Commercial Goods Enter Ukraine Disguised As Humanitarian Aid
4 July, 2017

Hromadske's investigative unit, Slidstvo.Info, has revealed a questionable overlap between trade and humanitarian aid in Ukraine. According to the report, fake charitable organizations are importing commercial goods to Ukraine disguised as humanitarian aid, as a means of tax avoidance.

Fake humanitarian organizations in the West of Ukraine and Poland are making commercial profits, often at the expense of those seeking to provide legitimate humanitarian assitance. A charity foundation registered to an address in Lublin, Poland, for example, has shipped dozens of humanitarian aid to Ukraine in recent years. The building's manager, however, claims that the foundation's founder disappeared several years ago. "I'm looking for him too. He owes me 20,000 zloty [5,300 USD] in rent!" the building manager told Hromadske.

Rostyslav Makukh, the volunteer chairman of the Lviv-based New Country Foundation, has been helping the army ever since the war started in 2014. His charitable foundation has brought over 40 humanitarian shipments to Ukraine. These humanitarian imports were all done under strict control and Makukh has documents to account for every kilo of humanitarian aid he has received.

Along with other activisits, Rostyslav Makukh also investigates schemes that bring commerical goods into Ukraine under the guise of humanitarian aid. Over a thousand organizations in Ukraine are recipients of foreign humanitarian aid, but while real organizations are still seeking official status, hundreds of dubious ones receive the green light from the Ministry of Social Policy. This allows them to deliver thousands of tons of humanitarian cargo without taxation.

Using a list from the Ministry of Social Policy's website, Makukh and the other activists created a database of recipients of humanitarian aid. The list included an organization that no one had heard of, the Lviv Women's Council. For the activists, this was strange because real volunteers usually know each other.

On paper, the Lviv Women's Council has imported seven humanitarian shipments in the last five years amounting to nearly 140 tons or seven truckloads of clothing and footwear. The organization filed the documents for the last shipment earlier this year. The recipients are four charity foundations and a number of individuals.

The Christian community centre, Mercy, was allegedly the recipients of of six tons of humanitarian aid from the Lviv Women's Council. When first asked, the founder of the fund, Tetyana Ivanova, denied any knowledge of the community centre: "I don't think it's even in our building," she said. Then she changed her story, "Oh my God, of course it is. You've just caught me off guard."

It quickly became apparent that the Mercy community centre also only exists on paper. Tetyana Ivanova didn't recognize her signature on any of the documents. "I did not sign anything this year," she insisted when presented with the foundation's paper trail. Finally, she admitted that she had agreed to become the fund's founder and director at the request of a classmate. "I'm a hired director," she said, explaining that she simply signs the papers. She also claimed to have no knowledge of the real owners.

Along with the Mercy centre, 1,500 disadvantaged people were supposed to receive aid from the Lviv Women's Council. However, it quickly became apparent that the foundation was fake.

The Lviv Women's Council was located on the outskirts of Lviv, where it supposedly received and distributed humanitarian aid to the poor. The founder of the organization, 25-year-old Dzvenymyra Dovhalyuk, was searching for work as a waitress in Lviv just two years before. She is also the founder of two other charities that receive international humnaitarian aid. Interestingly, one of her partners is Oleh Alexandrov, who has connections to MPs from the Opposition Bloc, a Ukrainian politial party founded in 2014.

According to the documents, in the last three years Dovhalyuk's organizations have received nearly 320 tons of humanitarian aid. However, Dovhalyuk refused to provide a list of people who had received aid. "You need to talk to my accountant," she insisted. "Leave me your phone number." The foundation's humanitarian aid was being received from a Polish donor, but Dovhalyuk claimed she didn't remember which city it came from. Finally, she refused to talk in front of the cameras.

The Lemberg Foundation, based in Lublin, Poland, allegedly continues to send tons of aid to the Lviv Women's Council. The office of the so-called foundation is located in the city's historic centre, but the building manager said that although he still receives letters for the organization's head, he is long gone: "I have customs officers, tax and court officers come in. I have stacks of mail that arrive for them at this address," the building manager told Hromadske. "But I haven't seen him in three years."

Accoridng to Oksana Sukhorukova, the coordinator of the Kyiv-based Frolivska 9/11 volunteer centre, humanitarian aid guarantees an organization an all-inclusive package at customs: "If it's humanitarian aid, you don't pay the 20 percent VAT. There's no customs fee," she said. "There's no brokerage services, there's a simplified procedure for customs clearance."

