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By John Helmer, Moscow

This is the Bangsamoro banana, and somebody is slipping on it.

On April 4 two young business partners, a Russian named Lev Dengov and a Turkmen, Merdan Gurbanov, with no known source of capital or past business record, signed an agreement to invest almost $600 million in the Bangsamoro region of the Philippines island of Mindanao. Their agreement commits them to creating one of the largest plantations on the island to grow bananas and pineapples for export;  the development of the regional  port of Polloc for storing and shipping the fruit; and the supply of Russian fertilizers to Filipino planters.

Presiding at the agreement signing was Emmanuel Piñol, the Agriculture Secretary and minister in charge in the Philippines Government. Two weeks later, Piñol publicized the extraordinary deal to the Russian press. Since then, however, he refuses to say how the deal was arranged; where the money will be coming from; and how the investment will be protected in an area which has been a battleground  between government forces and Islamic secession movements for the past fifty years.

Dengov and Gurbanov have also gone incommunicado, leaving behind them a trail of plans for corporate registrations around the world, a six-month old company on the register of UK Companies House;  and a prospectus for a $400 million investment in a self-service crypto-currency payment system in Russia and the CIS states.

Planters Products Incorporated (PPI), the Filipino fertilizer importer which signed in the deal with Piñol,  Dengov and Gurbanov, has cut off its telephone line; its executives don’t answer their emails.

Five of the leading banana importers to Russia, which source most of their fruit from Central and South America, won’t say what they know about the Bangsamoro Banana project, or even if they think a new scheme of importing bananas and pineapples from the Philippines might be commercially viable at any price.

First public word appeared on April 8 in Business World, a leading Filipino business publication based in Quezon; it is controlled by the PDLT telecommunications group. The 30 billion peso figure in the headline is roughly equal to $585 million.

The published photograph shows, at left, Rodel Mañara, a board director of PPI, the buyer of the fertilizer; centre, Agriculture Secretary Piñol; and right, Gurbanov. Dengov was also present, according to an announcement on his Facebook page by Piñol.

The newspaper quoted Piñol as reporting Gurbanov’s and Dengov’s company as Vigorous Alliance. “ ‘Under the agreement signed in Manila Thursday, Vigorous Alliance will supply fertilizer needed by Filipino rice farmers every planting season amounting to P30 billion,’ Mr. Piñol said in a social media post over the weekend. ‘The fertilizer will be loaned out by PPI to rice farmers at the start of the planting season payable after harvest,’ he said. According to Mr. Piñol, the loan which will start in October and will have no interest or service fees. He added the fertilizer price will be lower than the prevailing market price. ‘Since there is no available government funds for the (fertilizer-on-credit) program this year, the DA [Department of Agriculture] worked on the arrangement between Vigorous Alliance and PPI,’ he added.”

The April announcement followed a meeting in February between Piñol and the Russian Ambassador in Manila, Igor Khovaev,  Piñol’s press release about his meeting with Khovaev mentions imports of Russian fertilizers, not exports of bananas and pineapples.

Days later, Piñol gave an interview to Kommersant, the Moscow business newspaper, which published the text on April 16

Source: https://www.kommersant.ru/  and https://www.kommersant.ru/doc/3945545

According to Piñol, he had been to Moscow in March when he had talks with the Russian Agriculture Ministry for the import of Russian fertilizers to Philippines, and the export of Filipino commodities to Russia. According to Piñol,  there had been an earlier undertaking between President Vladimir Putin and President Rodrigo Duterte of up to $2.5 billion in two-way commodity trade with the Philippines. Since then, he said, negotiations had focused on imports of fertilizers worth up to $1 billion, and exports of tuna fish and coconut products. The fertilizer supply channel would be between state companies, he said. “We plan to start from the intergovernmental level. If the Russian government cannot provide us with enough fertilizer, we will turn to private companies.”

