Ukraine-Moldova-Transnistria: golden triangle of smuggling

Author: Anastasia Cucuruz, Ghenadie Brega (Republica Moldova), Elena Zigulscaia (Ucraina)
11/10/2016 38764

Almost every month, law enforcement officers of Ukraine report about delaying of alcohol and cigarettes smuggling from Moldova. However, in Ukraine the quantity of smuggled goods does not become less–“Privoz” in Odessa, which is one of the oldest and largest existing markets in Europe, is crowded with contraband cigarettes. They sell ​​it without checks and excise duties are questionable. Internet is full of proposals of Moldovan cigaretteswholesale. However, official data indicates that for more than two years Moldovacigarettesare not imported to Ukraine. However, traders are ready to sell illegal goodsby blocks, which prove the magnitude of the supply of smuggled goods. Moreover, contraband cigarettes are often produced in the Transnistria, registering a business in Moldova and Ukraine and ferrying, to the European Union as well. We were trying to understand where and how smuggled cigarettes come to Ukraine.

Images from a site of a tobacco products manufacturer that claims that it can export to Transnistria
Images from a site of a tobacco products manufacturer that claims that it can export to Transnistria
Images from a site of a tobacco products manufacturer that claims that it can export to Transnistria

Smuggled cigarettes at “Privoz”

- Where can I buy Moldovan cigarettes? –I askedthe traders at the "Privoz".

- Now they are being chased, but ask around!

We go in rows. There used to sell cigarettes “from the floor", could even take a piece, although, according to a new Tax Code, all excisable goods should be sold only through the cash register. Now law enforcement officers often make raids atthe "Privoz", chase merchants of smuggled goods. But in some places you can still find old women, selling cigarettes directly "from hands".

However, for the smuggled goods at the "Privoz" are set the whole kiosks. We go to one of them:

- Can I buy cigarettes "Rich" (officially produced in Russia, but banned for import to Ukraine, according to the sanctions list, are often imported to the country from Transnistria, located in the orbit of Russian influence)?

- Yes, it is possible –replied the seller.

- Can I take a block? What’s the price?

- Of course you can!

On the shelves of tobacco shops there are many exotic cigarettes, which cannot be found in regular stores. Sellers are assured: you can buy a couple of blocks. Kiosks are not equipped with cash registers, the calculation is carried out for the cash, how they pay 5% -tax to local budgets is unknown.

In fact, trading Odessa was always "famous" for the flow of contraband goods from around the world. In modern times nothing has changed in this regard, since the Odessa region is a border, and the proximity to the unrecognized republic of Transnistria only contributes to the illegal movement of goods across the border.

The issue of sales of smuggled cigarettes is also easy to solve - at the "Privoz" you can sell and buy everything, as Odessa residentsjoke themselves. In late 2014 the Tax Code of Ukraine was changed - all excisable goods, so cigarettes as well,should be implemented through a cash register, and the tax on them –goes also to the local budgets. But at the "Privoz", despite often pressuresof law enforcement officers, cigarettes, as before, you can buy even "from hands". There are ​​cigarettes, that in Ukraine the official manufacturers do not produce - for example, the Moldovan "Astra", supposedly English cigarettes "Business Club", the Greek "Asmoloff" and many others.

Cigarettes bought at "Privoz"

And due to SFS data, the cigarettes are imported to Ukraine illegally. They cost often cheap, in many there are no excise duties, indicating the illegal delivery of the goods. If there is excise duty, externally it differs from legal cigarettes. The further away from the famous market - the more surprised are eyes of the sellers at the request to sell unusual cigarettes. It should be noted that the Internet is full of proposals tobuy Moldovan cigarettes in Ukraine.

Photo on the official website of the Border Guard Service of Ukraine

Official: Ukraine does not import cigarettes from Moldova

However, the official numbers are staggering: cigarettes from Moldova were not deliveredto Ukraine for more than two years. Thus, all the exotic cigarettes - Moldavian "Astra", "Rich", "Asmoloff" and others –get on the shelves illegally. We know that smuggling is an illegal movement of goods and property across the state border, with violation of the customs legislation. It causes damage to the state, measured in millions UAH, or hundreds of thousands USD. Profit of smugglers is enormous.

For example, the information only about July 2016 indicates that law enforcement officers of Odessa region seized, only in one case, more than 72 thousand packs of illegal cigarettes, worth a total of 1.354 million UAH. Smuggler was Ukrainian citizen. The brands are such as "Arctic", "Monomakh", "Mark", "Prima" and others. The employees of Odessa customs prevent also smuggling of excise stamps from Ukraine to Moldova.

So, in March of this year in Chernomorsk, Odessa region, was stopped the car, moving by ferry, which revealed 12.6 million excise stamps for tobacco products, produced in Russia. The driver turned out to be a Turkish citizen, who was carrying contraband to Moldova.

