Blood And Gold: Smuggling And Murder In Ukraine’s Grey Zone

The war in Ukraine, having cost more than 9,000 lives since it begun in the spring of 2014, has now entered a relatively stagnant phase. No major offensives have occurred since Russian regular forces assaulted the city of Debaltsevo in February, 2015. Along the static front lines, warfare more closely resembles that of the First World War, with daily artillery exchanges between trenches and nocturnal attacks on checkpoints, in attempts to probe weaknesses in the Ukrainian lines. While the war is no less deadly, with Ukraine suffering casualties every day, the demarcation line between government and Russian-controlled territory looks more and more permanent with each day, as diplomatic initiatives repeatedly fail.

This de-facto border Ukraine shares with a lawless proxy non-state runs through devastated and heavily-depopulated tracts of land, dominated by warlords and gangsters. It is a haven for criminality. The bored, idle hands of thousands of young soldiers, armed and underpaid, does nothing to help this situation. Smuggling across the often vaguely-delineated frontier, in what has become known as the “grey zone” has become a vast industry, the bloody, corrupting effects of which are far reaching.

To combat smuggling, the Ukrainian authorities created a system of what they called “mobile groups” — small, mixed teams, consisting of personnel from the military, the Ukrainian Security Service (SBU), the State Fiscal Service, the State Border Service and civilian volunteers. The SBU headed the operation, which began in the spring of 2015. While the teams suffered from a lack of support and inadequate equipment, they were able to monitor and intercept smugglers on the front line in a way that the static checkpoints operated by the Border Service had been unable to do so previously.

On the morning of September 2, 2015, a mobile group headed out on patrol from the Lugansk town of Schastye, one of the more restive zones of the front line.

As their Mitsubishi truck was headed towards the village of Lobachevo, MON-50 mines (equivalent to American Claymores) exploded at the side of the road, showering the vehicle with shrapnel. Two people were killed: Senior Lieutenant Dmitry Zharuk, a tax officer, and Andriy Galuschenko, a civilian volunteer. Four were wounded.

While small-arms fire was reported by survivors, and a Ukrainian soldier who had raced to the scene of the blast with an armored personnel carrier received a bullet in the shoulder, it is uncertain if the gunfire came from the attackers or was confused crossfire from another group of soldiers coming to their aid from the other direction. One of the survivors from the mobile group recalled having fired off several clips of ammunition from his Kalashnikov rifle.

The attack was shocking for several reasons. Firstly, there had been a relatively effective ceasefire in effect for several days at the time. Fighting was at the lowest level seen since the beginning of the war. Secondly, Galuschenko was a respected operator and was a personal friend of the governor of the Lugansk region, Heorgiy Tuka. Photos of the charred and bullet-ridden pickup truck the group had been traveling in were quickly disseminated in Ukrainian media.

While some media outlets were swift to blame the killings on Russia-backed forces — a plausible assumption given the proximity of the incident to the front line, some commentators, including Yuriy Biryukov, an adviser to President Petro Poroshenko, suspected that the mobile group had been betrayed.

Biryukov wrote on his Facebook page that night:

“The group cleared their itinerary, and after that this group was ambushed. Coincidence?

And no, not with the headquarters, nor with the generals. With lieutenant colonels and colonels of one of the brigades…

They were waiting for them. Someone, perhaps, gave them a ‘corridor’ to pass through the line. Someone… We will find you, fuckers.”

Both Biryukov and Tuka had played key roles in the original organization of the mobile groups scheme.

The attack on Galuschenko’s group was not the first such incident. On August 27, another vehicle in the same mobile group was attacked on a stretch of road running alongside the Seversky Donets River, between Lopaskino and Lobachevo. The group’s vehicle was struck with armor-piercing rounds from a sniper rifle. Fortunately, no one was injured.

