Climate activists and Formula One enthusiasts rarely have much in common, but in plutocrat Dmitry Mazepin they may have found at mutual adversary.
In late October, the Danish racing driver Kevin Magnussen lost his position in the Haas F1 Team, which is now openly flirting with the idea of engaging the Russian driver Nikita Mazepin.
»Mr. Mazepin Sr. would like for his son to race in Formula One«, said the team principal at Haas, Günter Steiner, in October to the German TV channel Sport1.
»His son probably wants it even more«.
According to several sports media outlets, Haas’ interest in Mazepin depends on his father, Dmitry Mazepin, investing a huge sum, up to several hundred million in Danish kroner, in the team. Politiken is now able to reveal how a substantial part of Mazepin’s fortune – more than one billion Danish kroner, the equivalent of over 180 million euros – comes from the sale of climate compensation to over 400 European companies in 24 countries, in a scheme experts have characterized as fraud.
A full list of the companies, and how much they bought, can be found in Politiken’s Kyotodatabase, which is publically available.
Now a portion of the father’s fortune is set to be invested in Formula One, one of the worst sports in the world when looking at the carbon dioxide emissions – a sport that is struggling to become greener.
Climate experts have criticized the transaction, while the former Danish racing driver Jason Watt – who believes Mazepin cost Magnussen his job – finds the whole thing scandalous.
»Dmitry Mazepin is one of these parents who tries to buy his son a seat in Formula One. Now rumour has it that he is investing a couple of hundred million of Danish kroner in Haas for his kid to take over Kevin Magnussen’s seat. It’s destroying the sport. And if the way he acquired the money is destroying the climate, too, then that just makes it even more appalling«, said Jason Watt.
Dangerous greenhouse gasses
Dmitry Mazepin is a man who rarely speaks to the media. He declined interview requests with Politiken about the Formula One investments and his former company HaloPolymer, which between 2008 and 2015 sold more than 50 million climate credits to companies across Europe.
This is apparent from research carried out by Politiken on the basis of official EU data. Having bought these credits, these companies were allowed to emit more than 50 million tons of carbon dioxide extra into the atmosphere – more than Denmark’s annual emissions.
In return, HaloPolymer was to reduce their emissions in Russia by the same amount. But HaloPolymer’s climate projects were marked by fraud and exaggerated numbers, argues Lambert Schneider, who is research coordinator at the German Öko-Institut and a member of the UNFCCC Executive Board of the Clean Development Mechanism (CDM).
Together with his colleague Anja Kollmus, Schneider analysed HaloPolymer’s climate projects in detail. As Politiken reported in January, the researchers found that the factories »artificially multiplied« their production of the highly potent greenhouse gasses HFC23 and SF6. Subsequently, the factories destroyed the same gasses whereby they received credits from the UN credit system.
Their findings were corroborated by a former project developer for HaloPolymer, Michael Yulkin. He told Politiken that he was approached by HaloPolymer about the scheme, but said he wanted nothing to do with it.
»There was a perverse incentive to increase the emission of greenhouse gasses«, Lambert Schneider says, »because the climate credits they received instead were worth far more money than the cost of destroying the gasses«.
In 2010 and 2011 alone, HaloPolymer made more than 1.46 billion Danish kroner by selling the artificially inflated climate credits, as stated in an annual financial statement, Politiken was provided by the investigative consortium OCCRP.
The trading of credits was so extensive that in 2011, it amounted to 39 percent of HaloPolymer’s entire revenue – a large sum of money, which according to Lambert Schneider was earned by damaging the climate.
»It is worrying to see how much the selling of fake emission reductions increased the revenue and the profit in the balance sheets of HaloPolymer. As some of the credits were only sold after 2011, the full picture is probably even worse«, said Schneider.
A real oligarch
It is unclear exactly when 52-year-old Dmitry Mazepin earned his first billion. But he appeared for the first time on the Forbes list of billionaires in 2015 with an estimated fortune of 8.3 billion Danish kroner.
The same year he sold off HaloPolymer to his business partner Mikhail Genkin. This is evidenced by a note in the reputable Russian financial media outlet Kommersant, which cites a statement from HaloPolymer.
At Transparency International in Russia, deputy director Ilya Shumanov is certainly familiar with Dmitry Mazepin. He is »one of the oligarchs«, who built a fortune in the 1990s through the liquidation sale of the state-owned companies in the Soviet Union, said Shumanov.
Today Dmitry Mazepin is the main owner of the biggest fertilizer producers in Russia, Uralchem and Uralkali. As the ’fertilizer czar’ of Russia, Mazepin have been in negotiations with several East African presidents for the past two years. According to Russian media outlets, the purpose has been to sell fertilizer and build factories in Kenya, Zimbabwe and Mozambique, among other countries.
»Mazepin has many scandals behind him, both personally and in his companies, where he has been accused of extorting his competitors. But Mazepin is also one of Russia’s biggest philanthropist, who supports, among other things, sports and have bought school busses for poor regions«, said Shumanov.
When Dmitry Mazepin began to acquire fertilizer factories in Russia through Uralchem, these bulk purchases were, according to Reuters, made possible by a loan of more than 5.4 billion Danish kroner from the state-owned bank Sberbank.
Sberbank also plays a part in the sale of climate credits to Europe. Extraordinarily, Russia appointed Sberbank as the official authority to issue Russian climate credits. In other industrialized countries, that role was typically assigned to an energy agency or a climate ministry.
Thus, Sberbank found itself in unusual circumstances: By 2015, the bank had issued more than 50 million climate credits to HaloPolymer, while at the same time, the owner of that company owed the bank billions.
Sberbank refused to comment on its relationship to Dmitry Mazepin, Uralchem or HaloPolymer. In a written statement, Sberbank answered that the bank’s only task was to issue climate credits for projects which had been approved by the Russian ministry for financial development.
All credits had been verified by independent consulting agencies hired by HaloPolymer for that task. Furthermore, the loan department was separate of the climate department, according to Sberbank.
»Our technical functions being fulfilled under the international government procedures of approval and execution of carbon units transaction for Kyoto projects are separated from the bank’s core operations«, said Maria Vorobyeva, head of foreign press relations, in an email.