As explained the head of the press service of the Southern Regional Department of the State Border Service of Ukraine Andriy Beloborodchenko, the number of detentions of smuggled goods at the border in Odessa region is increasing: for example, in 2014 it was revealed 128 cases of illegal movement of tobacco products across the border, seized 2.159 million packs of cigarettes,last year - 75 cases of arrests, seized more than 4 million 280 thousand packs, in the first half of this year have already found 42 cases of trafficking of smuggled goods, seized more than 2 million packs. Analyzing this statistics, it becomes obvious that the smugglers, in the pursuit of profit,are trying to transportto Ukraine as much goods as possible.

However, according to the State Fiscal Service of Ukraine, the import of tobacco products from the Republic of Moldova to Ukraine was not carried out in 2015, as well as in 2014. Whereas in 2013 the total amount of tobacco, imported to Ukraine, was83 tons, for total cost 565,000 USD. Ukraine systematicallydelivers tobacco to Moldova: so 4215 tons, worth about 45 thousand US dollars was exported last year. It is obvious that the Moldavian cigarettes on the shelves of Ukrainian shops get illegally.

It should also be emphasized that the official data on exports of cigarettes from Moldova to Ukraine is radically different from the official response of Ukrainian fiscal services. Thus, according to the Bureau of Statistics of the Republic of Moldova, in 2014, cigarettes were imported to Ukraine, export was not carried out in 2015 and the current year.

Picture published on the official website of the Border Guard Service of Ukraine

Schemes of smugglers

As was explained by representatives of Odessa customs, which is headed by YuliaMarushevska, smuggling networks operate in a double direction. For example, cigarettes are transported in and from Ukraine to Moldova, a destination - European Union countries. In both cases, it plays a crucial role in price difference. For example, in average, pack of cigarettes in Moldova and Ukraine worth up to US $ 1, the EU - more than $ 5.

Smugglers often hide cigarettes in cars and vans - for example, unwind doors, instrument panels, also designed various devices under the bottom of the car. Cigarettes are imported to Ukraine, as well as out of the country to the European Union. Position of the management of Odessa customs is, on the one hand, to intensify the fight against contraband, including the illegal movement of tobacco products, on the other - to reduce the number of audits, initiated by the inspectors.

Corruption = smuggling

But law enforcement agencies of Ukraine and Moldova for various reasons cannot, and sometimes do not want to discourage contraband flows. Thus, the total length of the border between Moldova and Ukraine is 1,222 km, of which 450 - with Transnistria. According to the State Border Service of Ukraine, on the border with Moldova operate 54 checkpoints, 41 of them - automobile, 8 - rail, 3 - river, 2 - ferry.

All border crossing points from Moldova are equipped with special equipment, including X-ray scannersof different types. In addition, five specialized mobile scanners Rapiscan M4507, used throughout the frontier territory of Moldova and periodically moved to the so-called risk areas. Basically, they were received in 2008-2009 from the European Union. In addition, other government agencies have equipment,which is used including at the customs posts. Yet, when it comes to smuggling, these complicated devices are turning almost into a pile of useless metal, because illegal goods are sold on the shelves of cigarette shops.

According to insider information, smuggling in Odessa region from Moldova and Transnistria goes through two channels: the so-called "greenterritory" - through uncontrolled by customs officers and border guards parts of the border between two countries, and through the "window" that is, the corridor given to the smugglers at border crossing points. Often the cigarettes are manufactured in the unrecognized Transnistria that allows making enormous profits, evading taxes to the budget.

For example, according to the so-called TMR Ministry of Justice voiced data, in the unrecognized republic runs a tobacco factory "Ukr-Dniester Group", which is engaged in the production of tobacco products in the city of Tiraspol. According to unverified information, the production of tobacco is put into operation alsoin another Transnistrian town of Dubossary. You can find another "registered" company, which is allegedly engaged in manufacturing tobacco products, in the base of the TMR data.

In a letter, addressed to the "Ministry of Economy" of the region, we have appealed to the authorities of the unrecognized Transnistrian republic on the volume of cigarettes produced, imported or exported in the TMR, but the request was for more than two months unanswered. Thus, to verify production of Transnistria tobacco factories is almost impossible. Meanwhile, on the shelves of tobacco kiosks can be found cigarettes, produced in the region; according to local residents plant belongs to the famous TMR company"Sheriff".

But it is obvious that for a tiny unrecognized republic with less than half a million population,three tobacco factories, it is known from open sources of information, are unnecessary. Cigarettes with signs of differences of separatist republic have repeatedly been identified by police officers whenthey catch smugglers. They work also for foreign markets, delivering products, taking into account the status of the "republic", illegally.

