The prime minister of Moldova, Pavel Filip, has contributed to escaping from Ukrainian sanctions to one of the largest corporate tax-payers in the unrecognized Transnistrian republic – the Moldovan Metallurgic Plant.

RISE Moldova and СХЕМИ have obtained a copy of a letter in which the head of the Moldovan executive branch not only begs the Ukrainian government for exempting the enterprise from sanctions but also for ceasing Kiev’s formal investigations against its management.

Ukrainian exporters of scrap metals were able to cheat the sanctions on the Transnistrian plant thanks to Moldovan intermediary firms.


$200 million circumventing the Moldovan budget
The Moldovan Metallurgic Plant (MMP) in the city of Ribnita is under the Moldovan jurisdictions de jure but in fact it is under the control of the government of the unrecognized Transnistrian republic. Like many local companies in Transnistria, it does not pay any taxes or customs duties to Moldova.

The fiscal and customs authorities explain that “Transnistrian businesses are exempt from any obligations towards the [Moldovan] budget.

Otherwise, MMP is among the three largest corporate tax-payers in the breakaway enclave. Details HERE. Available financial reports for the first to third quarters of 2018 show that MMP wired to region’s public wallet as much as 115 million Transnistrian rubles, the equivalent of $7.1 million. Only Sheriff Holding earns more than MMP in Transnistria; by the way that’s why the enclave is dubbed as “The Sheriff Republic.”

From oligarch Usmanov, for “Government”
In early 2015 Transnistrian officials announced that Russian oligarch Alisher Usmanov, who owned almost 100% of shares in MMP, conceded the enterprise to the local “government”.


Before the sanctions, MMP used to earn as much as the entire public revenue of Transnistria //Photo: president.gospmr.org

Yevgeny Shevchuk, at that time serving as the president of Transnistria, explains that Mr. Usmanov had decided to give up the plant because it was unprofitable.
MMP is a loss generating enterprise which has survived thanks to [cheap] natural gas supplies for 50-70 dollars [per 1,000 cubic meters] at a time when it sells for around 280 dollars in the market. Other enterprises, in neighboring countries, pay the full price for natural gases, Mr. Shevchuk told our RISE Moldova reporter.

Official reports from Tiraspol, the capital of the breakaway region, confirm that in 2015 alone MMP posted more than $13 million in losses, and in 2016 the loss doubled to $28 million. However, already in 2017 the plant reported almost $13 million in profit thanks to subsidized Russian gases and a three-fold growth of sales.

That year MMP posted pre-tax revenue of $217 million, which compares to the annual public revenue of the entire Transnistrian republic – $234 million.

Sheriff’s business partnership with a firm of Poroshenko
In spite of the sanctions Ukraine imposed on the companies from the annexed Crimean Peninsula and newly-established Donetsk and Lughansk republics, trade with Transnistria continued as usual.

An earlier RISE Moldova report demonstrated that in 2014 through the first half of 2017 Roshen, a chocolate concern owned by Ukrainian President Petro Poroshenko sold goods worth around $3 million to Sheriff. The latter should be rightly referred to as the principal beneficiary of Transnistria’s existence. .

Blocking assets
Approximately one year ahead of the presidential elections in Ukraine the attitude of the Poroshenko administration towards Transnistria changed.

May 14, 2018. President Petro Poroshenko issues a decree. The list of enterprises under Ukrainian sanctions includes Ribnita-based plant too, under number 721. The enterprise falls into a restrictive regime for a period of three years.


Mr. Poroshenko’s decree dated May 14, 2018, on inclusion of MMP in the sanctions list for three years

The sanctions contain five items: blocking assets; limiting trade operations; prohibiting capital withdrawal from Ukraine; suspending the economic and financial liabilities; denying participation in public acquisitions. The reason for this move was not explained. MMP is the solely enterprise from Moldovan jurisdiction that got into Ukraine’s black list.

The list covers a total of 756 companies, mainly Russian capital ventures; for example Pervyi Kanal (First Channel of Russia) television or the Sukhoi fighter jet design bureau.

