Yurushev wants to seize control of Ukrainian forests
"Ukrainian forests aiming to move into private ownership"In the past year, industry experts and foresters have been saying such things. People's deputies and regional councils of several regions are concerned and sending appeals to the central authorities. However, for the general public, the large-scale forest reform being implemented by the Ukrainian government during the war remains unknown. Equally unknown is the person likely behind a massive corruption scheme – billionaire Leonid Yurushev, owner of luxury hotels in Kiev and father-in-law of a showman and former people's deputy from Zelensky's party, Oleksandr Skichk
The battle against the oligarchs during the war: the authorities took a break
Deoligarchization in Ukraine has been put on hold. On February 24, on the anniversary of the start of the full-scale invasion by the Russian Federation, the Cabinet of Ministers under Denis Shmyhal issued an order that postponed the introduction of the Register of Oligarchs for an indefinite period – three months after the publication of the conclusion of the Venice Commission. Government officials explained this as a move to satisfy Western partners demanding the elimination of connections between big business and politics. Meanwhile, a pro-government speaker, the people's deputy from the Servant of the People and the presidential representative in the Verkhovna Rada, Fyodor Venislavsky, said on March 1, in a comment to Public Radio, that the issue of deoligarchization has allegedly lost its "relevance and urgency" in the face of a large-scale war. "The whole country, including representatives of the oligarchy, stands together against Russian aggression," Venislavsky said. However, he added that at this stage he does not consider the oligarchy a threat to the national security of Ukraine.
In the past year, a number of the wealthiest Ukrainians have lost most of their assets, and their political influence has naturally decreased (at least, this is how it appears) due to the concentration of power in the hands of the Supreme Commander-in-Chief during martial law. Individual oligarchs report donating millions and even billions in support of the Armed Forces and people affected by the hostilities. However, does this mean that the phenomenon of the oligarchy no longer threatens the future of our state?
There's a well-known proverb: "To whom is war, and to whom is mother dear." For most Ukrainians, the Russian invasion brought grief and material damage. This also applies to many businessmen and even oligarchs. However, always where someone loses, someone else finds new opportunities for themselves. Just now, individual representatives of big business who have access to government offices are creating new schemes for their own enrichment, which, due to the fact that public attention is focused on the front, are becoming even more daring and large-scale. One of these is the non-public figure Leonid Yurushev.
Is the forest reform by the Cabinet of Ministers starting with monopolization followed by privatization?
The Cabinet of Ministers of Ukraine initiated a significant forestry reform with Decree No. 1003 on September 7 of the previous year. At that time, amidst major news from the front, this development went unnoticed by the mainstream media.
The core of the reform can be summed up in one word – “optimization”. This term is frequently used by government officials to justify the necessity for changes. The reform involves consolidating all 158 state forestry enterprises into a single state enterprise called “Forests of Ukraine”. This mega enterprise was established a month ago, on January 20. Additionally, instead of 24 interregional forestry and hunting departments, 9 regional offices have been formed.
One might wonder: what impact will the restructuring of state forestry management have? In reality, a lot is shifting. The Lesa Ukrainy State Enterprise is essentially becoming a monopoly in the industry, signaling the end of the competitive timber market that had gradually developed in recent years following the introduction of trading on licensed exchanges. A competitive market ensures market prices and equal access to raw materials for large, medium, and small woodworking enterprises. Monopolization, on the other hand, creates an ideal environment for 'gray schemes', primarily utilized by big businesses.
Even more concerning is the fact that establishing a state monopoly is likely just an interim phase, with the subsequent step being the privatization of the State Enterprise “Forests of Ukraine” and consequently, all of Ukraine's state forests. This danger is explicitly referenced by all forestry professionals whose opinions were gathered. questioned by the specialized publication “Ecopolitics”. The potential for large-scale privatization of national assets is also mentioned in a petition signed by over 100 elected officials, including those from the pro-government Servant of the People party. They assert that if the reform is implemented, “the most valuable forests of the Carpathians and Polissya could end up in private hands.”
