President Volodymyr Zelensky’s new habit of using the National Security and Defense Council for fast decisions took a new turn on April 2, when the council went after smugglers.
The council imposed sanctions against 10 Ukrainian citizens he said were the country’s top smugglers.
“Contraband is economic terrorism against Ukraine,” said Zelensky on April 2, explaining the decision. “According to expert calculations, Ukraine has lost Hr 300 billion ($11 billion) from smuggling.”
The sanctions are a way to overcome the inaction of the courts and parliament. After Zelensky’s earlier sanctions against pro-Kremlin lawmakers, Zelensky now turns his attention to lawbreakers, like those using the country’s rotten customs for personal gain.
But there is a catch. By law, Ukrainian citizens can be sanctioned by the Security Council sanctions only in case of terrorism. While smuggling is illegal, it’s not terrorism.
By bypassing the law, Zelensky risks going too far. While Ukrainians, tired of inactivity, have come to enjoy the president’s attacks against Ukraine’s untouchables, new sanctions come at the cost of institutional erosion and open the door to future abuse.
“The biggest risk now is that each next president can do the same,” says Anatoly Oktysiuk, a political expert at local think tank Democracy House.
Among the 10 most recently sanctioned Ukrainians, the best known are Odesa-native Vadym Alperin and Orest Firmaniuk, from Zakarpattia Oblast, who were named Ukraine’s top smugglers in the past. They denied it.
The names of an additional four, Valery Peresolyak, Volodymyr Didukh, Yuriy Kushnir and Oleksandr Chudakov, have often appeared in local media linking them to smuggling.
The rest, Ivan Bokalo, Oleksandr Yeremchuk, Viktor Sherman and Oleksandr Kravchenko are not widely known.
The National Security Council of Ukraine on April 2 put sanctions on 10 people whom it identified as “the top 10 smugglers in Ukraine.”
All of them are shying away from press appearances. None have commented about sanctions.
As a result of sanctions, the accounts and assets of all 10 are frozen for three years. They are also banned from conducting any business in Ukraine.
The Security Council also removed over 100 Ukrainian Custom Service officials from office.
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Godfathers of contraband?
Ukraine is a big country, full of opportunities for smugglers. Its 5,638-kilometer land border adjoins seven countries. Ukraine also has several large seaports, the biggest being in Odesa, a city of 1 million people on the Black Sea coast.
Influential groups use the land borders and ports to make billions by smuggling raw material and cheap goods out of the country. They make additional cash by illegally shipping goods into Ukraine, evading customs and taxes.
Ukrainian customs officers and top officials take part in these schemes.
Out of those sanctioned by Zelensky, two names stand out – Alperin and Firmaniuk. Both have been named “king of contraband” in the past.
Doing business since the mid-1990s, Alperin first popped up in the media in 2008 when his ship, Faina, was captured by Somali pirates.
The ship was transporting arms from Ukraine to Kenya. It was reported that Alperin paid $3.5 million for the ship’s release.
In 2017, Alperin was named as a major importer of goods from China, he also was sometimes referred to as an Odesa-based construction mogul.
The same year, the National Anti-Corruption Bureau (NABU) began investigating Alperin for a potential evasion of taxes and customs. He was soon charged with the creation of an organized crime group that included customs officers in Odesa and Kyiv.
NABU accused Alperin of costing the state Hr 77 million ($2.8 million) in taxes. Soon Alperin was arrested for bribing a NABU detective. He was released on bail.
In 2019, Zelensky called Alperin the “godfather of contraband,” after NABU arrested the deputy head of the Kyiv customs department linked to Alperin. Both remain on bail.
Firmaniuk has a similar life story.
In 2019, then-head of Ukraine’s Customs Service Maxym Nefyodov, in an interview to Bihus.info, named Firmaniuk and Alperin as the top smugglers in Ukraine.
Viktor Sherman, who was also sanctioned by Zelensky, was also on that list. Ukrainian media have reported that he is the business partner of Alperin.
Firmaniuk calls himself a customs broker, who uses “tax optimization” to import goods into Ukraine. The so-called optimization is a scheme by which iPhones are imported as iPhone parts and clothes are imported as threads, allowing a lower customs fee to be paid at the border.
Although this is illegal, Firmaniuk was never charged.
Low-profile brokers
The other seven people sanctioned by Zelensky have rarely made national headlines.
One notable exception is Peresolyak, who owns Minaj soccer club, which entered Ukraine’s Premier League for the first time in 2020.
Minai is a suburb of Uzhhorod, a small regional capital on the border with Slovakia and Hungary. Peresolyak has been called the main smuggler of Zakarpattia Oblast.
Peresolyak worked in Zakarpattia’s customs service for over 10 years, peaking as the deputy head of one of the departments. After leaving civil service, Peresolyak had 13 plots of land, several houses and a soccer club. Ukrainian media reported that he maintained leverage on the local customs.
Another local star is Kushnir from Chernivtsi Oblast which borders Romania. Kushnir was credited with inventing a scheme where locals would travel by foot over the border carrying several blocks of cigarettes. They would do so multiple times daily. The cigarettes would bypass customs in Romania and would be shipped by trucks to the European markets.
The cost of a pack of cigarettes in Ukraine is $2 on average. In Europe, the price can peak at $8-10 a pack.
The most interesting individual sanctioned by Zelensky is Didukh, who has been referred to in Ukrainian media as a Lviv-based crime boss. He survived at least three assassination attempts and is credited with having interests in smuggling raw materials from Ukraine.
Odesa-based Chudakov is the only one on the list (besides Alperin), who has been charged by the prosecution.
Chudakov is one of the five people charged in a corruption scheme involving Dmytro Holovin, the former head of Odesa’s police. The scheme centers around a group of police officers, who sold confiscated cigarettes through Chudakov.
Legal dilemma
Zelensky’s earlier decision to use the Security Council to defend Ukraine from Kremlin proxies was well-received by political observers and activists.
Now, many have raised questions about where this may eventually lead.
“We’re talking about a mechanism that’s instant, doesn’t require a formal investigation and doesn’t need to go through court,” Volodymyr Fesenko, head of the Penta Center for Political Studies, told the Kyiv Post in late March after the Security Council imposed yet another round of sanctions.
At the time, there was a consensus among experts that Zelensky would stay within the law. Now, this notion is gone.
According to Ukrainian law, only people who took part in terrorism can be sanctioned by the Security Council. Another Ukrainian law specifically lists activities that are considered terrorism.
Smuggling outside the eastern conflict zone isn’t one of them.
Zelensky’s office declined to comment on what grounds the sanctions were imposed.
This is not the first time Zelensky bypasses the law and it doesn’t look like he’s ready to stop.
On March 27, Zelensky signed a decree to sack Oleksandr Tupytsky, head of the country’s Constitutional Court, who’s been involved in the scandal regarding the annulment of anti-corruption legislation.
Tupytsky’s sacking was demanded since late October, when the Constitutional Court, under Tupytsky, effectively eliminated Ukraine’s system of asset declarations for public officials.
However, Zelensky doesn’t have the authority to fire a Constitutional Court judge.
“Zelensky set a precedent,” says Democracy House’s Oktysiuk.
According to Oktysiuk, Zelensky wants to see quick results, especially when Ukrainian institutions, such as courts, law enforcement and parliament, are failing. Yet there are no checks and balances on the president, making future abuse more likely.
“In Ukraine, if you have power, you’re above the law,” he says.
