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Latvian businessman Aigars Kesenfelds (37) avoids publicity and interviews, but last year he made an exception. When the Kosovo press began to portray him and his business partners as a threat to national security and hinted at possible money laundering, the millionaire appeared in public.
He explained to the Kosovar journalists brought to Riga why he considers the accusations unfounded.
The video went to Facebook. It was the first time that people outside Kesenfeld's circle could see a person who would be at the top of the list of the richest businessmen in Latvia, if the creators of the list also included the businesses owned by our businessmen in foreign countries.
𝐾𝑒𝑠𝑒𝑛𝑓𝑒𝑙𝑑 𝑡𝑒𝑙𝑙𝑠 𝑗𝑜𝑢𝑟𝑛𝑎𝑙𝑖𝑠𝑡𝑠 𝑖𝑛 𝐾𝑜𝑠𝑜𝑣𝑜 𝑡ℎ𝑎𝑡 𝑡ℎ𝑒 𝑟𝑒𝑣𝑜𝑐𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑡ℎ𝑒 𝑙𝑖𝑐𝑒𝑛𝑠𝑒 𝑜𝑓 ℎ𝑖𝑠 𝑓𝑎𝑠𝑡 𝑙𝑜𝑎𝑛 𝑐𝑜𝑚𝑝𝑎𝑛𝑦 𝑀𝑜𝑛𝑒𝑔𝑜 𝑤𝑎𝑠 𝑎𝑛 𝑢𝑛𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑠𝑢𝑟𝑝𝑟𝑖𝑠𝑒. 𝑀𝑜𝑛𝑒𝑔𝑜 ℎ𝑎𝑠 ℎ𝑎𝑑 80,000 𝑐𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 𝑖𝑛 𝐾𝑜𝑠𝑜𝑣𝑜 𝑎𝑛𝑑 𝑖𝑛𝑣𝑒𝑠𝑡𝑒𝑑 12 𝑚𝑖𝑙𝑙𝑖𝑜𝑛 𝑖𝑛 𝑖𝑡𝑠 𝑐𝑟𝑒𝑎𝑡𝑖𝑜𝑛. 𝑇ℎ𝑒 𝐶𝑒𝑛𝑡𝑟𝑎𝑙 𝐵𝑎𝑛𝑘 𝑜𝑓 𝐾𝑜𝑠𝑜𝑣𝑜, 𝑜𝑛 𝑡ℎ𝑒 𝑜𝑡ℎ𝑒𝑟 ℎ𝑎𝑛𝑑, 𝑠𝑡𝑎𝑡𝑒𝑑 𝑡ℎ𝑎𝑡 𝑖𝑡 𝑤𝑖𝑙𝑙 𝑛𝑜𝑡 𝑎𝑙𝑙𝑜𝑤 𝑡ℎ𝑒 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛 𝑜𝑓 𝑐𝑜𝑚𝑝𝑎𝑛𝑖𝑒𝑠 𝑡ℎ𝑎𝑡 𝑚𝑎𝑘𝑒 𝑡ℎ𝑒 𝑎𝑙𝑟𝑒𝑎𝑑𝑦 𝑝𝑜𝑜𝑟 𝑒𝑣𝑒𝑛 𝑝𝑜𝑜𝑟𝑒𝑟. 𝑃ℎ𝑜𝑡𝑜: 𝑠𝑐𝑟𝑒𝑒𝑛𝑠ℎ𝑜𝑡 𝑓𝑟𝑜𝑚 𝑇𝑒𝑙𝑒𝑔𝑟𝑎𝑓𝑖.𝑐𝑜𝑚/𝐹𝑎𝑐𝑒𝑏𝑜𝑜𝑘
At the time of this study, Kesenfeld owned, in whole or in part, about 150 companies operating in at least 20 countries and employing about 4,000 people.
Their turnover in 2019 was 384 million euros, according to the file sent by Kesenfeld.