In an interview recorded on August 30, Galuschenko had told Aleksei Bobrovnikov, a special correspondent for the 1+1 channel:

“If they say some scouts from the LNR did it, it is complete crap. It was done by people whose presence there raised no suspicion from anyone. There are no shelters, nothing, open space. They did it, ran down the hill, got into the car and left. So their presence there with weapons raised no suspicion. So I think there are criminals among either the 92nd Brigade or the border guards. They consider us a serious threat and they planned this.”

Andriy Galuschenko, known as Andrew, worked in cybernetics and applied engineering before heading the Schastye mobile group. In 2010, he founded his own business, restoring an abandoned factory space, where he constructed weather stations using a laser cutter of his own design. The business was a success — he took orders from across Ukraine. Galuschenko joined the Maidan protests on the day after Berkut riot police began violently beating student demonstrators, eventually becoming the deputy leader of a sotnya (hundred) of the Maidan Self-Defense.

 

When the war broke out in the east, he joined a volunteer battalion formed from Self-Defense units, which was named in honor of General-Major Sergei Kulchitsky, who had been killed in July, 2014, when Russia-backed fighters shot down a helicopter outside Slavyansk. Shortly after having been demobilized in February the following year, he joined the new mobile group scheme as a volunteer and was granted clearance by the SBU. Two weeks before his death, Galuschenko visited his daughter in Kiev, and told her: “We’ve come across something really big, kid.” Later, just two days before his death, he rang her and said: “In a couple of weeks we will get the upper hand on the whole smuggling trade.”

On August 29, Galuschenko spoke about the smugglers:

“So far their identities remain in shadow. But I think they will show themselves. Maybe they will come to us to try to make a deal. They told me: ‘everyone has his price.’ Those with too high a price ‘may buy a zinc jacket’. ‘A zinc jacket’. That’s what I’ve been told.”

By “zinc jacket,” he meant a coffin.

The day after Galuschenko was killed, Volodymyr Kiyan, a captain in the 80th Airmobile Brigade, was killed in the woods near the banks of the Seversky Donets, not far from Schastye. Kiyan, a veteran of the Iraq war and artillery expert, had been due to be demobilized on September 9. He had become a father only a few weeks earlier. According to official reports, Kiyan stepped on a landmine — a grimly-common occurrence on this section of the front line.

 

But it was not long before suspicions were raised that there was more to the story than that. The following day Yuriy Kasyanov, founder of Armiya SOS, a volunteer group providing support for Ukrainian troops on the front line, suggested publicly that Kiyan and Galuschenko’s deaths may have been connected.

Kiyan had spoken with Kasyanov the night before his death, telling him that he wanted to investigate the attack on Galuschenko’s mobile group:

“I can’t make accusations without evidence. I’m going out tomorrow, I will check everything, see for myself.”

Later on, messages sent by Kiyan using a web messenger on his smartphone were found via his laptop. They showed that he suspected that the attack had been conducted by Ukrainian troops involved in smuggling. He was also clearly worried about the danger posed by discussing such a possibility.

Kiyan borrowed a boat from a soldier in the Aidar volunteer battalion and, judging from his communications, planned to inspect the banks of the river near Lobachevo, to see if there was any evidence of any fighters having crossed the river the previous day to attack Galuschenko’s group.

Sources in the 92nd Brigade said, however that he changed his plans on the morning of his death and instead headed to a location further east along the river.

Footage recovered from Kiyan’s GoPro camera may reveal where he went that day, however it is impossible to verify the date on which the video was recorded. The video shows Kiyan and several other soldiers searching an abandoned sanatorium.

We can verify that this site was on the southern banks of the river, about a kilometre from the Luganskaya power station, by comparing the footage with photos uploaded to Wikimapia:

When the GoPro was returned to Kiyan’s family, no footage was found of the dangerous river crossings to and from the southern bank, nor was there any footage of his return through government-controlled territory, where he was reportedly found dead. The last images on the video show him looking relaxed and laughing on the southern side, before turning the camera off.

Meanwhile, the handling of Kiyan’s body and personal effects further raised suspicions. A source in the 80th Brigade told TSN’s Bobrovnikov that, contrary to regulations, Kiyan’s body was stripped naked and cleaned before being handed over to the coroner’s office in Starobelsk. Nor were his clothes returned to his family.

