ZÁHONY, Hungary – A long line of cars stands waiting to pass through Hungarian customs and security checks on the Ukrainian-Hungarian border. Hungarian customs agents examine passports and visas, after which they perform various checks to prevent goods being illegally smuggled into the European Union.
Frontex, an EU watchdog that monitors the 28-nation bloc’s external border controls, says few smuggling cases are detected here on the Hungarian border. Nevertheless, the small, Hungarian border city of Záhony is known as a hotbed for organized crime and smuggling, with goods mostly coming from Ukraine’s westernmost Zakarpattya Oblast.
That’s because, according to Frontex, a staggering 96.6 percent of smuggling goes undetected in this border town. In its latest annual report, the organization suggests that border guards on both sides are involved in taking bribes to ignore contraband activity. Ukrainians and Hungarians have formed various smuggling groups that compete against each other.
And the number of smuggling incidents is rising. So far this year Frontex observed an increase of 16.8 percent over all of last year’s 396 cases of illicit smuggling along mostly Zakarpattya’s border.
Frontex, however, says solid proof of border guard corruption and widespread smuggling in Záhony has never been found. But the Ukrainian and Hungarian authorities have known about the problem here for years, and the locals were surprisingly open about it when the Kyiv Post visited Záhony.
Nineteen-year-old Tamas, who didn’t want to give his full name for fear of getting in trouble with the authorities, admits to being a smuggler. Wearing fashionable baggy pants and brand new Adidas trainers, he takes a drag on his cigarette.
“This town lives off (smuggling). I’m not part of an organized gang, or doing big stuff, but it’s a way to make money. If I can buy a pack of cigarettes in Ukraine for less than €2, and sell it for twice the price (in Hungary), that’s called business, not crime,” Tamas says.
Some 56.6 billion illegal cigarettes were consumed last year in the EU, according to the latest annual report by auditing firm KPMG. That represents 10.4 percent of total consumption and is worth more than €11 billion in lost tax revenue.
There are others in Zahony like Tamas who are open.
Josef Ferensczi, a 56-year-old hotel owner, holds two passports – a Hungarian and a Ukrainian one – and enjoys the freedom to make weekly visits to his native town of Uzhgorod located some 30 kilometers north of Ukraine’s border with Hungary.
He also enjoys the little profit on the side he can make from cigarette smuggling.
When he spoke to the Kyiv Post, Ferensczi had just arrived from Uzhgorod, and was meeting with a young man named Viktor Halasz at the Záhony train station.
Ferensczi passes a consignment of cigarettes from Ukraine to the 21-year-old Halasz, whom Ferensczi describes smilingly as his “business partner.” Halasz will take the cigarettes to the Hungarian capital of Budapest to sell.
“The money is in Budapest,” Ferensczi says. He tots up his profit from this latest “business deal” in his head. “I think this time I’ll have a profit of $250,” he says.
Ferensczi declined to say how many cigarettes he has just smuggled into Hungary. He’s also vague about how he did it.
“The Ukrainians don’t even care,” he says. “Even if they do find them – and they’re not actively searching for them – they’ll probably just ask for an ‘unofficial fine.’”
Recently in July though, the top management of Zakarpattya’s border guards were fired, following a shootout over smuggling channels in the region that left two men from the right-wing paramilitary group Right Sector dead. They had allegedly clashed with the private security detail of a lawmaker and local law enforcement. Details of the deadly shooting that took place in Mukacheve, are still hazy, and a special parliamentary committee is investigating the incident.
The same month on July 17, authorities found at least €1.5 billion worth of contraband cigarettes that were without excise stamps on the Ukrainian side inside three trucks. It was the largest contraband bust so far this year, according to Ukraine’s Interior Ministry.
“Recently, though, there are new border guards. Young women have joined the customs, and they’re tough to bribe, but in the end their supervisor usually takes some money and closes his eyes,” Ferensczi said.
The Hungarians “do search for illegal smugglers among the many people crossing the border,” he said. “However, some (Hungarian customs agents) are part of the smuggling network. We text the person who’s on duty, and make sure it’s him that checks the smuggler. He gets paid, and the smuggler can go on without any problems. Both parties are happy,” Ferensczi added.
At the checkpoint on the Hungarian side of the border, the custom officers weren’t keen on talking about smuggling.
“Smuggling is not permitted,” said one officer, Andras, who because of his work wasn’t allowed to give his surname. His supervisor, Mathyas Bugos, is dressed in a dark green uniform with enormous gold-braided epaulettes.
“If we catch smugglers – and we do – they have to pay a fine and hand over the contraband. In some cases they will be criminally prosecuted or, if they’re Ukrainians, their visa will be revoked,” Bugos says.
Asked about allegations of collusion between smugglers and customs officials, Bugos says: “Despite what people in this town might think, we don’t take part in any smuggling gangs.”
Záhony town mayor Lászlo Helmeczi, speaking by phone, said the prevention of smuggling was a top priority in cooperation between the Hungarian and Ukrainian customs authorities. He acknowledged there was a smuggling problem in the region.
“If the European Union wants to grant a visa-free regime to Ukrainians, then I hope that more money will be made available for the prevention of smuggling, and dealing with corruption on the Ukrainian side,” Helmeczi said.
But he doesn’t think that Hungarian custom officers are involved. “They’re guarding Europe’s border. Corruption is not part of that,” Helmeczi says.
Kyiv Post staff writer Stefan Huijboom can be reached at [email protected].
