28.03.23 Review

Trophy Ukraine: an investigation by ‘Novaya Gazeta. Europe’ has revealed the large-scale transfer of property to Russians and their collaborators in the occupied territories

‘Novaya Gazeta. Europe’ has conducted an investigation revealing that there has been a massive redistribution of property in the Russian-occupied territories of Ukraine. This process involves re-registering assets as Russian legal entities, as well as confiscating them and transferring their ownership to new owners or the state. Some of these enterprises are also being repurposed to serve the needs of the Russian military. Novaya has identified over a thousand new enterprises registered as Russian entities in cities like Lysychansk, Mariupol, and Berdyansk. Only 260 companies have indicated the names of their owners in order to avoid sanctions. In addition to directly seizing Ukrainian businesses, Russians have also been engaged in setting up new companies from scratch in the occupied territories to attract government investment for the ‘reconstruction’ of the cities destroyed by their own troops. In Mariupol, for example, at least 17 residential construction companies were registered in 2022.

‘Novaya Gazeta. Europe’ has identified and tracked the fate of 1150 companies in the occupied territories of Ukraine. 80% of these companies were registered as Ukrainian before the war but have ended up on the Russian register of businesses after occupation. The largest of these companies had pre-war annual revenues of up to 450 million hryvnias (1.3 billion rubles in 2021). Ukrainian entrepreneurs have already taken legal action, filing lawsuits with the European Court of Human Rights and international arbitration. 

The new owners of these companies are typically Russians:150 have Russian citizenship while only 14 are Ukrainian. Many of these new owners are entrepreneurs from Moscow, the Rostov region, and Crimea. However, only 262 of these companies have a founder listed in the Unified State Register of Legal Entities. The owners hide their names not only in the hope of avoiding sanctions but also to bypass various anti-money laundering laws.

Many entrepreneurs were forced to flee the occupied territories, leaving their businesses, lands, deposits, and equipment behind. If these properties were not re-registered as Russian within a few days of the previous owners leaving, they could be classified as ‘ownerless property’ and thus transferred to the state administration or taken over by new owners. This is precisely what happened to the Tokmak granite quarry located in the Zaporizhzhia region, which was the area’s largest producer of crushed stone prior to the invasion. In 2021, the company received government contracts and earned 50 million hryvnias (equivalent to 135 million rubles in 2021). It was also preparing to construct a highway along the Azov coast. In June 2022, however, the Russian military seized this enterprise and issued an ultimatum to the company’s management: either cooperate with the occupying authorities or abandon the factory. In November that same year, the quarry was registered under the name of a new founder in the Unified State Register of Legal Entities. The new owner was listed as the Crimean company ‘Centre for Economic Cooperation of the Republics’, which conducts trade — including metal, agricultural products, and crushed stone — with enterprises within the self-proclaimed LDNR. The General Director of the ‘Centre,’ Sergey Ageev received the Russian medal ‘For the Defense of Crimea’ and was added to the Ukrainian ‘Peacemaker’ register as a result of his participation in the annexation of the peninsula.

Entrepreneurs who decide to collaborate with the Kremlin-installed authorities often take advantage of the property left behind by others to expand their businesses. For instance, after the arrival of the Russian army, Alexander Goik, a businessman who owned a small fuel sales company before the war, took the opportunity to seize the gas stations of the Okko-Light and West Petrol Market chains in Melitopol, selling 80 tons of fuel through them. Goik imported fuel for sale in Crimea and shared the subsequent profits with the Kremlin-installed authorities. On February 2, the regional Ukrainian Prosecutor's Office issued a notification suspecting Goik of collaborationism, in addition to accusations against him of exporting grain.

Russian businessmen have also set up new companies within the annexed territories in order to access funds from the Russian budget for the reconstruction of cities destroyed by the Russian army. In Mariupol, for example, at least 17 construction companies have been established by Russians in the past year. Many of these companies have already begun construction work, including the construction of 22 new houses in the city. There are also future plans to build a residential complex with 7,690 apartments. These construction companies have also been involved in restoration work, as almost 90% of the buildings in Mariupol are damaged, while 40% have been completely destroyed, according to figures from the Ukrainian authorities.

In the occupied territories, some companies have also been repurposed to suit the needs of the Russian military. For instance, before the war, the Berdyansk Agricultural Machinery Plant in Berdyansk, owned by Ukrainian deputy Alexander Ponomarev, manufactured agricultural machinery. However, after a brief hiatus, the plant reopened in November under new ownership and now produces anti-tank hedgehogs and potbelly stoves. The Melitopol Meat Processing Plant has undergone a similar fate. Its new owners reached an agreement with the Kremlin-installed occupying authorities to include the company's products in humanitarian aid supplies for the ‘needy residents of the Zaporizhzhia region.’ Ukrainian intelligence reports that this plant has been converted into a morgue.

The Kremlin-installed authorities have also targeted housing and utilities companies. In June, the military-civil administration of Kherson region took over the region's power grids. Following this, the occupying forces urged the region's residents to transfer their payments for housing and communal services to an account in the Russian Promsvyazbank, while electricity in the region began to be supplied by the Ukrainian Khersonoblenergo, a shell company created by the Kremlin-installed authorities. Meanwhile, in the Zaporizhzhia region, Tavria-Energo employs a similar scheme to collect electricity payments.