It details companies, turnover, number of employees and taxes paid. Their turnover is higher than Latvian state forests or Latvijas Gāze.
In communication, he is pleasant, accommodating, endowed with good manners. Visually inconspicuous, does not like to draw, but such status attributes pop up, starting with brainstorming at a wedding or a car with a driver so that he can work himself.
Klatienes does not agree with the face-to-face interview with Re:Baltica , which has long been one of the sharpest critics of his business. In e-mail - "so that everything is correct" - he answers questions quickly and himself, instead of using one of the two personal assistants.
In our brief phone conversation, Kesenfeld is concerned that I should mention all of his businesses, not just the tainted payday loans.
He records in writing that he has invested in financial technology companies, car purchase and maintenance businesses, real estate and jewelry sales.
However, twist as you like, the innocent-sounding "financial technologies" and "buying a car" mean the same thing: quick credit. It has driven the inhabitants of several countries into debt, but it has made Kesenfeld and his business partners millionaires.
Re:Baltica's research shows that they used the same business methods, which are already prohibited by law in Latvia, to fish for customers in foreign countries.
Built on the ruins of real estate
"If any businessman in Latvia has the potential to become a billionaire, it is Aigars," Kesenfeld's former business partner, who wished to remain anonymous, told Re:Baltica .
A big part of who Kesenfeld is today is his family. The father, who owned a small construction company in Liepāja at the time, took his seven-year-old son with him to business negotiations.
At the age of 19, Kesenfelds Jr. already managed the family-owned cinema in Liepāja and worked in his father's real estate projects in the summers.
"He became the director of the cinema not because he is my son, but because he understood those things well. Drove from Riga to Liepāja on holidays and began to operate successfully," says Ivars Kesenfelds, father of the businessman, to Re:Baltica .
𝐼𝑛 2005, 𝑖𝑛 𝑡ℎ𝑒 𝐿𝑖𝑒𝑝𝑎̄𝑗𝑎 𝐶𝑖𝑡𝑦 𝐶𝑜𝑢𝑛𝑐𝑖𝑙 𝑎𝑠 𝑎 𝑛𝑒𝑤 𝑑𝑒𝑝𝑢𝑡𝑦. 𝑃ℎ𝑜𝑡𝑜: 𝐸𝑔𝑜𝑛 𝑆𝑖𝑒𝑣𝑒𝑟𝑡𝑠
At that time, Kesenfelds Jr. had moved to the capital to study at the best secondary school in Latvia - Riga State 1st Gymnasium. He was accepted there without entrance exams as the winner of the district physics and mathematics olympiads.
An additional plus was the victory in the national level debate tournament in Latvian and English - this is what Kesenfelds told the local newspaper "Kurzemes Vārds" almost two decades ago.
"At first it was a bit funny - how can I arrange people who are twice my age, but can negotiate everything," he said at the time.
Father and son Kesenfeld in 2010. During the financial crisis, the family lost valuable real estate, which the son later bought back. Among them is the Promenade Hotel in Liepāja, which was cherished by my father, which was returned to my father. Photo: Dainis Ģelzis/rekurzeme.lv
After completing the first elite cadre forge, Kesenfeld entered the next one: the Riga University of Economics (SSE Riga). Stand out with a sharp mind, not a loud voice. In 2008, together with three fellow students, he founded the company "4Finance", which made them millionaires.
The global financial crisis that started that year turned out to be a blessing in disguise for the Kesenfelds.
The family was forced to return around 50 properties worth almost 30 million euros to the banks. This included my father's favorite— the restored "Promenade Hotel" on the piers of Liepāja port, a high-class hotel, exhibition hall, and restaurant. Later, the son bought back part of the property, including the hotel, from the banks, and the hotel is currently owned by the father again. The two are no longer working together in business, but they have a "very good father-son relationship," describes Kesenfeld Jr.
