Despite its importance to the country’s seafood sector and its growth in recent years, Icelandic tech company Vélfag is currently facing being forced into insolvency – due to questions over its ownership and alleged connections to a sanctioned Russian company.
The first lawsuit against the Icelandic state has been filed in Reykjavík, and the company states that further legal action can be expected to take place in both Iceland and Luxembourg.
At the heart of what has already been dubbed ‘The Vélfag Affair’ is the government’s concerns over the company’s ownership. Some years ago, prior to the invasion of Ukraine and subsequent sanctions, Russian fishing company Norebo acquired a substantial stake in Vélfag, although the company states that there is no connection between Vélfag’s current owner and Norebo, which is subject to sanctions.
Iceland’s Ministry of Foreign Affairs has declared that Vélfag will be forced into insolvency within four weeks, unless it provides “conclusive documents or information.”
This relates to its current ownership by Liechtenstein national, Swiss resident Ivan Nicolai Kaufmann.
The share of Vélfag previously held by Norebo is believed to have been transferred first to Norebo owner Vitaly Orlov’s son Nikita and then to a Hong Kong-based entity, before being acquired by Ivan Nicolai Kaufmann – who is reported to have done business with the Orlov family in the past.
‘The Ministry has not specified what documents are requested. At the same time, the exemption framework was further tightened, placing even greater obstacles on the company’s operations,’ a Vélfag representative states, commenting that the Ministry had already accepted and stated publicly that Vélfag is “strategically important for Iceland’s fishing industry.”
While the issue hinges fundamentally on whether or not Ivan Nicolai Kaufmann is a straw man for the Orlov family, and how this supposition can be proved or disproved, there are concerns within the industry that this could be more sinister than an administrative matter.
‘Industry representatives fear that these measures … appear to be a deliberate – and unlawful – attempt to dismantle a fundamentally healthy Icelandic company. Such actions could lead to extensive lawsuits for damages against the Icelandic state, ultimately burdening the taxpayer,’ Vélfag’s representative asserts.
‘There is also no connection between current shareholder and the sanctioned company Norebo. EU sanctions legislation is clear: Iceland has neither the mandate nor the right to sanction Vélfag or its shareholders. Any European court is expected to reach a straightforward decision in this regard.’
