LVIV, Ukraine – Will there finally be a crackdown on Ukraine’s corrupt customs service? Ukrainian Prime Minister Volodymyr Groysman, appointed on April 14, is promising one. He has declared it a priority to end abuses and overhaul the State Customs Service, which is part of the State Fiscal Service.
Smuggling, bribes paid to cut import duties, opaque pricing of customs clearance – all these have long plagued the country’s customs service, draining billions of dollars from Ukraine’s official economy into the shadows.
“We currently have enormous challenges with customs, which on the one hand cater for the needs of the shadow economy, and on the other hand hinder the development of our domestic producers,” Groysman said in a video message posted recently on his Facebook page.
To carry out the cleanup, Groysman has introduced 20 mobile groups of border guards, dubbed the Black Hundred, whose members come from the National Anti-Corruption Bureau, the National Police and the State Fiscal Service. These roving units are tasked with uncovering gray and black smuggling schemes.
Lviv and Uzhhorod are cities where Groysman wants to reform customs first.
Control of Lviv customs
Lviv Oblast in western Ukraine has a long border with Poland, which is part of the European Union, and is thus a big window for smuggling.
Visiting Lviv Customs on May 7, Groysman said smuggling had to be halted in three months, and the customs clearance of goods made faster.
“If there’s the will for that, I’ll give my support,” the prime minister told Lviv customs employees, writing later on his Twitter account.
But if not, heads will roll, he warned.
Lviv Fiscal Service Department has already introduced joint border controls with Polish authorities at three of six vehicle checkpoints, Lviv Customs head Levko Prokipchuk said. Working jointly reduces the opportunities for corruption and smuggling, he said.
“This cooperation is working well, as it speeds up border crossings and helps us focus on risks,” Prokipchuk said.
Smugglers from Ukraine frequently transport cigarettes, clothing and electronic devices into Poland.
Better equipment at border posts would help stop them. For instance, X-ray scanners could detect hidden consignments of smuggled goods in an instant. But Lviv Customs has no working scanners on its borders with Poland.
Along with smuggling, time-consuming customs procedures are the bane of business.
According to the Doing Business 2016 ranking for Ukraine, it takes 122 hours (around 15 days) to prepare documents and export goods through the border, while importing takes 220 hours (27 working days).
Staff levels are also a problem: Ukraine’s checkpoints on the Polish border have 550 customs officers – 20 percent less than on the Polish side
Every year, passenger and transport traffic increases by 10 percent – it was 17 million people in 2015 – but “the number of employees is falling,” Prokipchuk said. “And then they ask why we have lines at the checkpoints?”
Smugglers in Zakarpattia
Hennadiy Moskal, the governor of Zakarpattia Oblast, has already found cracking down on smuggling in his region tough going. So tough, in fact, that at the beginning of May he was ready to quit.
Moskal took over as governor in June 2015, after spending 10 months as governor of war-torn Luhansk Oblast in eastern Ukraine. But it was much easier to control Luhansk Oblast, on the border with Russia, than tackle smugglers on the EU border, he says.
On May 6, Moskal asked to resign, complaining that a local customs official was blocking his efforts to stop illegal smuggling. He only agreed to stay on after a May 10 meeting with Groysman and State Fiscal Service Head Roman Nasirov, during which Groysman ordered Nasirov to fire the official.
Zakarpattia Oblast, which borders four EU states – Slovakia, Hungary, Romania and Poland – is ideal smuggling country. According to Moskal, cigarette smugglers earlier earned Hr 1 million ($40,000) from each truck they sent to the EU, and Hr 1.5 million ($60,000) from those sent to Britain. Up to 12 trucks would cross the border every week, bringing in up to Hr 72 million ($2.88 million) a month in net profit for the smugglers.
“Now we have a stable system – you can try to bribe customs officers, but they all know that … if they let through a truck, we might not see this man for 20 years,” Moskal said, referring to the possible prison term for smuggling.
“Tobacco smuggling is a transnational organized criminal activity, and Ukraine is just part of it,” Moskal said. “I can’t even tell you who’s the boss of it all, as it’s an international syndicate.”
In a recent case, Zakarpattia customs officers found a car with diplomatic plates trying to bring 60,000 packs of cigarettes into the EU as “diplomatic cargo,” Zakarpattia Fiscal Service reported on May 21.
Illegal migrants also cross the border in Zakarpattia into the EU, while brand-name clothing is smuggled from the EU into Ukraine, Groysman said.
Low-tech, low wages
Meanwhile, Samopomich Party lawmaker Tetyana Ostrikova wants to take the human factor out of the customs problem.
She has proposed introducing new software to detect suspicious customs declarations, and prevent customs officials from altering the values of goods in electronic customs declarations – a common form of customs corruption.
Like Moskal, Ostrikova also thinks that checkpoints should have new scanners and weighing equipment. On top of that, there should be clear rules governing the actions of customs officials. If these are broken, the official should be dismissed, and then prosecuted, she said.
But for all that to happen, Ostrikova thinks the heads of all the customs departments in the State Fiscal Service have to be sacked. She also wants to see a rise in the number of customs officers working on the borders, while customs police and administrative staff numbers should be trimmed back.
Apart from poor equipment and opaque practices, low wages also engender corruption in the customs services.
Yulia Marushevska, the head of customs in Odesa Oblast, sees the extremely low salaries paid to customs officers as her primary problem. With an average salary of Hr 3,000 ($120) per month, customs inspectors can hardly make ends meet, and the state will never be able to fight corruption with them, she said at an Anti-Corruption Committee meeting on April 13.
To increase salaries, she proposed to introduce paid services, such as fast-track customs declaration procedures. “This is something that will help to reduce the risk of corruption, because our employees will no longer be prisoners to corrupt interests,” she said.
Problems at the top?
When there is talk of problems at customs, one name often crops up – that of State Fiscal Service Head Roman Nasirov.
Nasirov, an ally of President Petro Poroshenko who has the support of Prime Minister Groysman, has been involved in several spats with other officials.
Moskal threatened to resign after Nasirov appointed an ally, Andriy Krymskyi, as a deputy of Zakarpattia Fiscal Service. Moskal decided to stay on a governor only after Nasirov agreed to fire Krymskyi.
Marushevska has also clashed with Nasirov, whom she claims has been blocking her efforts to make customs clearance in Odesa faster and corruption-free. Nasirov and the Security Service of Ukraine have launched official inspections that Marushevska says have paralyzed her work. He has already filed three officials complaints against her, and also appointed one of Marushevska’s deputies without her approval.
Nasirov has also been in conflict with Konstiantyn Likarchuk, his ex-deputy. Likarchuk was fired last September after accusing his boss of appointing associates of ex-President Viktor Yanukovych to key jobs, and restoring Yanukovych-era corruption schemes.
Meanwhile, Likarchuk and investigative journalists have published documents showing that Nasirov failed to declare two apartments in London. Nasirov has denied any wrongdoing.
But Nasirov’s position seems secure for now. On May 18, parliament’s Customs and Tax Policy Committee had the chance to oust Nasirov, but the vote failed.
Only eight of the 32 members of the committee voted to recommend that the Cabinet dismiss Nasirov, said Ostrikova, herself a member of the committee. She claimed the decision to keep Nasirov in place was part of a political deal between the government and opposition lawmakers to secure support for the government’s program and the appointment of Yuriy Lutsenko as prosecutor general.