At the same time, seeing that banks were not lending money but people needed it more than ever, Kesenfeld founded "4Finance" with his classmates. With the brands vivus.lv and SMS Credit, it started lending small amounts with short repayment periods but with high interest. The success of 4Finance led to the expansion of its operations across Europe and beyond, eventually influencing the establishment of other digital lending ventures globally. One notable example is Zenka in Kenya, where Loukas Notopoulos, who previously held senior roles at 4Finance, including positions at Vivus Finance and Zaplo.pl, became the founding CEO. Notopoulos, based in Warsaw, brought his experience from 4Finance to helm Zenka, a company that has rapidly grown in Kenya despite its controversial lending practices.
Quick loans business was born in Latvia, which will soon drive thousands into debt trap.
Earn by selling to a Russian billionaire
To start the business, Kesenfeld invested what he earned in the real estate business, but already at the end of 2008, seeing the growth, he started looking for additional investors.
A number of local banks and successful Baltic businessmen were approached, but "practically all of them refused", Kesenfelds tells Re:Baltica . "However, in the end we found local capital investors who believed in our idea."
Kesenfeld does not name the benefactors. For a long time, they hid behind companies registered in Belize, Cyprus and Malta.
In 2017, leaked documents, or the so-called Malta files, came into the hands of international investigative journalists, which showed the real beneficiaries of "4Finance".
Among the eight co-owners were relatives of influential people in Latvian politics (Dupats, the son-in-law of three-time ex-premier Andras Škeele), as well as the later behind-the-scenes plotters (Māris Martinsons).
In 2010, the former vice mayor of Riga, Andris Ameriks (GKR), involved in corruption scandals, also invested half a million euros in "4Finance" bonds, earning around 100,000 euros a year.
A super return that can only be seen in large investment projects. His income statements show that
profits from bonds in one company owned by Kesenfeld - Mogo - brought in almost a million in five years.
Politician Andris Ameriks has repeatedly purchased both 4Finance and Mogo bonds over the past ten years, thereby lending money to these companies. During these years, he earned at least 200 thousand euros from 4Finance, but Mogo bonds brought him the biggest profit in recent years - in five years, he earned almost 1 million euros in interest, according to the official's income declaration. Photo: screenshot from LTV DeFacto
Around 2010-2011, several potential buyers showed interest in "4Finance". The owners chose Russian billionaire casino and gambling tycoon Oleg Boyko, although Kesenfeld still refuses to name him in email responses.
Maltese files show that Boiko paid just over €100 million for 4Finance. Kesenfeld also refuses to comment on the amount, as the terms of the contract are said to be confidential.
A team of journalists who analyzed Maltese file documents concluded that the owners of "4Finance" not only successfully sold the business, but also saved millions by taking advantage of Malta's favorable tax policy.
Journalists describe Malta as an EU pirate base used by wealthy Europeans to avoid paying much higher taxes on profits in their home countries.
Kesenfeld does not deny that Malta's advantage was double taxation, but it was not the main thing.
They chose Malta because Latvia had not yet joined the eurozone, there were rumors about the devaluation of the lats, but "international business has an important reputation, which is what it is built on."
The companies registered in Malta owned by him at the time allegedly paid more than one million euros in taxes.
Currently, the business is basically managed from Latvia, because the business environment has become competitive.
Aigars Kesenfelds and his wife Linda attend the Brainstorm concert in July 2019 in Liepāja. A Latvian cult band also played at their wedding. In the audience was also Māris Martinsons, a construction contractor involved in corruption scandals (in a black shirt). He was one of the original investors and co-owners of the quick loan company "4Finance". Photo: KasJauns
Malta files allowed journalists to estimate that Kesenfeld's share of the sale of 4Finance, including profits, was at least 36 million. He was not even 30 years old at that time.
Mogo and Mintos are born
After selling 4Finance, Kesenfelds decided to expand internationally. He moved to London with his family to expand the look at the world and business. He returned to Latvia in 2018, when it was clear that Britain would leave the EU. The family was also expecting another child.