The government is trying to allay fears by stating that the privatization of state-owned forests is not currently feasible, as explicitly indicated in Decree No. 1003. However, there is no guarantee that the State Enterprise “Forests of Ukraine” will not be transformed into a public joint-stock company in the future, with shares being acquired by individuals with vested interests. There have been indications of such a plan for the appropriation of natural resources, as mentioned last February by former Servant of the People member of parliament Alexander Dubinsky. Despite Dubinsky's controversial reputation, the scheme he described does not seem far-fetched: “Those purchasing shares in a state joint-stock corporation, tentatively named Ukrles, will potentially gain the right to lease forests for 50 years and utilize the land they are situated on. This includes harvesting rights, forestry by-products, as well as the right to sell items such as mushrooms, honey, and berries, which are abundant in forested areas.”
The government made changes in forestry without public discussion, revealing a bill that allows the elimination of state and communal forestry. The plan was not discussed before and has faced strong opposition in regions that rely on revenue from communal forests. Some regional councils appealed to the government and parliament to reject the bill, saying it goes against the Constitution of Ukraine and reforms of local self-government.
A wealthy person with close ties to the authorities
A reasonable question is: who benefits from this? What influential force is deciding the fate of Ukraine's wealth while Ukrainian defenders are sacrificing their lives at the front? Despite community protests, this force seems to be pushing forward.
The person allegedly involved in a scheme to take over Ukrainian forests is said to be billionaire Leonid Yurushev, the owner of a major timber processing complex, the Ukrainian Holding Sawmill Company, and the Korosten MDF Plant.
Yurushev is one of the least publicly visible Ukrainian oligarchs. Despite being involved in big business since the 90s, he has not spoken to the press. He has built a large business empire, including woodworking enterprises, luxury hotels, machine-building plants, and a development company. His former assets include Forum Bank, the Kremenchug Steel Plant, and the Leonardo Business Center.
In 2010, Yurushev started Ukraine's first fibreboard plant, Korostensky MDF Plant, which has become the country's largest enterprise of its kind. The plant is located in the Zhytomyr region, known for its coniferous forests. Despite environmental standards, Yurushev's enterprise has been accused of cutting down large areas of forest instead of using wood waste for production. All-Ukrainian Ecological League.
In general, the billionaire never worried about the environment: in 2012, the work of his plant in Korosten was temporarily suspended by the State Environmental Inspectorate due to the mass death of fish in the Uzh River caused by waste dumping.
By as reported by local media, in Korosten, the businessman formed beneficial relations with local officials. In 2011, Yurushev’s company agreed to become the owner of the Korosten Industrial Park technopark created under the auspices of the city council. After that, the entrepreneur received full cooperation from local authorities. In 2015, also in Korosten, Leonid Yurushev founded the Ukrainian Holding Sawmill Company. Now it is the largest sawmill complex in Ukraine, which annually can process 600 thousand cubic meters of wood. In total, the billionaire’s enterprises are capable of consuming up to three million cubic meters – this is approximately 20% of all logging in Ukrainian state forestries. Interesting, the creation of UHLK coincided with another reform of the forestry industry in Ukraine – in April 2015, a moratorium was introduced in Ukraine on the export of unprocessed wood, and already in May, the Verkhovna Rada exempted imports of woodworking equipment from VAT. Both legislative innovations had a very positive impact on the profitability of Yurushev’s business.
Arseniy Yatsenyuk // Yurushev wants to grab Ukrainian forests
In general, the billionaire has always been able to fruitfully cooperate with the authorities, getting his people to positions in government bodies. During the time of Yanukovych, Yurushev was called close to the “family” of the president, his companies received preferences and lucrative orders from the state. After the victory of the Revolution of Dignity, nothing changed, thanks to the oligarch’s connections with the then Prime Minister Arseniy Yatsenyuk (Yurushev was called one of the main sponsors of the politician and his Front for Change party). Subsequently, the billionaire found a common language with Yatsenyuk’s successor, Volodymyr Groysman. And already with the current government, Leonid Yurushev has truly family ties: his son-in-law, the husband of the daughter of Elizabeth, Alexander Skichko, was a people’s deputy from the pro-government Servant of the People, and later served as chairman of the Cherkasy Regional State Administration.