Furthermore, comparison of the messages seen on the synchronized chat client on his home computer in Lviv, a thousand kilometers from the front line, and his mobile phone indicated that texts he had sent from his phone had been deleted before the device was handed over to his family.

Later that year, Kiyan’s mother received a phone call from a member of the 92nd Brigade, telling her that her son had in fact committed suicide. However the wounds on Kiyan’s body – all to his back and the rear of his legs – would not suggest that he killed himself with a mine or grenade.

In the meantime, the atmosphere surrounding the investigation was clearly toxic. A day after Kiyan’s death, Bobrovnikov was threatened by an officer in the 92nd Brigade while reporting on deaths of Galuschenko and Kiyan. The conversation was filmed:

 

“The smuggling won’t stop. Everyone gets ground up in this meat grinder. Everyone. If you declare war on the smugglers… If you decide to shut down the smuggling, you won’t be able to do that… It won’t come to a war. Quietly, this guy or that guy, we’ll have to throw them out the window. What needs to be done needs to be done. To eliminate a person is no problem at all. I am saying this to you as a soldier. In the forest, one shot and no one will hear. Now — a click from the bushes. And no one will hear the click of the receiver. A man falls. Where did it come from? From there.”

Within a year, Bobrovnikov was pressured to drop his investigation into Galuschenko and Kiyan’s deaths.

“I was threatened from the very beginning of this story, even before my source for information was murdered. They would say: smuggling is a huge business here, but do not try to dig into it. ‘Let’s go, we can just show you a more picturesque location to film that stuff with the other people involved’ – that’s what I was told a day before Andrew was murdered.

There were more than ten occasions, I think, when someone would try either to threaten you or to scare you off. It comes in one form or another from various sources — military, law enforcement, anonymous.”

The mobile group program also faced continued interference and threats. For example, in April this year, Bobrovnikov filmed another team, traveling near Verkhnetoretskoye, north of Donetsk, being threatened by a Ukrainian soldier.

The mobile group driver was told that they couldn’t travel into the grey zone despite having previously witnessed civilian pedestrians and vehicles passing through the area.

The soldier said:

“You went yesterday? It’s good that you’re still alive…Next time, we will shoot without warning.”

However the mobile group did proceed to the location later, under the cover of dark, in order to wait for smugglers in the morning. They succeeded in seizing a significant shipment of pharmaceuticals, which they claimed were intended for the production of desomorphine – a derivative of morphine known in the former Soviet Union as krokodil.

Such incidents have given rise to suspicions among those involved in the anti-smuggling campaign that some Ukrainian servicemen and local officials are involved in the illicit trade.

In May Heorgiy Tuka, who had been dismissed as Lugansk governor by President Poroshenko a few days earlier, told Hromadske TV that people in “the highest offices” were “managing and shielding” smuggling rackets on the front line.

Of the Galuschenko case, Tuka said:

“We know practically everything. Unfortunately, there is a gulf between ‘knowing’ and ‘proving.’”

Rodion Shovkoshytnyi, leader of the mobile group deployed near Verkhnyetoretskoye that was threatened on video, has said that there were repeated instances of collaboration between members of the SBU and some military personnel in protecting smuggling activities. In particular, his claims concern certain members of the Interior Ministry’s Dnipro-1 regiment.

Shovkoshytnyi wrote in June this year about the smuggling trade in the village of Novoluganskoye, northeast of separatist-held Gorlovka. According to the Ukrainian government, the village is under Kiev’s control, however the streets are effectively controlled by Russia-backed fighters and there are no Ukrainian checkpoints in the settlement. As a result, the village has become a thoroughfare for smugglers as they can legally travel to the “government-controlled” village without having to pass through any frontier checkpoints.

Shovkoshytniy said:

“If problems arise, an SBU colonel arrives immediately with two teams of troops from Dnipro-1, headed by a certain Gotsman. He’s been involved in this for more than a year already. He has a business in Bakhmut [formerly Artyomovsk]. Lives in Dnipropetrovsk. The SBU know him very well. Last summer they caught him with a huge cache of weapons from Debaltsevo. And nothing. As normal.”

