The mercenary group leading the battle for Bakhmut carefully hides its business dealings in a maze of shell companies and manages to evade Western sanctions.
Russia’s Wagner mercenary group, classified by the US as an “international criminal organisation” and sanctioned by the EU for “human rights abuses”, has been pivotal to Russia’s recent military gains in Ukraine’s Donbass region.
In recent days, the group headed by Russian billionaire Yevgeny Prigozhin has been leading the charge to capture the strategic city of Bakhmut from Ukraine, although it has been doing so with alleged heavy casualties. Recently, Prigozhin made the headlines when he declared that he wants to run for president in Ukraine in 2024.
The Wagner Group has also been known to be involved in conflicts worldwide, including in Libya, the Central African Republic and Mali.
In Russia, Wagner is not an official company since the country’s laws do not allow the existence of private military companies. Instead, it is hidden behind a complex entity of shell companies abroad with strong ties to the governments in Moscow and elsewhere.
While the Western bloc has been attempting to make it more difficult for the Wagner Group to operate across the globe through its shell companies, it has found diverse methods to make money and continue to conceal its finances, allowing it to bankroll its operations on several fronts.
So how does Russia’s Wagner Group make money?
Gems and jewels
Wagner Group’s operations in recent years have expanded in Africa, especially into Sudan, the Central African Republic (CAR) and Libya, where it protects investments of Prigozhin, a close ally of Russian President Vladimir Putin.
Last year, the US accused Wagner mercenaries of exploiting natural resources in CAR, Mali, Sudan and elsewhere in the continent.
Over the last year of Russia’s war with Ukraine, the Wagner Group has further expanded its network in CAR, where its mining profits reportedly reached $1 billion.
In 2020, the group sent soldiers to CAR to take control of an artisanal gold mine and turn it into an industrial complex.
The same year, CAR’s Ministry of Mines cancelled the licence of a Canadian company at Ndassima, according to a report, and gave a 25-year concession to a Madagascar-registered company called Midas Resources, a Russian entity owned by Prigozhin.
On the other hand, the US very recently imposed sanctions on Meroe Gold, a Sudanese gold mining company, saying that it was “owned and controlled” by Prigozhin and served “as a cover for Wagner forces operating in Sudan”.
Portable commodities and precious gems, such as gold and diamonds, are ideal ways of payment for Wagner since they can be whitewashed easily.
Trading these gems has been done by an obscure company registered in St Petersburg called RN Trading, which managed to remain unsanctioned.
Last year, Sudanese officials inspected a Russia-bound plane in Khartoum and found gold in boxes labelled as cookies, according to reports.
READ MORE: Can Wagner mercenaries take over Bakhmut?
A report of an open source investigation made by the “All Eyes on Wagner” initiative in 2022 found out that a Wagner company had been allocated a 30-year forestry permit for timber business in an area in the Congo Basin, which is one of the most considerable swathes of undeveloped rainforest in the world.
The report says that Wagner mercenaries were in control of the city of Boda in CAR by the time the timber company Bois Rouge was awarded the forestry concession tender in 2021.
Located in St Petersburg, the Bois Rouge company has links to individuals close to Prigozhin.
Around the same time the concession was allocated to the company in February 2021, a military operation was launched by the FACA (Central African governmental army), supported by Wagner mercenaries, to remove rebel groups from the region, the report claims.
When 30 percent of the Congo Basin is exploited, potential revenue from forestry could soar to $890 million on international markets, according to “All Eyes on Wagner”.
“Even if such numbers should be refined and some inputs are missing, wood exports can be a profitable business for the Wagner,” it adds.
READ MORE: UN experts call for probe of war crimes executed by Wagner, Mali forces
Middle East oil
It has been reported that the Wagner Group was also paid in natural resources, specifically oil and gas, for its mercenary work in Syria.
In 2018, the US-sanctioned EvroPolis, another Prigozhin-controlled company, was awarded energy concessions by the Syrian regime in return for Wagner mercenaries capturing oilfields held by the Daesh terrorist group.
EvroPolis accounting records indicate that the al-Shaer gas plant and three other energy production sites in Syria’s Homs generated around $162 million in revenues for Prigozhin’s firm in 2017 alone.
Despite these clear linkages about Wagner’s shell corporations, whether the group receives funds from the Russian state, even indirectly, remains unanswered.