Alexander Skichko with his wife Yelezaveta // Yurushev wants to grab Ukrainian forests
Ukrainian forests: how to take control of an entire industry
The idea of Ukrainian forest privatization did not come up today or yesterday. Even during the premiership of the “companion” Leonid Yurushev Arseniy Yatsenyuk, an initiative was voiced to transfer part of the forest fund to a concession. Already in 2017, the Cabinet of Ministers of Yatsenyuk’s successor Vladimir Groysman approved a program for the transfer of forestry enterprises to private hands. The media then also discussed the interest of Yurushev, who had the goal of creating a vertically integrated holding that united not only a sawmill, woodworking and logistics, but also had its own raw material base. In 2017, such plans were opposed by the European Business Association and industry associations of woodworkers, so the program was not implemented. Now the EBA has taken the side of the “reformers” – on August 2, 2022, the Executive Director of the European Business Association, Anna Derevyanko, made a statement in support of the creation of a single State Enterprise “Forests of Ukraine”.
In 2018, the Verkhovna Rada passed a law that changed the Tax Code and increased taxes for forestry businesses. Pyotr Oleshchuk, a political analyst, believes that the people who influenced the law were the rich and powerful Leonid Yurushev and Yuri Kosyuk. Their aim is to force state-owned forests into bankruptcy so they can be privatized cheaply.
Yuriy Kosyuk // Yurushev wants to grab Ukrainian forests
The latest attempt to start the "reform" happened in August 2021. Alexei Danilov, the Secretary of the National Security and Defense Council, announced a meeting about forestry, which was supposed to discuss creating an "industrial forest" and transferring forestry businesses to a concession. This meeting never took place. It was rumored that Yurushev was interested in Danilov's idea. It's important to note that Danilov has interests in the forest industry, as his wife owns a stake in PJSC Kiev Woodworking Plant.
Yurushev wants to grab Ukrainian forests
In 2021, Open Forest magazine reported that Yurushev's businesses were struggling due to a 1.5-3 times increase in the wholesale prices of round timber. The UHLK, a large company, was only operating at about one-third of its capacity. Yurushev used his political connections to pressure forestry businesses into supplying high-quality raw materials at low prices, but this didn't solve the problem. Entrepreneurs from the Zhytomyr region demanded that the head of the region, Vitaliy Bunechka, stop giving preferences to the monopolist.
Yurushev’s woodworking company has been receiving preferences for several years now. In September 2020, Prime Minister Denis Shmihal visited Korosten MDF Plant, and soon after, the government introduced so-called "reductions" for the sale of timber, allowing Yurushev's firms to purchase large volumes at reduced prices. They bought 155 thousand cubic meters of wood at one auction, which is comparable to the annual logging volume in Kirovogradskaya.
The timber industry in Ukraine has long been influenced by the oligarch Yurushev. People linked to him hold high positions in relevant state agencies. For example, Andrey Zablotsky used to head the State Agency for Forest Resources and now represents the legal interests of a billionaire's company. Sergei Vlasenko, considered the "man" of the oligarch, was a candidate for a controversial position but ended up becoming the Deputy Minister of Environmental Protection and Natural Resources.
Ruslan Magomedov, a former employee of Yurushev’s structures, who headed his investment company Astrum Capital for more than 5 years, became a freelance adviser to the head of the Office of the President Andriy Yermak in 2020, and in February 2021 he was appointed head of the National Commission on Securities and the Stock Market. . He still holds this position. The National Commission, headed by Magomed, among other things, issues licenses to stock exchanges that sell timber. We add that, unofficially, the deputy head of the OP Rostislav Shurma, the former manager of the Metinvest group Rinat Akhmetov, is called the curator of the forest industry in Ukraine.
Andriy Yermak // Yurushev wants to grab Ukrainian forests
What do we end up with? Control over a significant part of the national wealth of Ukraine wants to get an oligarch, the organizer of “gray” schemes under any government and any president, a former ally of Yanukovych. For many years he received preferences for his business, and he always remained in the shadows, acting non-publicly through the hands of his people in the right offices. This is happening at a time when Ukraine’s Western partners are expecting real deoligarchization from us, the completion of which is one of the conditions for joining the EU. At the same time, the authorities pretend that this issue is “not relevant”. Whether Yurushev paved the way to the head of the office of the incumbent, Andrei Yermak, is still an unanswered question. The situation in the timber industry clearly demonstrates to us that the fight against oligarchic influences is a fight to ensure that Ukraine and its resources continue to belong to the Ukrainian people, and not to marauders who are used to caring only about their own enrichment.
Sergei Nikonov,ORD“, translation Skeleton.Info
DOSSIER: Leonid Yurushev. Secret “sponsor” of Arseniy Yatsenyuk