"Ukr-Dniester-Group": TMR-Ukraine

The above-mentioned company "Ukr-Dniester Group", which operates in Transnistria, under the same name in 2012, was registered in Ukraine. Legal address: Odessa, Devolanovsky descent, 11. According to the Classification of Economic Activities, Ltd. is engaged in manufacture of tobacco products and wholesale trade of tobacco products. According to the official data, the owner of the company is a businessman from Odessa Vladimir Rozengolts.

We have asked the company, but a response has not been received yet. The law enforcement and intelligence agencies also have no claims to the enterprising Ukrainian, who allegedly sells products, produced in Transnistria, in Ukraine and possibly Moldova, bringing it by smuggling.

Black Hole TMR: loss of tens of millions, no one behind bars

Indeed, the very existence of the self-proclaimed "republic" outside the norms of international law, contributes to the implementation of the criminal schemes, which affect not only the neighboring countries, but also countries throughout the European Union.

In Moldova, for example, operate two government decisions - from September 2001 and August 2005, according to which Transnistrian companies are exempt from payments for imports of cigarettes and for environmental pollution. Entrepreneurs from Transnistria may qualify for benefits under the condition that enrolled in the State Register of enterprises and organizations of the State Register of the Republic of Moldova, as well as if you have received a license for the import and processing of tobacco, claiming its cargo to the competent authorities of customs. Thus, the "republican" companies actuallyare legalized. As a result of these fraudulent transactions,EU losses are estimated at tens of millions of euros, all go to the pockets of international criminals.

So, in 2014, were found a few companies in the unrecognized Transnistrian republic, importing cigarettes of Italian factories. The export transactions were reported in the European customs system and concluded fictitiously on the Moldovan-Romanian and Romanian-Ukrainian customs. Transnistrian companies, which took part in these schemes, - SRL "Alcazar", "Sarmat-Plus" SRL and others. To implement the criminal schemes were forged official documents of government agencies from Romania, Moldova and Ukraine.

Then the offense was identified by Moldova Service of Information and Security, together with the European Office for the fight against customs fraud OLAF and EUBAM. According to the press release of the Prosecutor General of Moldova,was initiated a criminal case under article 248. Later, from 2013 to 2016, prosecutors filed five criminal cases on money laundering and the movement of contraband goods, committed by SRL "Alcazar", "Sarmat-Plus" - companies from the Transnistrian region of Moldova.

The investigation found out that company SRL "Alcazar", haven’t been declaring the items when moving them across the border. State budget damage is estimated at about 8.4 million lei, or more than 430 thousand US dollars. The company "Sarmat-Plus" SRL has caused damage in a much larger amount - 253 million lei, that is almost $ 13 million USD.

However, until now the court is considered only one criminal case. According to the prosecutor Andrei Pascar, although the judge convicted the accused to a prison term for smuggling in a large scale, hehas not spent a single day in prison, came under conditional release. In other cases, the Prosecutor General of the Republic, together with the investigating teams of several EU countries continues to lead the investigation, the trial is still far.

In addition, Italy launched an investigation in two criminal cases against Italian companies-exporters. Previously, these illegal schemes were uncovered in Slovakia. Then it was the company «Yesmoke» from Italy, which passed the cigarettes through a fictitious destination in Spain and the customs warehouse in the Italian Torino. The purpose of these schemes was the evasion of excise duty. The company was registered on the deceased people. In the end, the goods were transferred to another company. Excise did not return, and the cigarettes illegally withdrawn from customs warehouses. Later, these cigarettes were found in Hungary and other EU countries.

The Slovak authorities have managed to prevent the fraudulent scheme involving Transnistrian companies «Sarmat Plus» and «Invest Capital Group». Cigarettes were to leave the EU territory without excise stamps, respectively, without paying for them. A few months after the official export of cigarettes the partyof «Yesmoke» was discovered in Eastern Slovakia. On suspicion of a crime were detained two Ukrainians.

Representatives of EUBAM commented on this issue, noting that the mission is working with Ukrainian and Moldovan partners on several levels: "The mission supports the tightening of legislation, restricting the smugglers, the development of strategies to combat trafficking in both countries and works quickly to our Ukrainian and Moldovan partners can identify, detect and prevent contraband goods. This includes support for closer cross-border exchange of information and operations, and support for more use of risk analysis. The mission also helped to establish contacts between two countries and international law enforcement agencies."

This situation has led to the fact that many times announced by EUBAM mission idea to create a joint Ukrainian-Moldovan customs checkpoints to prevent, in the first place, the illegal movement of goods, including the EU, will finally be implemented into practice in 2017. Perhaps, then will disappear contraband cigarettes and the budgets of both states will no longer bear the huge loss. 

This investigation is accomplished within „Shining a Light on Corruption in Moldova” Project, carried out by the Center for Investigative Journalism and Freedom House, with the financial support of the Norwegian Foreign Ministry.

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