Labeling, “Blindness” and Smuggling: How International Companies Avoid Crimean Sanctions

This article is about how to collectively violate international and national law, substitute the country while maintaining own credibility.

About a year ago, a number of revealing materials appeared on the network about how refrigeration equipment manufactured in the occupied Crimea is freely traded – not only to Russia, but also to the EU countries. Despite the evidence presented, it seems that there was no reaction either from the law enforcement officers or from the defendants. Censor.NET checked how things are today.

As a reminder, on July 30, 2014, the European Union decided to ban the import of Crimean goods that do not have a Ukrainian license. These measures apply to EU citizens and companies incorporated in the EU. The United States adopted such a ban in December 2014. The corresponding decree of the Ukrainian government has been in effect since January 16, 2016.

PLANT IN CRIMEA, BUFFER IN RF, CLIENTS – EUROPE AND OTHERS

The focus is on the Crimean plant “UKsnab”, owned by the Kharkiv holding UBC Group. The enterprise was built in the early 2000s. Until recently, UKsnab produced more than 140 serial products, occupying about 13% of the world market with revenues of about US $100 million. 25% of the company’s shares belong to the European Bank for Reconstruction and Development.

UKsnab, a division of UBC Cool, is the world’s leader in the production of coolers. After the occupation of Crimea by Russia, UBC Group faced the need to legalize its activities and protect property.

Already having a plant near Kharkiv, UBC Group began building another one in Vinnytsia. Announcing its construction, UBC Group announced that it did not intend to leave Crimea (then Ukraine had not yet introduced sanctions).

This was stated by Evhenii Varva, a representative of the UBC Group. Varva on July 10, 2015, noted that the events in the Crimea affected the work of the company. According to him, the construction of a new plant in Vinnytsia is connected with the company’s desire to diversify its product supplies abroad. The enterprise in Crimea will focus more on orders from the CIS countries.

However, already 5 days after the resonance in the media, another statement by UBC appeared – that back in 2014, UKsnab moved to the Kharkiv region and now has nothing to do with the Crimean plant, and “the entire production complex of the former UKsnab is owned by the “Plant refrigeration equipment “owned by one of the largest Russian refrigeration equipment operators.” The enterprise not only continues to work successfully but also provides for the growth of production capacities … “

According to information from 2017, “Refrigeration Equipment Plant” provided an increase in the repair and installation of machinery and equipment by 1.5 times.

The fact that the Crimean plant is working can be seen by following its figure in the news of the invaders. The coronavirus became a new reason for mentioning the plant in the media. So, he is listed in a number of enterprises that were checked for compliance with quarantine standards. Moreover, probably out of its mental simplicity, the Crimean press indicated directly that it was not a plant belonging to some Russian operator that was checked, but UBC LLC (in the article it is indicated as Yubisi LLC).

As can be seen from the recruitment sites, the plant continues to operate. In the database, it is listed as “Refrigeration Equipment Plant” LLC “BBC Cool B”.

Moreover, he is considered by the occupying authorities to form a budget. The plant’s administration cooperates with the occupiers, as evidenced by negotiations on a number of issues. For example, about the work of the police at the enterprise, participation in working meetings of the occupation authorities and various campaign projects of the ruling party of the Russian occupier.

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In the list of enterprises that are allowed not to interrupt their work during quarantine, the refrigeration equipment plant in Krasnoperekopsk is indicated by the media as belonging to Ihor Humennyi. From all these facts, the conclusion suggests itself: UBC Group not only did not stop production in the occupied territory but increases its productivity, increases capacity, actively cooperates with the occupation authorities, financing them, paying taxes to the occupiers.

LABELING, TRANSIT THROUGH UKRAINE AND CLOSED EYES

What does a layman do when he wants to know where and by whom the products are made? What does the customs officer doing the inspection of the cargo for the conformity of the goods with the documents, purpose, origin? That’s right, everyone is looking at the label/tag that the manufacturer posted. Here is a photo of a real refrigerator tag delivered to Carlsberg.

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After a short glance, we immediately conclude that the refrigerator was produced in some remote village of the Belgorod region. But during the investigation, we have never heard information or statements from UBC that they have another “village” factory.

