Here Comes Smuggling! Why Did Zelenskyy Exempt Most Smugglers From Sanctions?

There are two pieces of news: the good one is that the customs reform is not about to start but has been going on for a long time. The bad one is that this is definitely not the reform you think it is. Thanks to the efforts of the Presidential Office, Ukraine has been held hostage by smugglers and is unlikely to get out quickly, even if we pass a hundred laws on raising salaries and equipping customs posts. And all because someone, Mr. President, is very greedy and not very smart.

This customs “reform” began in 2021, when Volodymyr Zelenskyy, in the guise of a smuggling fighter, staged a multi-part performance to authorize the activities of smugglers. The show “Go the hell out, you brigand” [a phrase famously used by Zelenskyy at the beginning of his presidency during one of regional meetings] toured successfully and ended with the imposition of sanctions on both specific persons and legal entities associated with them. The sanctions were imposed for three years, after which they can be extended if necessary.

For the most part, there has been no need to do so. For example, this year only two individuals were sanctioned under Decree 169, while sanctions were lifted for the remaining eleven individuals automatically.

We sent official inquiries to the Presidential Office, the National Security and Defense Council and the Security Service of Ukraine seeking explanations as to what changes have taken place in the lives and activities of these eleven gentlemen that would no longer need to be sanctioned. The National Security and Defense Council, pretending to be an office for records management, replied that it was a minor matter: whatever respected bodies submitted to it, it approved. The office cunningly forwarded our request to the NSDC's office managers, who politely sent us a second copy of the response. The Security Service of Ukraine, however, did not make a mistake (or did, depending on how you look at it) and officially replied that within three years of the imposition of sanctions, “authorized state bodies, in accordance with their competencies, monitored the effectiveness of sanctions. In April 2024, the sanctions were extended in respect of certain individuals who continue to pose real and/or potential threats to national interests...” This means that those who were not included in the 2024 lists do not pose such threats. The Security Service clarified whether this was a failure or a victory: “The Security Service of Ukraine continues to carry out the necessary counterintelligence measures and will initiate restrictive steps in the event of new threats to state security.” In other words, “eleven friends of smuggling” are on the watch list, we are keeping a close eye on them...

Something tells us that Mr. Maliuk, head of the Security Service, has not seen this response, so we are publishing it (see the document) in case this spear in his back starts to keep him awake.

After all, among those who were automatically exempted from sanctions by the decision of the Security Service, there are many interesting characters who continue their usual activities at the border, and they are definitely not in pursuance of the national interest. ZN.UA's sources were very surprised to learn that the so-called Galician smuggling aksakal Volodymyr Polusytok no longer poses a threat to national interests. Of course, the head of Lviv customs, A. Kuznik, assured the public that he had fired all of Polusytok's people. But, firstly, to do this, it was necessary to actually fire everyone from the Rava-Ruska customs post without exaggeration. And secondly, is Kuznik's testimony reliable, given his 17 years of experience in the Security Service? No offense, but the connection between smugglers and Security Service officers is long-standing, extending far beyond “necessary counterintelligence measures.”

In fact, at the beginning of the story with the non-renewal of sanctions, there was a suspicion that it was a case of banal extortion (a side hustle for many law enforcement officers). But the scale was too large.

In addition to Polusytok, the following ex-members of the sanctions list feel confident and at ease: Denys Aminiev, an Odesa-based footwear and textile expert, Eduard Kukoba, a Mukachevo-based cigarette expert (known to his friends as “Koba,” and yes, they really call him that), Mykhailo Hribanov, an electronics connoisseur from the Odesa region, and Yurii Dvorak, a former head of the Kyiv customs office and now a modest fertilizer and flower lover.

Yes, they are not all from Ukraine and do not personally carry bags of iPhones and herbicides across the border, but they have never done so before. For some reason, however, in 2021, counterintelligence measures resulted in the imposion of sanctions, and in 2024, they didn't get around to it.

But in addition to the list of individuals, the sanctions decree also contained a list of legal entities associated with smuggling schemes. About seven dozen of these companies were exempt from sanctions. The vast majority of them, despite three years of restrictions, have not gone bankrupt, are still operating, have interesting directors and counterparties, and are doing business, let's say, eloquently. Some of them are obviously trying to avoid a tax post-audit, others have obviously made it impossible to serve a protocol on violation of customs rules and, consequently, to collect a fine, and still others have nothing to do with anyone but one-day firms. And such discoveries do not require any counterintelligence tricks — everything is in the public domain, where there is a will there is a way.

However, it somehow turned out that in 2021 sanctions were imposed pompously without any evidence being made public, and in 2024, they were quietly lifted despite obvious evidence of dubious activities.

This is high time we mentioned that the Security Service has recently become a real source of human resources for customs. In addition to the aforementioned Kuznik, S. Siliuk (Kyiv customs), D. Raikov (Central Department for Combating Smuggling) and A. Kolobrodov (Coordination and Monitoring Customs) have been hired there. There were others. As soon as the odious Security Service officer Mykola Bezzubenko became Andrii Yermak's advisor, the number of Security Service workers at the customs doubled. Uncomfortable questions began to arise, an investigation into alleged extortion involving Bezzubenko came to mind, and his PhD thesis under the supervision of Oleh Tatarov was found. In short, it stank. The Security Service weeded out strangers from among their own close circle, but left the key ones in place. For example, Kolobrodov, the head of customs monitoring, is a man who can stop any cargo with one call, is worth any reputational risks, even if he escapes from a NABU search through the roof of a restaurant (there is no proof, but the detractors are still laughing).