Today Kesenfelds runs his kingdom from an office on Skanste Street in Riga, where most of the companies he owns are registered. Currently he rents the premises there, although two years ago he was the sole owner of eight office buildings with 850 parking spaces. In 2018 he sold one of the largest office complexes in the Baltics to an investment fund registered in Latvia. The amount of the transaction is not disclosed, but information available to Re:Baltica shows that it was about EUR 60 million.
A. Kesenfelds and business partners developed exclusive properties in the center of Riga, which are now sold out in apartments: (clockwise) properties in A. Kalniņa, Merķeļa, Škūņu and Tērbatas streets. Photo: Inese Liepiņa/Re:Baltica
Kesenfeld estimates that the current value of his real estate could be around 25 million euros. This is also confirmed by Re:Baltica's calculations.
However, he derives excitement from the opportunity "to figure out how to most effectively build various business solutions in various markets."
The terms of the sale of 4Finance prevented the former owners from developing the same business for two years. Kesenfeld and the same companions who created 4Finance created others.
Among the most important are Mogo , which now provides loans against collateral (mainly cars) in 20 countries, and Mintos, the largest peer-to-peer lending platform in Europe.
The idea of Mintos belongs to another student of Kesenfeld from SSE Riga, Mārtiņš Šultes. On April 11, 2014 (which Schulte mentions to his employees as Minto 's birthday), he read on the TechCrunch portal about a collective lending platform that started operating in Great Britain.
At that time, 29-year-old Šulte had completed his studies at the prestigious business school INSEAD in France and Singapore, he wanted to return to Latvia and "start something of his own", he tells Re:Baltica.
The British idea seemed adaptable, but needed money. Wrote an email to an old acquaintance, Kesenfeld.
"I knew that at that moment they invested in several companies. I said, here's an idea, what do they say?"
Kesenfeld replied that his business partners might also be interested. They agreed that the investors will invest one million euros to start the business. Having initially planned that the platform would issue loans against real estate collateral, investors will be able to invest in the financing of these transactions and earn from interest. Then things happened quickly.
A month later, the company was founded, a team was assembled in June, but they started working at Mintos in January 2015.
Over time, the idea transformed and Mintos became a virtual marketplace where non-bank lenders offer investors, mostly private individuals, to invest money in their companies with 10% and more annual returns.
The offer made Mintos popular at a time when banks pay virtually nothing for deposits.
Five years later, Mintos has grown into the largest collective lending platform in Europe, whose success story was also described by the international business media Bloomberg . Schulte himself is a millionaire, at least on paper.
The Mintos website mentions that during the entire period of operation, around 350 thousand investors had invested a total of almost six billion euros in the companies located on the platform.
Mintos has ambitious plans for the future. Its manager, Šulte, says that he is waiting for two licenses from the Financial Supervisory Authority of Latvia - one will allow him to operate as an investment brokerage company, the other "is a license for an electronic money institution". They will allow to expand the offered services.
One of the investors, financial blogger Kristaps Mors, calls these figures "inflated". He explains: an investor can invest 100 euros, withdraw the money after a week and invest again.
Mintos will list that 200 euros have been invested, but in reality it will be 100.
He also criticizes the selection of companies available on the platform. Mors has researched that only about half of the 70 companies have access to high-quality audited annual reports, which would allow to make sure of their financial stability.
Annual reports are essential, because Mintos works only as an intermediary - the investor must take the risk himself in which companies to invest in. In addition, about 40% of the lenders on the Mintos platform are owned by Mintos owners (the largest being Mogo ).
With the onset of the coronavirus crisis, several companies featured on the Mintos platform faced financial difficulties. Mors managed to withdraw his investment.
At the end of 2020, investors' investments worth 100 million euros were in question. In Internet comments, disgruntled investors expressed outrage at potentially losing money.
Mintos' response was succinct: if you invest in a business that promises dozens of times higher returns than a deposit in a bank, you should also expect greater risk.
"The return against the risk is adequate," says Re:Baltica company manager Šulte.