We go to check Google Maps and understand that either this production is set up in some kind of cowshed or it simply isn’t there. The first is hard to believe, given the quality of products that meet the high standards of world companies. And if you take a closer look at the tag, it is even more interesting, the phones indicated as contact ones have the code of Krasnoperekopsk – Crimea.

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So what’s really happening? It’s simple …

Equipment is sold through two companies:

LLC TH “Refrigeration Equipment” – registered at the address: 309255 Belgorod Region, Shebekino, General Shumilova Street, 14. Until 2015, this company was registered at the same address as the main company UBC Cool B. At the same time, in the statutory information it is indicated that it is engaged in the sale of equipment, there is no word about production.

LINK

LLC “U BI SI KUL-B” is a legal entity registered at the address: 309255 Belgorod region. Shebekinsky district, with New Tavolzhanka, st. Pioneer and data about which is on the tag.

On the website of the Federal Tax Service of Russia, you can get a full statement of the company https://egrul.nalog.ru/index.html LLC “U BI SI KUL-B”. The same company registered a separate division – its branch:

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You can see the ordinary substitution and manipulation of information in order to deceive the customs, the SBU, the world community and “cover” the client. We just write a legal entity on the tag and forget to indicate the real address of production facilities in the sanctioned territory, while leaving the real Krasnoperekopsk phones for the possibility of real communication with the manufacturer.

This is the story of one label dated 2016. Has anything changed since that time?

On the official website of the UBC Group, only two plants are listed – UBC Green Cool in Vynnitsa and UBC Cool in Dergachi in the Kharkiv region. However, the site of the online store designed for Russia does not have these two factories. Only “Refrigeration Equipment Plant” is listed.

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Nearby is an impressive list of international companies that buy products: AbInBev, Heineken, SABMiller, Baltika, Coca-Cola, Pepsi, Red Bull, Carlsberg, Efes …

Evidence that the Belgorod counterparty sells, among other things, to international companies, sub-sanctioned Crimean products is in unrelated documents. For example, in litigation in which the Crimean plant appears.

So, in the decision of the Arbitration Court of the Ivankovsk region of the Russian Federation of June 2020, both companies of the UBC Group appear as third parties. The essence of the dispute is the transportation of refrigeration equipment from Krasnoperekopsk, occupied by the Russian Federation, to Kazakhstan. The text says Consignor – Limited Liability Company “Trading House Refrigeration Equipment”, Limited Liability Company “U BI SI KUL-B” “Refrigeration Equipment Plant”, loading address Republic of Crimea, Krasnoperekopsk st. Severnaya d. 1. Warehouses in Armyansk also appear. Upload date 06/18/2019, upload date – 06/28/2019. The nature of the cargo is refrigeration equipment.

In the Russian court registers, there are other similar references to the company, proving the operation of the plant in Crimea and deliveries across the territory of the Russian Federation for international brands. For example, for Nestle. In the decision of the Arbitration Court of the Belgorod Region of December 2019, the supply of UBC Cool B equipment to OJSC ROSINKA COMPANY (Lipetsk) appears, which has been the exclusive partner of Nestlé in Russia since January 1, 2018. The popular Nestea iced tea is produced in this plant. (NESTEA is a registered trademark of Société des Produits Nestlé S.A. (Switzerland). The disputed delivery took place in 2017, a few months before the announcement of the joint work of Lipetsk Rosinka and Nestle.

We received a response from Nestlé on this particular case. It states: “Nestlé as a group has a licensing agreement under which Societé Produits Nestlé, as a trademark owner, grants Rosinka permission to use one of our trademarks (Nestea). Nestlé does not participate in Rosinka’s activities and does not participate in the import of equipment you are talking about, or in any other activity of this company “:

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Buying products from enterprises from the occupying Crimea is a violation of EU legislation even if it is used in Russia and the CIS countries. However, in violation of the sanctions policy, European companies went further – the products of the Crimean plant are exported to EU countries.

For a start, just look at the statistics on exports from the Russian Federation for recent times. The share of UBC Cool B in the export of refrigeration equipment from the Russian Federation is approximately one third. The last deliveries are recorded for April of this year – to Slovakia.