So, no matter which side you approach the smugglers, they are surrounded by a dense circle of Security Service officials, who, depending on their positions, are either in the know, have their share or keep things under control.

All of this could be perceived as ordinary banditry, albeit on a large scale, if not for one thing: Seyar Kurshutov, who was the first number on the list in Decree 169.

He lives in Vienna, spends his vacations in Monaco, hangs out with bad guys on Mount Athos, and sometimes talks utter nonsense, such as that Ukraine will be saved by the security forces. It is not known where his Ukrainian passport is, but it seems that there is no shortage of passports from other countries. Legend has it that Kurshutov is an influential businessman and restaurateur. According to the documents, he is a long done individual entrepreneur with a car from 2005. But in reality, he is what some would call a “friend of all friends,” a person who knows who to talk to and how to negotiate in order to establish and keep processes going.

It seems that it is these skills, somewhat beyond the usual red tape across borders, that have attracted the interest of the Presidential Office. His services are not needed at the level of “Vasia from the second shift will let the car stacked with cigarettes through,” but rather in case there are hundreds of Vasias and thousands of cars. Rumor has it that he got his hands dirty not just anywhere but at Hranovskyi's shadow customs office under the tutelage of Oleksandr Cherepinskyi, a Kharkiv customs expert and the second number on the list from Decree 169. The fact that Kurshutov and Cherepinskyi's sanctions were not extended this year is hardly an unfortunate omission, but rather an offer from the Presidential Office, which has long been looking for sources of stable funding for the various needs that accompany government affairs.

As a gesture of friendship and to strengthen Kurshutov's main functions, it seems that he was given a share of the anonymous Dark Knight Telegram channel (Yermak's advisor D. Zarivna is probably aware of the details). If you can't bear to go down to this Telegram sewer, believe me, everything you used to consider character assassination is childish name-calling compared to this. Still, a small anonymous Telegram channel is just a bonus to the main offer.

Evil tongues say that the terms of the deal are as follows: Kurshutov works for the state for 25 days and for himself for five. Even more evil tongues object, saying that the volume of smuggling is now such that five hours will be enough “for yourself” even if the monthly salary of a “dark knight” is about $50,000. But what is really interesting is the “work for the state” mentioned above. This is the key to understanding what kind of swamp the Presidential Office is trying to plunge us into up to the very top of our heads.

Do you know what would happen if all smuggling flows in the country were suddenly stopped? Both customs duties and the so-called import VAT will fall together. After all, the vast majority of smuggling is not black, but gray supplies, which are imported at a reduced cost or by changing the nomenclature to “save” on customs duties and are sold at a corresponding “discount,” but not “zero.” To put it simply, the gray economy is integrated into the white economy and affects everything from trade turnover and demand to tax revenues. To understand the volume: customs duties and import excise and VAT account for about 18% of all tax revenues, or UAH 480 billion last year. Of course, not all of these revenues are from gray schemes, but you will be surprised how significant their share is.

On any marketplace, compare the prices of smartphones and try to explain the discrepancy between different sellers, which often exceeds UAH 10,000. And then see how wide the offer of those “cheapest” options really is. The shameful truth is that stopping smuggling for a few months means a guaranteed drop in customs revenues alone by at least 60%, meaning that instead of the conventional UAH 100, the budget will receive only UAH 40. This is a top method of smugglers to put pressure on the state, which they regularly use. They literally stop all flows and wait for the Ministry of Finance to get angry. And when they reach an agreement, they start “working for the state” again. Unfortunately, it turns out that the state budget is a hostage to smuggling.

Without breaking it, this customs cannot be reformed, regardless of salaries, integrity, polygraphs or competitive selection (all of which make sense, but have no decisive impact).

As clumsy as the 2021 sanctions were, even they initially significantly reduced smuggling flows and caused trouble for smugglers. Imagine what the effect would have been if they and their accomplices from law enforcement agencies were in the dock instead of on sanctions lists. This was and is our only chance for fundamental changes at the customs.

However, the Presidential Office decided to roll back even the accidental progress that had been made. How else can one perceive the situation when the Security Service officers have been appointed to key customs positions, key smugglers have been released, legal entities associated with them are working at full throttle, and the “friend of all friends” who is supposed to support their joint coordinated work by channeling profits into the right pockets is living his best life, boasting at every corner about how close he is with the Presidential Office.

The situation in which the budget of a country at war is being held hostage by a handful of criminals is being cemented before our eyes for the personal benefit of Yermak and Zelenskyy. They need it — they have a fiction instead of a faction, the power vertical is not free, and elections are still in the cards. After all, Kurshutov's “work for the state” is not just about the budget. As a famous Louis said to his parliament: the state, it’s me.

 

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