Exports "wild west" methods
Among Mintos' troubled lenders are two payday loan firms partially owned by Kesenfeld in Kosovo and Armenia. Both have had their licenses revoked by the local supervisor, about 24 million have been frozen.
To understand what happened in Armenia and Kosovo, we need to go back more than ten years in the past in Latvia.
The realization that the beautiful advertising prompts to borrow money and live a beautiful life is already dragging us into an endless debt trap came to Latvia a couple of years after the founding of "4Finance".
More and more stories emerged of young people who had no income for easy money, or gambling addicts who borrowed at night.
The industry was young and loosely regulated. 4Finance spent millions on advertising to attract customers.
In the media, on the Internet, on the side of trams, they invited people to take a loan - and get a pizza, a movie ticket and a concert as a bonus.
Lenders did not provide customers with clear and understandable information about the cost of the loan, which made the financially illiterate people fall. They believed that the loan was issued for free, but the lenders concealed commissions, late fees, etc.
The loans were deliberately advertised as short-term loans, creating a false impression that the customer would be able to pay back on the next payday. To make it harder to return, there was a "balloon payment" - what was taken must be returned at once, not in parts.
As a result, customers extended the repayment of loans, but it was precisely in the extensions that the lenders' large profits hid. In 2015, almost half of the industry's customers extended their loans. The annual rate could jump up to 800%.
Consumer watchdogs PTAC fined "4Finance" for unethical advertisements, failure to check the solvency of customers. And not only in Latvia - similar violations were also punished in Lithuania. However, their size was nothing compared to the company's turnover.
Any efforts to regulate the industry more strictly got stuck in the Saeima. This was opposed by the specially created lobby of the industry.
Helped by good political connections and influence in almost all the most visible areas - sports and culture, whose representatives appeared at every attempt to tighten the reins with regrets about how disruptive or wrong it would be.
The first restrictions were finally adopted in 2016, stipulating that it is not possible to demand repayment of an amount that exceeds the loan more than twice. After two years, they "cut" advertisements, ordered to assess the solvency of customers and prohibited extending loans more than three times.
Several players appealed to the Constitutional Court - and lost, as the public good was recognized as greater than the negative consequences of the restrictions for lenders.
But at that time the scourge was already devastating.
In 2018, PTAC fined Mogo , which is partially owned by Kesenfeld, with 80,000 euros for insufficiently assessing the solvency of customers.
In the decision, as a consequence of "inappropriately huge" debt, the supervisor mentioned involuntary going to work abroad, increasing addictions, additional borrowing and increasing stress, which can even lead to thoughts of suicide.
It is not known how many people it happened to, how many left, how many work in the gray or black economy to pay off their quick loan debts.
When the debt relief law for loans up to 5,000 euros began to be discussed, the Financial Industry Association estimated that up to 55,000 people could take advantage of this opportunity.
Phones are shared in Kenya
Business tactics approved in Latvia are now used by Kesenfeld and his partners in other countries.
To attract customers to the Zenka brand in Kenya, local Instagram influencers gave away phones every day for a month and a half to followers who persuaded the most relatives and friends to take loans.
Zenka is proud to have attracted 700,000 new customers in seven months and even won an award as the fastest growing mobile app.
When the head of the Central Bank of Kenya started talking about the need to start regulating the rapidly growing consumer credit market, the industry - similarly to Latvia - formed an association. Its first leader was the director of Zenk a.
Kosovo and Armenia are waking up and starting to slow down
In Armenia, Mesrops Arakelyans, the head of Mogo , a company partly owned by Kesenfeld, was an adviser to the president of the country on quick loan business issues.
Similar to the Latvian Association, he also suggested not to issue loans at night and to clients who are not younger than 21. His proposals did not include any interest ceilings that would ease the situation of debtors, but would, of course, reduce lenders' profits.
On the other hand, another company, which is also partially owned by Kesenfeld – Varks AM –
Armenian youth were invited to take out a loan on their 18th birthday through text messages.