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If we raise the customs register of the Russian Federation, then the list of countries to which UBC Cool B sends its products is impressive:

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The supply of products to the territory of Ukraine can be traced again in court decisions. For example, in a court decision from 2016, it is about export-import transportation. As follows from the materials of the case, on October 27, 2014, LLC “Yu BI COOL-B”, an agreement was concluded with the Ukrainian forwarder LLC “Trans Center”, for the organization of the latter for the transportation of export-import and transit goods transported by rail.

However, if we look at the Ukrainian customs register, we will see another way of exporting sanctioned equipment to Europe, but already under the label “made in Ukraine”.

In the customs registers of Ukraine for 2019 there are supplies of equipment in fact from the occupied Crimea to two Ukrainian counterparties: TOV GRIN KUL (this is a new UBC plant in Vinnytsia) and PRAT UKpostach (the main company UBC, which is the owner of the Crimean plant).

An incredible match can also be found in the 2019 customs register of Ukraine.

For example, 05/17/19 PrAT “UKpostach” bought from UBC Cool B “refrigerator shafy-vіtryny” compressor type “Ice Stream” model “Virgo” with the logo “Stella Artois”, internal one-door volume 150 liters without a lock with LED lighting – 15 pcs … Filled with R-90 refrigerant, which is not ozone-depleting. The country of origin is the Russian Federation.

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On 05/27/2020 PrAT UKpostach Ukraine sold the same refrigerated cabinets to the company Pivara Trebjesa Chornogoria in the same quantity. “Erni, volume 150 l, without lock, with LED lamps -15 pcs. Filled with R-290 refrigerant, which is not ozone-depleting.”

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It turns out that through the territory of Ukraine to the EU countries for the international brewing corporation Anheuser-Busch InBev, which is one of the largest beer producers in the world (the world market share is estimated at 28%), goods are exported from the occupied Crimea. Thus, both companies bleach their products.

This is far from the only case of coincidence. We look further:

In May 2019 TOV GRIN KUL bought 798 units of “Vitrina refrigeration industrial compressor type. Refrigerating “shafa-box” of compression type “ICE STREAM” model “DYNAMIC”, the internal one-door volume of 550 litres”. These are about 14 full trucks, each with 57 refrigerators.

During the same period of time, the same amount of equipment was sold to the following buyers in the EU: MOLSON COORS D.O.O. BANJALUKA (Bosnia and Herzegovina), Pepsico IVI L.t.d (Greece), Quadrant Amroq Beverages S.R.L Romania), T-TRANS Pribenik, s.r.o. (Slovakia). The customs register states that the equipment was branded with global companies: PepsiCo, Heineken, OZUJSKO.

Moreover, law enforcement agencies will clearly be interested in other information that surfaced during the investigation. There are facts of sale of UBC products through the Russian Federation to the occupied territories of Donetsk and Luhansk regions. So, their equipment was bought by the Hercules company, known for its work in CADLO. The documents clearly indicate the shipping address in Krasnoperekopsk. The exporter in ORDLO is LLC “TRADING HOUSE “PELMENI I KEFIR”.

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In addition to refrigerating cabinets, UBC Cool B actively imports to Ukraine coolers for bottling beer of the brands Typhoon-90M, Typhoon 75, freezers FROST STREAM chests. The same equipment is present in the registers of exports from Ukraine to EU countries during the same period. Only the goods are already dispatched as Ukrainian.

OWNER OF UBC GROUP Humennyi

The owner of UBS Group Igor Humennyi has a reputation as one of those Ukrainian businessmen who have reached the global level. In an interview, he emphasizes that the main international clients of his holding are multinational companies. According to the Novoye Vremya rating for 2018, Humennyi is one of the hundred most influential Ukrainians, ranking 61st in the list.

For Ukrainians who do not follow the business Olympus, Humennyi may be known thanks to several high-profile scandals that have occurred in his institutions. So, in 2016 it became known that foreigners are no longer allowed to enter the Stargorod restaurant chain after 22:00. If we dwell on specific cases, then people of “non-Slavic appearance” were not allowed into the establishments. The Ombudsman was forced to take up the matter.

