THE head of Ukraine’s Presidential Administration is backing a Russian tobacco giant.
Boris Lozhkin supports Megapolis, the company responsible for more than 90% of tobacco sales under President Viktor Yanukovych.
The company have agreed long-term deals with the ‘big four’ tobacco giants – Philip Morris, Imperial Tobacco Group, British American Tobacco and Japan Tobacco, Inc. – for cigarette sales in Ukraine.
Megapolis take a cut of the money when they sell on cigarettes to retailers to effectively give them exclusive selling rights in Ukraine.
Any retailer not complying is shut out of the market.
The company is a subsidiary of Russian distributor Megapolis, whose principal owners are Igor and Sergei Kasaev.
In 2013 they sold a 40% share in Japan Tobacco, Inc. and Philip Morris for €1.3 billion.
Forbes estimate that some of the profit was ploughed back into arms manufacturing companies, including a factory that produces Kalashnikovs and AK47s.
Boris Kaufman, one of Megapolis’s political associates, has been closely linked to Lozhkin, whose Austrian bank account was frozen last month.
Reports suggest €113 million was deposited in the account from Ukrainian fugitive Serhiy Kurchenko.