Since 2014 the Frolivska 9/11 centre has been specilizing in helping migrants from the Donbas region in the east of Ukraine, supplying them with clothing and footwear and assisting them with resettlement, job searches and even first aid. "It all depends on the situation on the front line," Sukhorukova explained, "When there's trouble we are overwhelmed." The volunteers have recently re-oriented the centre's activities and are now mostly assisting hospitals. Oksana Sukhorukova regularly receives medical equipment from abroad.

Despite the organization's good reputation, officials regularly block the passage of humanitarian aid. The volunteers have been forced to publicly demand the passage of ambulances for ATO fighters through customs. "We conducted the action, we approached Groysman [Prime Minister of Ukraine–ed.], it was a public event at the Ukrainian House," Oksana Sukhorukova told Hromadske. "Those ambulances could have been at the Svitlodarsk Arc [a battle in the east of Ukraine in December 2016–ed.], but they weren't there because the Ministry put sticks in our wheels."

Disreputable foundations have also been using the guise of humanitarian aid to bring in goods besides clothes, furniture and appliances. An Odesa-based fund, for example, receive Chinese grill pans, waiter bells and bottle caps while a Jewish community centre received products from Israel such as salami, pastromi, pickled tongues and Swiss steak. The Kyiv-Pechersk Lavra received tractors with a combined worth of around half a million euros. "The law allows for anything to be delivered under the guise of humanitarian aid," explained Oksana Sukhorukova.

In the words of Rostyslav Makukh, volunteer chairman of the New Country Foundation"The most common scheme is the import of second hand goods under the guise of humanitarian aid. This scheme has been in place since the '90s, as I've learned. It was quite common during Yanukovych's reign. In 2014, it subsided a little, but now it's back again."

Designer items are also being imported to Ukraine through these schemes. Last year, the famous Lviv charity foundation Ukrainian Volunteer Movement tried to ship nine tons of goods to Ukraine from the UK. The cargo got stuck at customs due to a problem with documentation, and later disappeared from the warehouse.

The foundation's activity drew the attention of Lviv prosecutors. Documents from the criminal case state that in the EU the cargo was marked as commercial, and not from the UK but from Italy. "The goods travelled from Rimini in Italy," Halyna Yanko, the Chairman of the Public Council at the Security Services of Ukraine (SBU) Directorate in the Lviv Region said. "Rimini is famous for its stock of brand name clothing."

At Polish customs, the consignor was indicated as the Italian company TEDDY SPA, the manufacturer of clothing brands such as Miss Miss, Calliope and Terranova. Four firms planned to buy the goods in Ukraine, one of them was a store called BEAR in Odesa. The company's phone number and address coincided with a Terranova store, however, it closed down a few months ago.

"In informal conversations with customs officials, it was confirmed that this was designer clothing," Halyna Yanko told Hromadske. "But why did they let it pass? Why did they put designer clothing into a warehouse for six months? Why didn't anyone notice and how did it disappear?"

The brand name clothing crossed the Ukrainian border disguised as humanitarian aid sent to the Ukrainian Volunteer Movement from the British Company ARENTINO IMPEX. The head of the Lviv fund, a well-known public figure named Mykhaylo Kot, is the co-founder of two other charities. His foundation called The Future, has also received over twenty tons of humanitarian aid from ARENTINO IMPEX.

In the UK, British journalists from the organization Finance Uncovered visited the British donor's office. The company only had a mailbox there and the founders of the so-called foundation are actually shell companies from the Seychelles. "As we expected, we could not obtain any information as to who rents the mailbox specifically on behalf of ARENTINO IMPEX," said British journalist Linonel Fall. "Still, I wrote them a letter which I dropped into this rented mailbox."

One of Mykhaylo Kot's "charity organizations," the International UNESCO Programs Western Regional Centre has received twelve humanitarian shipments in the last three years. Some of them were from British comapnies.

"If you look at these companies, you get very serious doubts as to their actual activities," Antonina Volkotrub, an analyst for the Anti-Corruption Action Centre, told Hromadske, explaining a number of markers for fictitious companies. For example, the donor BAMORTH INTEGRO, which passed 43 tons of new clothes to Mykhaylo Kot's so-called charitable foundations. Its "residence" in the UK is a public registration location and its director has appeared in more than 120 companies. "It's interesting that the owner and director of this company is the same person," said Antonina Volkotrub. "He was born in 1964 and is a citizen of Vanuatu. I doubt that this man really knows that he is the owner of this company and manages it."