In an interview with Obozrevatel in August, Shovkoshytnyi accused this Gotsman, a relatively well-known fighter, of making threats, warning mobile group members that they should “watch out,” lest they be “confused” for enemy soldiers.

Gotsman’s appeal to soldiers on the front line to cooperate with smuggling schemes was, Shovkoshytnyi claimed: “We will make money, then we will help you.”

In some cases, it was SBU personnel themselves that were allegedly moving goods across the frontier.

In January, Shovkhoshytnyi’s residence in the Donetsk region was searched by counter-intelligence officers just hours after he had informed a general in Kiev that SBU officers had been caught smuggling furniture and construction equipment across the frontier.

At the same time, Shovkoshytnyi was keen to stress that the SBU was not monolithic. Many SBU officers, he said, are absolutely professional and had played a key role in intercepting smugglers and aiding the mobile groups, particularly the elite Alfa units. The corruption was most prolific among the local “territorial” structures of the SBU, who are enmeshed in the local rackets that have origins predating the outbreak of the war.

Perhaps indicative of such splits within the security forces is the fact that just a month after Shovkoshytnyi described the involvement of some members of Dnipro-1 in criminal activities, the SBU and Prosecutor’s Office  announced the seizure of a vast cache of illegally acquired weaponry at base used by the regiment in Dnipropetrovsk.

But nevertheless, Shovkoshytnyi told Obozrevatel that:

“During the ten months of working there, I have never been shot at directly by a separatist. All the incidents of danger always came from people wearing the chevrons of the Ukrainian armed forces.”

This ranged from threats to actual shooting.

In fact it was the involvement of military personnel in smuggling activities that was, he said, the original motivation for the formation of the mobile groups after an incident early last year, during which the commander of one of the front-line brigades ordered troops to open fire on State Border Service personnel who had stopped a convoy, inflicting casualties.

This summer, the mobile group program was fundamentally altered: the role of volunteers like Shovkoshytnyi and Galuschenko was curtailed and the system became the sole premise of the security services, who themselves were so often implicated in corruption and cover-ups.

On September 12 this year, over a year after the attack on the mobile group that killed Galuschenko and Zharuk, the Military Prosecutor’s Office announced that they had come to the conclusion that the ambush was indeed set by Ukrainian soldiers. According to the report, two members of the 92nd Brigade, Oleksandr Svidro and Pavel Dolzhenko, acting in coordination with other unnamed individuals, had planted two MON-50 mines and set them off as the group approached.

The report states that the two — sergeants in a reconnaissance company – had been operating a smuggling scheme with several other, unnamed individuals. The total value of goods traded across the front line near Schastye by both truck and boat was described as equaling 25 million hryvnia (just under $943,000), 24 million of which consisted of drugs. With the Schastye mobile group presenting a threat to their operations, the pair allegedly decided to eliminate them.

A third individual, named only as a Mr Asosov, the head of the intelligence company at the brigade, allegedly provided Svidro and Dolzhenko with a false alibi on the night that they supposedly set up the ambush.

Despite the acknowledgment that “other persons” were involved in both the smuggling and the killing of Galuschenko and Zharuk, however, the report makes no mention of these figures’ identities, nor of any plans to bring charges. Such a large criminal scheme would surely require the involvement of a much greater number of people.

Indeed there is considerable evidence that the smuggling operation in that area was a far larger affair.

In early August 2015, just weeks before the fatal attack, Galuschenko’s mobile group was called by State Border Service agents to inspect a cargo found in the driver’s cab of a train that had been stopped near Stanitsa Luganskaya, around 20 kilometers east of Schastye, that had crossed the Seversky Donets river from occupied territory.

Inside the driver’s cab were five bags containing gold and silver jewelry. The bags were marked with the numbers: 1, 2, 3, 4 and 6. The estimated value of the cargo was $500,000. The train was bound to deliver coal to the Luganskaya power station in Schastye.

