In March 2014, shortly after Ukraine’s Euromaidan Revolution, the Finance Ministry issued an order to re-create a separate energy customs body under the State Fiscal Service. The state agency was originally created under President Viktor Yushchenko in 2005, but liquidated under President Viktor Yanukovych in 2011.
But in October 2015, the Head of State Fiscal Services, Roman Nasirov, announced his intention to liquidate the agency once again.
So what is going on?
Located far out of Kyiv’s city center, Ukraine’s energy customs receives little attention from the press and its existence is largely unknown to the wider public.
It’s an entirely centralized and separate customs authority that works exclusively with gas and oil products. The regional outposts report directly back to the main office in Kyiv, not to the larger regional customs authorities, and the data is not shared.
The main reason for having a separate energy customs is to ensure the upmost professionalism, according to its acting head, Ihor Pikovsky: “Why train 9,000 people? It’s better to train 200,” he told the Kyiv Post.
25 percent of revenues
Pikovsky, who took office on Aug. 31, has been one of several temporary heads of the agency since its re-creation in 2014. When asked why there had been so many staff changes and what exactly was going on at the agency, Pikovsky told Kyiv Post that he “didn’t know anything.” He couldn’t even say who had last held the post, and the information is not publicly available.
Considering that the agency accounts for more than 25 percent (Hr 5.5 billion, or $220 million) of the total customs revenues raised in the country, according to Pikovsky, the non-transparency of its operations and lack of consistent management is surprising.
Serhiy Kuyun, the director of A-95, an energy consulting group, told the Kyiv Post that when the agency was first introduced it was very popular with businesses, as it had developed a specific approach to energy products, something Ukraine used to lack. However, he says that now it’s not as necessary for them to be separate.
The constant change in leadership of the energy customs, says Kuyun, is down to infighting “between officials who want to work with those goods.”
Anatoliy Makarenko, the former deputy head of the State Fiscal Service from March 2015 to April 2016 and its head between 2009 to 2010, told the Kyiv Post that under Yanukovych it was liquidated and that the sphere had come under the control of the Ministry of Taxes, de facto the State Fiscal Service, to help corrupt schemes.
Makarenko alleges that between January 2013 and February 2014, 2 million tons of diesel and oil products that came through Ukrainian customs were falsely classified as being for re-export. This meant that no customs duties were paid on the products. But instead of being transited out of the country, the oil products were delivered to various destinations within Ukraine. According to Makarenko, when he took office and the energy customs was reintroduced, this practice stopped.
Kurchenko schemes
Kuyun told the Kyiv Post that the scheme was controlled by Serhiy Kurchenko, a Ukrainian gas mogul close to Yanukovych. What made it obvious, according to Kuyun, was that the figures for the consumption of fuel in Ukraine were much higher than the amount being officially imported or produced.
“They started to bring fuel in as contraband, more and more, so the indicators – because there was a separate structure – started to dramatically decrease,” Kuyun explains. “It was becoming too obvious, so they moved it to the general ministry, and the losses were spread out. It was liquidated to hide the scheme. And so that’s why it was re-created in 2014, to control it again. Because back then tens of billions of hryvnias were being stolen.”
However, it seems that infighting between the different groups didn’t stop in 2014.
A group in parliament that Makarenko supports is lobbying for customs to become a separate state agency from the State Fiscal Service. The law, No. 3763 on the national customs services of Ukraine, which was submitted in January, has yet to be voted on.
Even if a separate customs service were to be created, Makarenko believes the energy customs should also remain separate until corruption in the country decreases.
At the moment, he says, the energy customs is coming under attack from the State Fiscal Service. Many of those whom he considers to be top professionals in the body have been dismissed or left.
Herman Taslytskyy, a lawyer and the head of the public committee for customs under the Ministry of Finance, has specialized in customs for his entire career, says that while there is an aspect of professionalism to the separate body, he has doubts that it’s being created with a good intention.
“There were rumors that the customs was created for the benefit of one person, to make it possible to control in one place all the energy resources coming into Ukraine… For many specialists in the field, the creation of the energy customs was not connected to the reducing custom clearance time or the simplification of the process. It was rather connected to some sort of corrupt scheme.”
According to Taslytskyy, the creation of the energy customs, like much of the corruption in the customs service during the Yushchenko period, was designed to achieve greater control over certain products.
Flowers, for instance, were only cleared at one specific Kyiv region customs point. Taslytskyy says the energy customs was liquidated in 2011 because of an internal battle over flows of money – a battle that had been started by the then customs head, Ihor Kalyetnyk, appointed in 2010. It was then that the Fiscal Service was also liquidated, and the infamous Ministry of Tax and Duties created.
On its re-creation in 2014, Taslytskyy said that there was now no obvious economic benefit to having an energy customs. Although it was true that it created a specialization among customs officers, Ukraine should be trying to automate all its customs processes, he said.
And according to Kuyun, the energy customs is again in the process of liquidation. The mystery continues.
