted of anything as of yet), it isn’t beyond the realms of imagination for the GRU to call in a favour every now and then (the smuggling case which lead to the abduction of Eston Kohver by the FSB comes to mind).

In any case, don’t expect any clear-cut answers from the authorities within the next few days. And if anyone says they know for certain what’s going on, chances are they are as honest as Airiston Helmi’s bookkeeping.

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FNS Pohjanmaa, Alfons Håkans, and two Ministers of Defence

I will readily admit to being a great fan of the FNS Pohjanmaa (01). The Finnish Navy has always been centred around the southern parts of the country, so the towering minelayer named after my home province and sporting the pennant ‘01’ as befitting a flagship instilled a certain sense of pride. The news that she is to be scrapped is a sad one, but I can’t say it surprises me.

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FNS Pohjanmaa (01) outside of Suomenlinna. Source: Wikimedia Commons/MKFI

 

The ice-classed hull is old, the vessel originally being built in the late 70’s, and the combination of minelaying capability and the ability to feature a total complement of 120 persons when acting as a training ship (compared to the complement of 60 for the roughly equally sized Hämeenmaa-class) made the ship a highly specialized tool for a trade that doesn’t exist outside of a very limited number of navies, all of which operate in the Baltic Sea. When it was clear that Estonia wasn’t going to buy the ship, it was more or less set that the ship would have to be scrapped (let’s face it, while it would have been nice to see the vessel becoming a museum ship, this wasn’t going to happen, the number of people living here interested in visiting an old minelayer is far too low to warrant that).

 

So it was an expected decision when the Ministry of Defence on the 18th released a statement saying that the vessel will be broken up, as no suitable buyer had come forth. This seemingly clear-cut case then took an interesting turn, when the CEO of Finnish salvage company and tug operator Alfons Håkans Ab Oy contacted news agencies and, very frustrated, said that the company had made an offer that the military had completely ignored. Soon enough, former Minister of Defence Stefan Wallin publicly called for the scrapping to be put on hold, until the issue had been sorted out.

 

Unsurprisingly, the whole issue have yet more angles, and the Ministry of Defence have been quick to give out further details to explain the situation, commendably enough with the costs of the different alternatives spelled out.

 

Keeping the minelayer mothballed costs around 10,000 Euro a month, most likely the sum is being made up by a combination of keeping the ship’s interiors dry and warm (i.e. above freezing), and having someone check up on it every now and then to make sure nothing bad happens. In other words, the hunt for a buyer had already cost roughly 150,000 Euros. As such, Minister of Defence Jussi Niinistö gave two months’ time to find a buyer, otherwise the ship would be scrapped. Early September no buyer had been found, and it was decided that the vessel should be scrapped. This would cost around 458,600 Euro, a high cost mainly due to the asbestos found aboard, but it was calculated that the scrap metal would be worth 210,500 Euro, leaving the state with a net loss of 248,100 Euro. It was at this stage in the process that Alfons Håkans made their offer. To begin with the offer was for 200,000 Euro, but they eventually raised it to 350,000 Euro. To note is that this would not have gone straight into the state’s account, but rather the cost of dismantling all armaments and military equipment from the vessel would have had to be deducted, meaning that the net gain of the affair would have been smaller.

 

However, the main issue was that the shipping company was not able to state the intended use of the vessel clearly enough, a prerequisite if a Finnish naval vessel is to be sold on the civilian market. The fact that it had been a combat vessel also meant that it would still have been classed as defence material despite having been demobilised, something which further would have placed it under export restrictions (I am assuming the MoD is referring to the Wassenaar Arrangement). The company states that their aim was to lease the ship to third parties for the following roles:

  • Training vessel
  • Humanitarian assistance to refugees on the Mediterranean
  • Watching oil and gas fields (unclear to me if they mean as a Safety Standby Vessels or patrol vessel)
  • Deep-sea fisheries protection

The yard assures that when at some point in the future they will sell the vessel onwards, they will not do it to a customer in a country that is currently at war.

It seems evident that the company does not have a set mission or long-term contract ready for the Pohjanmaa. Instead, they seems to have sensed the opportunity to get a reasonably sized vessel for a bargain price, and that the time for finding a user would have been only after the vessel was acquired.

Export control is a quagmire, one which I myself am far from an expert at. Suffice to say is that as this vessel would at least be classed as dual-use (or military goods, if we are to believe the MoD), the paperwork involved in hoisting a flag other than the Finnish on it isn’t something you handle in a freely written letter to the logistics command. That the company apparently isn’t aware of this isn’t surprising, as their business so far has been largely (exclusively?) in the civilian market.

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The crew of the Pohjanmaa left their mark at the port of Funchal, Madeira, during one of the ships many extended voyages. Source: Author

Why Wallin has taken an issue at Pohjanmaa being scrapped is unclear. Perhaps he wasn’t aware of the full story (Niinistö’s post came only after Wallin had released his view on the issue), or then he is trying to get back at the Finns Party for the so called Scandal of Dragsvik. In 2012, then Minister of Defence Wallin first said that he had not given the Defence Forces any guidance as to which garrisons could be disbanded, only for it to later turn out that he indeed had said that disbanding the Nyland Brigade was impossible, due to its status as the only unit in the forces to provide training for Swedish-speaking Finns. This obviously provided the anti-Swedish parts of the Finns Party with a tempting target, and they unleashed quite a campaign against the Swedish-speaking minister. Their reasoning was that the Finnish-speaking North Karelia Brigade had been sacrificed to save the Swedish-speaking unit, and the whole issue eventually culminated in a vote of no confidence against the minister. Despite passing it with a clear margin, he stepped down as minister and leader of the Swedish People’s Party of Finland shortly after this, citing reasons other than the scandal.