Last month, the Russian investigative journalist Yulia Polukhina wrote an astonishingly detailed report on the smuggling trade in the Lugansk region for Novaya Gazeta. In particular, Polukhina discusses the smuggling of gold and silver jewelry, manufactured at the Agat plant in separatist-held Rovenki, into Ukrainian government-controlled territory.

The plant was owned by one Aleksandr Rak, a former gangster, councilor and member of Viktor Yanukovych’s Party of Regions. Rak, who enthusiastically supported the Russkiy Mir movement and maintained his own large security apparatus after going into legitimate business, disappeared in early 2014 after a power struggle with local Cossack paramilitaries, leaving his wife in charge of Agat.

The jewelry seized by the border guards near Stanitsa Luganskaya last August bore the hallmarks of the Agat plant.

One of the local Cossacks told Polukhina that the original cargo had, in fact, consisted of eight bags. Among the organizers of the delivery, he said, was Aleksandr Avdygin, a priest in the Rovenki parish and a director at the Agat factory. His wife, Galina Buynichenko, a Party of Regions member, was called in for questioning by the security services of the so-called LNR after the loss of the jewelry and complaints about a fraudulent humanitarian scheme she had operated. “After that we were told that she was dead.”

Astoundingly, Bobrovnikov reports that he was told by Galuschenko and other members of his team that the then-deputy head of the Lugansk Administration, Yuriy Klimenko, had phoned up and asked the mobile group to let the jewelry pass as they were the property of a priest on the Ukrainian side of the frontier.

Bobrovnikov later found jewelry marked with the very same Agat hallmarks, however, on open display in the windows of a jewelers in Kiev.

 

 

It should be noted that, just days before his death, Galuschenko said, on camera, that Klimenko and General-Lieutenant Anatoliy Naumenko, head of the local police, would be the chief beneficiaries in the event that trade across the frontier with separatist-held territory were legalized. As for Naumenko, another member of Galuschenko’s mobile group, an SBU officer, told Bobrovnikov, again on camera, that the police chief had threatened the team, telling them not to interfere and warning that his men had more weapons than them.

Meanwhile, the  trade appears to have continued, with a source in the Ukrainian military telling Bobrovnikov that a cargo of gold and silver jewelry, with prices marked in Russian rubles, was seized in Maryinka, west of Donetsk, in February this year. Another Cossack fighter told Polukhina that the manufacturing process at Agat depends on smuggling materials from government-controlled territory. Last spring saw the interception in Mayorsk, north of Gorlovka, of a cargo from Kharkiv, consisting of scraps of gold, silver and platinum, as well as acid (used in production), bound for Rovenki.

The value of the one, partial cargo seized last August, and the interference by a government official in the work of the border guards and mobile group, indicates that the smuggling scheme on the front line in Lugansk was a far larger affair than that described in the military prosecutors’ report.

Indeed the Chief Military Prosecutor, Anatoliy Matios, told Bobrovnikov in January that the scheme in the Schastye area was just “the tip of the iceberg.” According to Matios, investigators had uncovered a transnational criminal operation, involving the delivery of drugs from Asia to Europe, via the occupied regions of the Donbass, claiming “we know all of the logistics.”

Disturbingly, and perhaps as a warning, Matios told the Bobrovnikov that the killers had in fact intended to kill him along with Galuschenko.

Nevertheless, despite the huge scope of the smuggling trade — which, as Polukhina’s extensive exposé shows, includes not only the trade of jewelry, but also cigarettes, alcohol and fuel – military prosecutors have rounded up only three individuals in a front-line unit, naming no higher-ranking figures or local officials.

But most baffling of all was the Military Prosecutor’s Office’s declaration that, despite having reached the conclusion that Ukrainian servicemen were responsible, they had “sent a formal request for international legal assistance to the Russian Federation.”

That seems like an incredibly remote prospect while the two countries are engaged in an undeclared war. Until such assistance is received, the case appears to be on the back burner.

