Hrodna region investment climate: far from congenial

Oskar Smulski is a former petty officer from Poland who decided to run a business and invest in Belarus. But his readiness to build two factories in the territory of the eastern neighbour resulted in complete failure: Mr Smulski was $800.000 fined by Belarusian economic court.

His company Bio-eko got $10 bn tender for constructing a mushroom growing factory in Hrodna region. Bio-eko was expected to be responsible for the process of construction and technology infusion. In October, 2008 an agreement was signed: according to it, the investor was to pay an advance, i.e. 30 per cent of the total sum.

Investment…or sponsorship?

Hrodna region executive committee did pay $800.000 for the development of the construction project. But the fact that the Belarusian side was not able to fill the funding gap came like thunder. $800.000 turned out not to have been in store for any investment project, which means that the transfer was illegal… Soon BRE Bank (Poland) refused to finance the project saying that the Belarusian partner failed to pay down interest. As for Hrodna authorities, their ability to devote funds for the factory also appeared to be shady.

The partners started to menace us with the court’s trial and demanding we should build the factory at our own expense or at least return the money we had received before, Agnieszka Olbrycht, Bio-eko’s CIO, said.

“We turned down this ‘proposal’ and withdrew our workers though two construction sites were ready at that moment. There were also site containers and building materials which are lost now,” Oscar Smulski confessed..

Trial and sentence

The case was tried at Hrodna court. “We insisted on witnesses’ questioning (i.e. people who had been negotiating with us) and all the necessary documents’ presenting there. But the judge said there would be no witnesses and drew the head of our affiliate out of the court room. In February 2012 we were informed of our being found guilty of self-willed leaving the construction site. The court also took a decision to fine us for every laying day. Suprisingly, the total sum of the fine equals $800.000, i.e. the amount paid by the Belarusian side at the very beginning,” Mr Smulski adds.

Soon after policemen seized all the project documents at Hrodna affiliate of Bio-eko; its employees were interrogated by the KGB. “According to the Belarusian partners, they would never lose such cases because judges are always ordered telefonically what sentence should be passed.”

Belarusian verdict in Poland

In 1994 Belarus and Poland signed an agreement on cooperation in civil and trade cases. As the sentence became effective in law in Belarus the Polish court also found it legal. And now official receivers demand the Polish company should pay the fine off.

Don’t invest in Belarus!

“I was absolutely devastated by the situation and even took a time-out in my business activity because the problems in Belarus hit my family life as well,” Mr Smulski said. The Polish businessman warns undertakers against investing in Belarus: “My experience has shown that the cooperation with the country should be developed solely according to the formula: you give money, we provide goods. On the spot, from hand to hand,” he stated.

Project alive

Last year the official website of Hrodna region state executive committee published the description of a new tender. The officials would like to find a person who is eaged to provide 100 per cent financing of the factory. The search is still in progress, they told Belsat TV.


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