The opinion piece by Wallin feature a number of oversimplifications, the main one being that he quotes the 350,000 Euros as the net gain for the state, but he also questions how the “trusted Finnish company” could have given a decisive answer as to the end-use of the ship they don’t yet own?

The question regarding the cost for the navy to demilitarise the vessel is somewhat open, but safe to say is that it probably wouldn’t be cheap. The deal with Alfons Håkans would also have included all spares belonging to the ship, spares which in many cases probably can be used for the Hämeenmaa-class (all three vessels resemble each other rather closely, and e.g. feature similar Wärtsilä-Vaasa 16V22-diesels, although the Hämeenmaa-class has the uprated 16V22MD-version for 3,200 BHP a piece compared to Pohjanmaa’s 2,800 BHP a piece), as well as all emergency equipment belonging to the ship, further diminishing the net gain. However, Wallin is probably right in that the cost for the state would have been less if the vessel had been sold and not scrapped.

This leads us on to the other issues, namely the reputation of Alfons Håkans. There is no denying that Alfons Håkans is a serious company, and one that stands out as a bright success story. In fact, following recent acquisitions a few years ago, it is the shipping company with the largest number of vessels in both Finland as well as the Baltic States (though naturally the tonnage is more limited). The exact financial state of the concern is unclear to me, as it is made up of quite a number of different companies (at least the following companies are operated by the Håkans-family, though I am unsure whether they are financially linked to each other: [1], [2], [3], [4], [5], [6]), of which the parent company seems to have been changed into a holding company without employees a few years ago. However, this is not an unusual way to organise larger companies, and I’ve found nothing to indicate that the company would be in any kind of difficulties. As such, it is perfectly plausible that they could have acquired and made a profitable business out of leasing the Pohjanmaa onwards, despite the fact that at 1,100 t light it is considerable larger than the Pontus, another ex-naval vessel that currently is the largest ship in the company fleet. However, their reputation is somewhat marred by the fact that Alfons Håkans has at times been at odds with the authorities, such as in the case of the subsidiary Baltic Pilot which for a while offered piloting for services. The special status of the state-owned ice-breaking company Arctica Shipping has also been a topic of heated discussion.

The most relevant quarrel is however not the odd status of privatised piloting and ice-breaking in Finland, but the story of Airiston Helmi Oy, a small travel company based in the southwestern parts of the country. The company has Russian owners, and apparently gets a steady influx of money from somewhere, as it remains active despite never having made a profitable year since its founding in 2007, and accumulating a net loss of 2,4 million Euros in the last four years alone. The company made the headlines after it was found out that it has bought a number of properties situated next to the main seaway leading in to the Port of Turku, one of the most important harbours in Finland and home to Pansio Naval Base and the navy’s main surface force, the Coastal Fleet. Alfons Håkans got dragged into the Russian property buying-discussion after it turned out that they had sold two ex-naval vessels to Airiston Helmi, and that contrary to the contract they signed when acquiring the vessels from the navy, they had neither renamed the vessels nor repainted the hulls to avoid confusion with active duty naval vessels. Instead, only the pennant numbers had been removed. This seemingly minor oversight spawned a minor scandal as the strange financial state and property affairs of the buyer became clear. While Airiston Helmi certainly seems too obvious to be a front for Russian intelligence, it is equally clear that small green men in bogus naval transports attacking strategic seaways fits into current Russian military thinking. Alfons Håkans shrugged off the whole thing, the buyer was in a hurry to seal the deal, and there simply wasn’t any time to repaint the vessels. If the navy had an issue with this, they could contact the owner directly.

The hitch with this is that grey hulls and the vessel name Kala aren’t in any way restricted to naval use. The legal reach of the navy does not extend any further than the entity that buys the vessels directly from the navy, who has signed a deal to repaint them. As soon as the vessel is sold onwards, there is nothing the navy, or anyone else for that matter, can do about it. Legally speaking the navy could probably demand some kind of compensation from Alfons Håkans, “We were in a hurry” seldom works as a legal reason for not following written contracts, but in the end they decided against pursuing the issue further. However, It is safe to assume the affair wasn’t forgotten when Alfons Håkans called and asked to buy the former flagship.

To sum it all up: It’s a pity to see the Pohjanmaa go, but the reasons for denying the sale seem perfectly valid. I don’t believe Alfons Håkans is a Russian agent, but they could have handled the Airiston Helmi-affair a lot smoother than they did, and as a consequence of this they probably didn’t receive too much goodwill from the defence forces, who chose to stick to the a rather stringent interpretation of the rules for selling military goods. Having had a more thorough look through the current export control regulations would probably have helped too. Why Wallin has decided to make a fuss about the issue is beyond my understanding.