Meanwhile, there is no active investigation into the death of Volodymyr Kiyan, nor the threats to mobile groups operating in the Donetsk region.

Worse, several key figures involved in both the smuggling operations and the effort to curb them have met premature deaths in recent months.

On September 18 of this year, the deputy head of the Ukrainian Presidential Administration, Andriy Taranov, died in a freak accident while riding a water scooter on the Dnieper river in Kiev. Taranov is believed to have been closely involved in overseeing the formation of the mobile groups and the wider fight against smuggling. President Poroshenko said that a large part of Taranov’s activities would have to remain classified, but praised him for having played a key role in Ukraine’s defense.

That same month, Yevgeny Zhilin, former commander of a separatist paramilitary unit, was shot dead in a Moscow restaurant. Russia’s Kommersant reported that Zhilin’s death was likely linked to a dispute over fuel smuggling on the front line in the Donbass. Polukhina found that Zhilin had been managing gas stations in the occupied territories that were owned by Sergei Kurchenko, a businessman and MP with close links to Yanukovych, who fled Ukraine in 2014 and is wanted on corruption charges.

Then, at the beginning of October, a Russian militant, Armen Bagiyan, nicknamed Bagi, was killed near the village of Zhyoltoye, just a short distance from Lobachevo, on the other side of the Seversky Donets river, where Galuschenko’s group had been headed a year earlier.

According to Polukhina’s sources, Bagiyan was in charge of smuggling operations in this area, in particular the trade of gold and silver to and from the Agat factory. Mobile group volunteer Rodion Shovkoshytnyi, writing a few days after Bagi’s death, claimed that the Russian had organized an attack on another mobile group near the Lugansk village of Tryokhizbenka on March 2 this year, wounding three Ukrainians.

One of Polukhina’s sources, a Russia-backed fighter known as Malysh, recounted how Bagiyan had set off for a meeting with some of his superiors. He was then found shot dead, several meters from his car, from which men who served another local warlord were seen retrieving documents.

In the meantime, the smuggling-related violence continues.

On the 29th of October, a team from the State Fiscal Service, attached to one of the reformed, professional-only mobile groups operating in Lugansk, was attacked near Lopaskino — less than 10 kilometers west of Lobachevo. This was the very same stretch of road where a mobile group was attacked the previous August. According to the State Border Service, the attack was conducted by Russia-backed fighters, firing from the southern banks of the river. Three agents were wounded.

This vast criminal enterprise, the killings, and the complicity of certain elements within the Ukrainian security forces, is a story that has received comparatively little media attention, particularly inside Ukraine. There is a sense that the issue is regarded in some quarters as a distraction from the real issues at hand, whether the war with Russia or the fight against political corruption.

Of course, this case is fundamentally linked to both issues.

Firstly, with the war having entered a rather more stagnant, though no less deadly phase for much of the last year, Ukraine must look to a long-term vision of how to either reintegrate the occupied areas of the Donbass, or, if that proves impossible by political or military means, to insulate the remainder of the country from the corrupting influence of the Russian occupation.

The criminal trade along the front line not only enriches warlords and gangsters on the occupied side of the frontier, but it also compromises some of the troops defending the Ukrainian lines and their superiors, damaging Ukraine’s national security.

Secondly the introduction of Ukraine’s troops to the smuggling trade can do nothing but harm to the longer-term prospects of the fight against corruption. Nor does the apparent complicity of some within higher positions help.

But worst of all is the damage to the authority of Ukraine’s judicial and law-enforcement systems. No drive against corruption can be achieve anything concrete without effective justice. The decision by the military prosecutor’s office to name two low-ranking members of the Ukrainian armed forces as suspects but no higher figures, and then to defer any prosecution until further evidence is obtained from the Russian Federation of all sources, is just one of a litany of such cases where justice is demonstrative rather than effective. If murder and treason can go unpunished, then what hope is there for wider reform? The resulting lawlessness or bespredel (literally “boundlessness”) is by far the greatest obstacle facing Ukraine in its path to escaping the corrupt post-Soviet realm.