Scrap metal exporters domiciled in DNR/LNR
Given that the reasons for the introduction and cancellation of sanctions regarding the Ribnita-based plant were not made public, RISE Moldova and journalists and their fellows from the СХЕМИ (Schemes) program teamed up in a quest for independent investigation.

Thanks to the team’s access to official customs reports about the export of scrap metals from Ukraine to MMP, we first analyzed the information about the business partnerships of the Ribnita plant over the past five years.

Since 2014 – alias from the time Ukraine waged its anti-terror operation in the east – most Ukrainian scrap metals suppliers resided in Donetsk and Lughansk, cities which at that time had already been under the control of pro-Russia separatists.

Sources in Ukrainian police say that that in autumn 2018 the main scrap metals exporters were a number of companies affiliated to UkrMet. Market competitors have linked this group of companies with Andrey Kisselyov, currently a parliament member and in the past a Regions Party supporter of former president Viktor Yanukovich.

Mr. Kisselyov has said he is not currently running any of the envisaged companies but admitted that he is offering them consultancy.


The CEO of UkrMet, a business partner of MMP, assures the СХЕМИ reporter, a colleague of RISE Moldova, that trade with Transnistria had been suspended during the sanctions… //Photo: СХЕМИ

The CEO of UkrMet, Constantin Bass, assures that since the sanctions got enforced the company has shipped scrap metals to Moldova, but not the Ribnita-based plant, omitting the fact that it was the solely metal works enterprise in Moldova.

Constantin Bass, CEO of the UkrMet company group (Kiev):
Our company had not shipped any goods to the Moldovan Metallurgic Plant during the embargo period. Yes, we do know a number of companies involved in such trade. We’ve completed our own investigation. They had used the same expedition firm we use to hire for operations inside Ukraine; it is the largest expeditor called UkrTrans. It was legitimate shipping and Moldova was the final point of destination for that delivery.

How to circumvent the sanctions
March 19, 2019. There’s one month left until the second round of presidential elections in Ukraine. On that day, President Petro Poroshenko updates the sanctions list for his decree. The Moldovan Metallurgic Plant is no longer in the list. Instead, a Chisinau-based company called Novastal Prim gets a place there; it is slapped with a three-year ban.

Novastal Prim in turn has been an interesting subject for our reporters since autumn 2018. On the background of Ukrainian sanctions on MMP, between September till December last year this firm was the largest recipient of Ukrainian scrap metals in Moldova.

But where was all that stuff stored? Our journalists visited the office building in Chisinau where the company was renting storage space, according to official papers, but not one pound of scrap metals could be detected there – not to mention piles of this materials. Instead, they noticed that the four-storey building in Botanica District hosted a branch office of the Moldovan Democratic Party, which is run by oligarch Vladimir Plahotniuc.


What a coincidence – the Ukraine scrap metal importer is an office neighbor to a Democratic Party branch

Ukrainian customs reports show that Novastal Prim imported scrap metals from Ukraine by railroad, via the Transnistrian area of the Ukrainian-Moldovan border, crossing Slobodka-Cobasna checkpoint, and further on its way to Ribnita, where the plant is located. During four months of 2018 the Chisinau-based firm received more than nine tons of scrap metals worth $2.7 million from Ukraine.

Novastal Prim was founded on February 10, 2014 by Moldovan citizen Ghenadie Adajuc. On September 6, 2018 it falls under the control of a 33-year-old resident of Chisinau – and citizen of the unrecognized Transnistrian republic – Piotr Tanasevschi, who takes over as both owner and executive director. In December he sells the firm to Andrei Sevciuc, 44, another resident of the Moldovan capital.

Our attempts to have a conversation by phone with Piotr Tanasevschi have been unsuccessful. The current owner Andrei Sevciuc didn’t deny that his firm has established trade relations with MMP. However he could not explain why Novastal Prim has been added in Ukraine’s black list, noting that he “isn’t the government of Ukraine.”

Business partner with Metalferos
The official version of the Ukrainian Security Service claims that Novastal Prim is suspected of violating the sanctions regime by acting as an intermediary supplier between Ukrainian exporters and the Transnistrian metallurgic plant during the embargo period. Speaking about Mr. Sevciuc (who is not a family member or relative to Transnistria’s ex-president Yevgeny Shevchuk), the current owner, we’ve learned that his business partner is Alexei Timbrovschi, co-founder of Olbris-Impex.