Earlier, in 2014, the Kharkiv “Stargorod” was convicted of cruelty to animals. According to “Komsomolskaya Pravda”, on Halloween, the show program involved a competition in cutting off the heads of chickens, and the hall of the establishment was decorated with animal entrails.

In 2017, already Lviv “Stargorod” was in the centre of a scandal – this time a language one. The institution refused to turn off Russian songs, and the visitors who asked for this were exhibited, calling the police.

The most recent resonance is last year’s New Year’s corporate UBC Group, to which one of the employees came in Nazi uniform. At the same time, Humennyi did not hesitate to be photographed with him.

However, only the connection with the fugitive businessman Sergei Kurchenko got into the business dirt of Humennyi. The latter began his career in the UBC Group – the company “Expogaz” – together with Mygal and Koshel, who later became part of the “watching family of Yanukovych” team. As of 2013, on the UBC Group website, references to Kurchenko have been removed. According to journalistic investigations, it was in the company of Humenny that Kurchenko learned to launder money, acting as the nominal owner of the companies. So, through “Expogaz” allegedly money was laundered for the main enterprises of Humennyi, and then, roughly speaking, messed the chief.

There is no public information on how the relationship between Kurchenko and his former boss Humenny is developing. The fugitive Kurchenko is clearly doing well in Russia. Good conditions have also been created for Humennyi in the Russian Federation. So, the doors are open for him to build new factories. In December 2018, Humennyi even held talks with the President of Tatarstan on this matter. There are two Stargorod brewery restaurants in Russia – in St. Petersburg and Sochi.

It is noteworthy that in the above-mentioned data on the assistance of the occupation authorities of Crimea to the work of enterprises during quarantine, there are also Kurchenko’s enterprises next to the plant in Krasnoperekopsk. Isn’t he behind the mysterious “Russian refrigeration equipment operator” who allegedly owns the plant – according to Varva’s statement in 2015?

In any case, the facts already cited simply scream about the need for a reaction from the competent authorities. So far we have not received a response to a request to clarify the situation from Humennyi himself, as well as from European companies and from the EBRD. The rhetorical question hovers in the air: why does the situation of actual smuggling and disregard for international lawsuit Ukraine’s western partners and the ruling circles of Ukraine after so many years of the occupation of Crimea and the sanctions?

At the request of Censor.NET, the Security Service of Ukraine reported that it had started to work on the received information.

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Why global companies continue doing this

Why do global companies, despite the sanctions, continue to buy equipment manufactured in the annexed Crimea? Excuses like “we didn’t know”, “this is an unfortunate mistake”, “there was a misunderstanding” will not look convincing.

All multinational companies have supplier verification procedures at different levels – from financial to security. There are global procurement departments whose missions for millions of euros in procurement are to conduct regular supplier audits, visit production sites and manage the procurement process and quality. For example, the procedure for working with suppliers of the world leader in beer production AB InBev. After all, there are local offices represented in all countries where the companies operate.

We received assurances from AB InBev that the products purchased by the company were produced at a plant in the Kharkiv region, where, according to their information, the Crimean plant was transferred. Such a guarantee, according to the representative, was given by the UBC Group.

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It is hard to believe that none of them checked the presence of the plant in the village. New Tavolzhanka, as the equipment manufacturer, says on its label. Or did they cynically turn a blind eye to this, receiving financial benefits from the purchase of equipment from the annexed Crimea?

Considering all of the above, it seems that this is not the end of the scheme that we have revealed. This scheme can be transformed into other sophisticated variations that will allow Mr. Humennyi to further increase the power of his business empire, ignoring any norms, sanctions and values. And all the same multinational companies (AbInBev, Heineken, SABMiller, Baltika, Carlsberg, Coca-Cola, Pepsi, Red Bull, Efes, Unilever, Nestle …), which prioritize financial profit, regardless of the ways of obtaining it. 

Ihor Burdyliuk for Censor.NET.Source: https://censor.net/en/r3215139

(C)CENSORNET 2020

One comment

  • Clearly, the United States must follow such foul practices and hound those people responsible for these violations and slam them with harsh punitive measures. Announce them in the news media and we’ll see further violations be reduced to a fraction. It can help fill our coffers to boot.

    Liked by 4 people

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