Vigorous Alliance, Piñol mentioned, “will be engaged in growing bananas and pineapples in the Philippines. “The plantation will be in the Bangsamoro region, a new region created by our government. We really need its development and were very happy that some kind-hearted Russian investors agreed to help us in this. We have already conducted aerial surveys and soil testing this year. Everything is going very well; we hope to start production by the end of the year. Moreover, they have already expressed a desire to invest in pineapple plantations and shrimp production. There is another Russian company that wants to rent one of our ports on Mindanao, the port of Polloc, so that all Russian cargo will pass through it to the Philippines… [The banana plantation] will be the largest in the world, as much as about 10 thousand hectares. It should be noted, however, that we have not yet planted a single banana.”

According to Piñol, two companies are interested in the plantation project – Vigorous Alliance and Banex. In Moscow Banex, which is Russian-owned and directed from Monaco, refused to answer questions about their interest in the Bangsamoro plantation, referring the issue to their office in Ecuador; no answer has followed from there.

Kommersant reporters said they had tried to check with Vigorous Alliance, but had found almost nothing except a registration in Dubai. The  newspaper identified Dengov (right)  as having participated in 2017 in a “Russian contact group for the inter-Libyan settlement at the [Russian] Foreign Ministry and the State Duma and assistant to [Ramzan Kadyrov], the head of the Chechen Republic.” Additional biographical details about Dengov appear in this Russian source.  Kommersant reported that Dengov’s telephone number has been disconnected.

More details about another line of Gurbanov’s business appear in UK corporate registration records and on the internet. He appears as a co-founder of a crypto-currency venture called KIBIS, announced on the internet last December.   His partner is Vitaly Snagovskiy.  KIBIS said it had registered in the UK in October last, with a business plan for self-serve automated payment machines, using crypto-currencies.    Apart from Gurbanov and Snagovskiy,  most of the employees of the KIBIS venture appear to be Filipino. 

Gurbanov has issued a prospectus describing the KIBIS business plan. The investment estimates suggest that the Ukraine and Russia are intended to be the principal markets.  The sums listed are prospective; the money has yet to be raised from investors.

UK Companies House confirms that on October 22, 2018, KIBIS Group was registered in the UK. In the incorporation papers Gurbanov, 33, lists himself as Turkmen by nationality, and a resident of the UAE. Snagovskiy, 33, lists himself as Russian, also resident in the UAE. The company is registered at an Islington, London, address used by other companies as their address of record. 

The co-signatory of the April 4 agreement, Planters Products Inc. (PPI), is a fifty-five year old company, based near Makati City, in the Philippines.    It specializes in insecticides and other crop treatments. Importation and distribution of bulk fertilizers does not appear to be one of its current lines of business. The company did not respond to questions.


Source: https://en.ru-stat.com/ Value shown is in USD millions.

Source: https://en.ru-stat.com/ The total value of exports to Russia dropped from $406 million in 2017 to $256 million in 2018; the value of fruit and vegetable shipments dropped from $32.3 million to $19.7 million. They comprise about 8% of the value of Filipino exports to Russia.   

Putin and Duterte met for the first time in Moscow in May 2017.  “Regrettably, our trade has been modest,” Putin conceded. “But it started growing early this year and has already increased by 25 percent. There are many promising areas of bilateral cooperation, such as power machine building, transport infrastructure, energy and possibly military technical cooperation.”  There was no mention of commodity trade in either direction.  Since their meeting, Russian exports of petroleum products to Manila have grown; Filipino exports to Russia have dwindled.

Russia’s banana supply has traditionally been centered in Costa Rica and Ecuador, with St. Petersburg the principal port of entry, followed by Novorossiysk. The trade has been complicated by the bankruptcies of leading importers and by investigations of drug smuggling. The rise and fall of the Joint Fruit Company (JFC) of Vladimir Kekhman, once the biggest of Russia’s banana growers and importers,  has been particularly notorious; that story can be followed here.  

Putin and Duterte met again at a regional summit conference in Vietnam in November 2017.  

Source: http://en.kremlin.ru

Part of their discussion focused on trade; part on Russian military supplies to assist Duterte in fighting the Islamic insurgency in Mindanao.