Mykhaylo Kot, the co-founder of the Lviv charities at the centre of the scandal avoided making a statement to journalists for almost a month. First, he insisted that he was abroad and then he said he was in the hospital. Eventually he stopped answering Hromadske's calls.

Despite the ongoing war in the east of Ukraine, the majority of humanitarian aid is delivered to the country's western and central regions. The top five recipient cities are Kyiv, Lviv, Ternopil, Lutsk and Zhytomyr. For nearly two years, prosecutors and the Security Service of Ukraine (SBU) have been investigating the smuggling of commercial goods under the guise of humanitarian aid to the Volyn region in north-west Ukraine. The search warrant includes impressive numbers. According to reports each month they import about 70 tons of goods and household items which are then sold for cash. This enriches the participants of the illegal scheme, while inflicting material damage on the Ukrainian state of around 10 million USD.

The scheme allegedly involves ten charities in the Volyn region. According to the investigation, the pseudo-humanitarian aid was allegedly sold through a network of European brand shops. At least six of the founders of these funds are associated with Oleskandr Rudynets, a pastor at God's Kingdom church. Supporters of Oleksandr Rudynets claimed that the needy receive humanitarian aid from God's Kingdom.

In the past five years the funds associated with Oleksandr Rudynets have received an impressive amount of aid, much of which is from the UK. His foundation Leverage has received 196 shipments, while the Independent Church of Christ got 86 and the Spiritual Administration of Christian Churches God's Kingdomgot 66. In October 2016, for example, God's Kingdom received 17 tons of aid from a British company which was eliminated three months later.

Oleksandr Rudynets refused to meet with Hromadske and instead answered several questions over social media. "I am a bishop at God's Kingdom in Ukraine, I serve the Church in nine regions," he said when asked why he and his family need so many charities. "God's Kingdom receives and distributes aid throughout Ukraine. Two and a half years ago, I personally drove shipments to the frontlines." He also answered ambiguously when asked about the final recipient of the humanitarian aid, "All information is formed by the Ministry of Social Policy commission. The police and regional administrations control the process. They often offer the receivers. Our quota for personal use is around 15 percent."

When asked to explain the criminal case against him, Rudynets said: "Some expert piled everything into a heap. Since we were at the center of it, they appointed me the head of Cosa Nostra. After a series of investigative and court actions, everything fell into place. We have never been charged."

Investigators have allegedly proven fraud with humanitarian aid through a number of charity funds and involvement in the scheme of officials from the Ministry of Social Policy. When asked why none of the cases have gone to court in the last two years, the Security Services of Ukraine (SBU) cited an ongoing investigation and did not provide any information.

Oksana Sukhorukova, the coordinator of the Frolivska 9/11 volunteer centre, has been fighting the Ministry of Social Policy's schemes for years. At first, she received peculiar offers, "They offered to create an association of foundations with impeccable reputations to work with humanitarian aid," she explained. "I.e. our reputation, their resources. We approach international donors and distribute the humanitarian aid under the Cabinet's control. We were promised high salaries as the managers of the association and were directly offered law enforcement 'protection'." When they refused, problems started, "All shipments from volunteer organizations were stopped for no reason," Oksana Sukhorukova recalled. "They said that they lack the documents to recognize them as humanitarian."

The matter was only partially settled after a public scandal, but real volunteers still face problems with humanitarian shipments. Only a special working group under the Ministry of Social Policy can recognize a shipment as humanitarian. It meets weekly and consists of representatives of various ministries. However, all the paperwork is prepared within the Ministry of Social Policy.

Although the Ministry's press office denied Hromadske an interview with the Minister of Social Policy, Andriy Reva, journalists managed to ask him several questions on his way to work. The Minister refuted large-scale corruption involving officials and blamed the approval of fake shipments on a lack of people and resources.

"First, the department is short on people. After we made changes, only 3 people remain, I think. That is nearly not enough," Minister Andriy Reva said. "This is not exactly the work profile of the Ministry of Social Policy–to determine what humanitarian aid is and what is not. Intentions are one thing, but checking documents and cargos, where they're going, I don't think that's the work for the Ministry of Social Policy."

The Ministry of Social Policy is currently initiating legislative changes to pass responsibility for humanitarian aid to the Ministry for the Temporarily Occupied Territories. But are officials really ready to change their behaviour? It would appear that the opportunity for profit is too great for them to refuse.

/Evegenya Motorevska for Hromadske's investigative unit, Slidstvo.Info

/Written by Eilish Hart