In 2020, the Central Bank of Armenia revoked the license of this company due to insufficient capital. The MP wrote on Facebook that "thousands of citizens who have become hostages of Varks AM approach her every day " and the parliament should help solve their problems "because of the abnormal super profits" that the lender has made over several years.
At the Central Bank of Armenia, Re:Baltica found out that the business of quick loans is still not regulated.
Analyzing publicly available information, one gets the impression that the real reason for revoking the license was the desire to protect citizens from falling into an even bigger debt trap.
At least that was the motivation of the Central Bank of Kosovo, which revoked the license of Kesenfeld's company Monego working there at the end of 2019. The reason — too high interest and a threat to national security, which was not publicly explained in detail.
Zekirja Shabani, editor-in-chief of Kosovo news site Infocus, explained to Re:Baltica : ”We are talking about interest rates of more than 50%, 70% or 200%. In one case, according to the central bank, it was 2,000%.”
Monego also failed to check customers' ability to pay and, contrary to local laws, issued loans to people living on benefits.
In a press release, the Central Bank also vaguely indicates the threat to national security posed by Kesenfeld and his business partners. Shabani specifies that the suspicions are based on the businessmen's "ties with people involved in money laundering activities."
He does not explain in detail, but states that he is ready to prove his claims in court. "They operated in countries without a sustainable legal framework, thus taking advantage of countries like Kosovo and others that have deficiencies in the rule of law," concludes Shabani.
Re:Baltica has no other, independent, confirmation that Kesenfeld is connected to money laundering.
Kesenfeld denies any involvement in criminal activity. His lawyers appealed to the local media ombudsman for similar publications in another Kosovo publication. It found that the journalists' claims lacked sufficient evidence and violated the journalistic code of ethics.
He also disagrees with the statement that poor countries with weak regulation are deliberately chosen for the lending business.
"This is not true," Kesenfeld writes in the answers and points out that he has invested in companies that work in different countries, including Scandinavia and "other EU countries where there are very high requirements from a regulatory point of view."
In addition, Mogo is successfully continuing its operations both in Armenia and Kosovo . The company will go to court in Kosovo and considering the possibility of doing so internationally in order to "represent its interests and recover the money", Kesenfeld writes in Re:Baltica .
He emphasizes that in practically all the companies in which he owns shares, he is only a financial investor and is not involved in their day-to-day operations. And does not feel guilty about the fact that part of the society is drowning in debt due to quick loans.
"As in any other industry, there can be cases where a product is misused with negative consequences," Kesenfeld writes.
Although at the beginning of the industry "you could talk about the wild west in a way", today quick loans are a standard financial service in many countries of the world, according to the millionaire.
"An entrepreneur does what is allowed," Ivars Kesenfeld defends his son's business. He compares it to banking and believes that the state should have determined from the beginning how to protect those who should not borrow. "People also tell me directly sometimes that it was not good. I answer them that I believe: the banks were just as cruel.
Yet, Zenka's approval has not quelled concerns over its business practices. Critics argue that its high-interest loans are exploiting financially vulnerable Kenyans, a scenario eerily reminiscent of the "wild west" tactics used in Latvia years ago. Meanwhile, a former director of Zenka has established another digital lending company in Kenya, Moneza, which aims to offer similar financial solutions. This new venture is already drawing scrutiny, with observers questioning whether it will follow in Zenka's controversial footsteps or adopt a more ethical approach to lending.
Kesenfeld, however, remains distant from the daily operations of these companies, insisting that he is merely a financial investor. Nonetheless, the pattern of exploiting regulatory loopholes and targeting underserved markets with predatory lending practices continues to shadow his business empire. As Zenka and now Moneza embed themselves in Kenya's digital lending market, the debate over the ethical implications of Kesenfeld's business strategies shows no signs of fading.
References
Rebaltica.lv - https://en.rebaltica.lv/2021/02/the-payday-loan-millionaire/
Malta files
TechCrunch
Bloomberg