Putin: “we need to lay a special emphasis on economic ties. Unfortunately, they are at a fairly low level even though a certain growth in bilateral trade can be observed this year.” Duterte: “I would like to convey to you the gratitude of the Filipino people for your timely assistance, especially the trucks and arms that you sent because we had to replenish the supplies which were getting low. According to my soldiers the arms that you sent are very accurate and they were able to take care of the snipers that abounded in the city. I lost almost all of my troops because of the snipers, which were covered in buildings just like in Syria. There’s a new kind of war and the cover is cement, concrete and iron. So we had to hurt them just like in the other places in the Middle East because we had to wipe it out, building for building.”

“And that is my dream that before I finish my presidency I want to build a strong Armed Forces and strong police. It is very important for you to know that we are buying our arms from Russia this time. Because at the time we were short of arms for the police. And we wanted to buy it from America, but because of the almost equal power of the US Congress and the President it is only stymied by the legislators, so the 23,000 that I ordered were scrapped. And your timely assistance to my country helped us to replenish the old arms. And we have the new stock, so the new arms that we got from you, sir, were given.” 

Reuters, which regularly reports fabrications by US government officials, has reported “a senior Philippine official, who declined to be named because he was not authorized to speak to media” as claiming: “The Philippines is now open to buying Russian arms as Manila cultivates closer ties with Moscow, he added, particularly as the military looks to diversify its equipment, reining in costs while maintaining quality. ‘Moscow has been offering to sell arms to us since the mid-1990s and they are willing to barter guns for bananas,’ he said, adding that Russia was selling fighters, helicopters and submarines to the Philippines.”  The idea of a barter trade of bananas for guns originated in this Reuters report. It has not been reported in Russia.

US Government pressure has intensified on Duterte not to expand his Russian weapons purchases.  In January of this year Duterte said publicly he will resist the US pressure.  

According to uncorroborated local press reports, in the Bangsamoro fighting between government troops and the Islamic rebels one Chechen fighter has been identified among the casualties so far. 

Russian fruit market experts believe that the  Philippines may be able to supply Russia with  substantial volumes of bananas since crop  disease has struck plantations in Costa Rica. According to Anatoly Kutsenko, President of  the National Fruit and Vegetable Union, the proposed size of the Bangsamoro plantation mentioned by Piñol could at current yields produce about 59,000 tonnes of bananas and 175,000 tonnes of pineapples per annum. Special warehousing and shipping will require investment, however.  Igor Mukhanin, head of the Russian Association  of Russian Gardeners and Nurserymen (right), said the high cost of transportation to western Russian ports makes it likely that Filipino bananas and pineapples will be shipped to Vladivostok. “There always has been a deficit of fresh fruits, so the demand is very high. The climate of the Philippines allows two harvests of bananas per season and this investment could be very profitable. It’s a matter of the regional marketing. Nobody will transport bananas to western and central Russia, because it will be very expensive. Moreover, this market is full of Central American fruits.”

Philip Owen, director of the Russian food trade consultancy Volga Trader, comments: “the [Russian] Far East could take all the Philippine bananas. As for the pineapples, I am not sure. There really has been a restriction on supply due to disease in Costa Rica and now elsewhere. That said, pineapples are not a traditional Russian food. Demand will not be elastic. Perhaps the [proposed venture] will juice them; fruit juices can be bigger business than solid fruit in Russia. The economics would make sense,  especially if some processing was done in Vladivostok – for example,  pineapple juice in cans, even as pulp as an ingredient sweetener. There would be a large Russian government grant for a processing plant. Pineapples make more sense than bananas. They are slightly easier to transport and there is no disease in Asia yet.”

In Quezon on Friday, Piñol was asked what capital undertakings and financing guarantees the Gurbanov-Dengov group has tabled for the Philippines government to substantiate its capability to undertake the proposed trade in commodities. His spokesman confirmed the question had been received. Piñol did not reply.



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