Mr. Timbrovschi is a known person – he runs the state-owned scrap metals collecting enterprise Metalferos, a monopoly in Moldova. It is also one of the biggest suppliers of raw materials for MMP.

Critical state of “an important business unit”
Our journalists could not obtain official explanations either in Kiev or in Chisinau about the reasons for inclusion and then removal of the Moldovan Metallurgic Plant in the sanctions list. But СХЕМИ and RISE Moldova could obtain a copy of a letter which the Moldovan prime minister, Pavel Filip, sent to his Ukrainian counterpart Vladimir Groissman and President Petro Poroshenko.

The reason why this letter was necessary is “the critical state of the metallurgic plant in the city of Ribnita, the largest steel manufacturer in Moldova.” After a two-page long text with technical details of the “critical state”, Mr. Filip is asking the two top statesmen in the end:

Taking into consideration the above-stated, I am asking you to review the matter around the Moldovan Metallurgic Plant and to identify the solutions designed to ease the activity of this important economic unit, and namely to:
• exclude MMP from the sanctions list;
• cut two-fold the level of export duties which de facto represent an administrative barrier for market access;
• cease the anti-dumping investigation against MMP, as an unjustified measure;
• suspend the individual license obligations until the final decision of the court…

New decree coming one week later
We’ve also succeeded to trace the path of Mr. Filip’s letter, from its sending from Chisinau to its translation into Ukrainian, and reviews in the Ministry of Foreign Affairs, the administration of Mr. Poroshenko, the Ukrainian Security Service (SBU), and the National Council for Security and Defense (SNBO). Overall, the prime-minister’s request passed through numerous offices in Kiev within just one working week.

March 7, 2019. A letter from the Moldovan Government, signed by Premier Pavel Filip, starts its journey to the leadership of Ukraine.
March 11. Ukraine’s Ministry of Foreign Affairs receives the letter via the Moldovan Embassy in Kiev.
March 12. Ukraine’s Ministry of Foreign Affairs translates the document and sends it to the Presidential Administration, to the National Council for Security and Defense, and the Ukrainian Embassy to Moldova.
March 12. The same day the Poroshenko administration sends Filip’s request to the SBU for review.
March 19. SNBO decides to lift the sanctions from MMP. The same day President Poroshenko signs a decree to relieve the Ribnita-based plant from the sanctions regime.

Shevchuk: It could be more expensive without Chisinau

Taking questions from journalists who came with the initiative to lift the embargo from the Transnistrian enterprise, Ukrainian officials kicked those questions – and the responsibility – among them.

The SNBO said the decision to get MMP out of sanctions on based on the SBU’s recommendation. The latter in turn finger pointed to the Presidential Administration of Ukraine.


Our RISE Moldova has attempted to talk to Prime Minister Pavel Filip about why he has so stubbornly defended an enterprise which is out of Moldova’s control and pays nothing in taxes.
Let’s talk another time,” Mr. Filip cut it short.

According to Transnistria’s ex-president Yevgeny Shevchuk, the decision to lift the sanctions is rooted in the fact that “MMP is the second largest currency earner [in Transnistria], and 80% of its currency earnings is purchased by Agroprombank [which is part of the Sheriff Group].” Therefore, he argued, the trade and currency operations represent “a motivation of something bigger.”

Being asked whether MMP officials were ever able to get rid of the sanctions, or corrupt Ukrainian leaders, Mr. Shevchuk answered: “It would be a fake to claim this way without evidence, but surely the annulment wasn’t free of charge.

In Chisinau they know how [to do it]. And even more, it could cost more expensive to have the matter solved without Chisinau,” he underlined.

Vladimir Thorik (RISE Moldova), Valeria Yegoshina (СХЕМИ, Ukraine)

This research was enabled by n-vestigate network, (n-vestigate.net)


Poroshenko-Sheriff business connections

Parasite-firms of Transnistria


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