In December 2019, during the official launch of a new customs agency in Ukraine, Maxim Nefyodov, then Active Head of the State Fiscal Service announced an action plan with significant improvements and changes.
Among them were staff reductions, recertification of employees, the introduction of stationary scanners, and new applications. The stationary scanners, which the ex-head had been proud of, had been purchased by the previous head of SFS, Miroslav Prodan.
However, while commenting on 100 days of the new customs, President Vladimir Zelensky said that “smuggling sent the customs to knock out.”
The fight against smuggling had cost Miroslav Prodan the position and many months of litigation. It was possible to defend the name, but for the introduction of the innovations, the successors took several years. Some processes are yet to be completed. And we can now only dream of significant results in the fight against smuggling. Even the ex-head of customs Maxim Nefyodov himself publicly estimates the volume of smuggling at customs during his time as head to have been at 1.5-2 billion euros per year.
In March 2017, when Miroslav Prodan was appointed to the position of Acting Head of the State Fiscal Service of Ukraine, the Government set a number of goals with an emphasise to fight against smuggling and simultaneously increase budget revenues. The whole country was eagerly waiting for real action in the fight against smugglers and corruption.
The customs officers, under the new leadership of Miroslav Prodan, subsequently took up the challenge and quickly started to uncover several illegal schemes of smuggling into Ukraine, including oil products.
Since customs is not endowed with the functions of law enforcement agencies in Ukraine, the Cabinet decided to include the National Police of the Ministry of Internal Affairs in the fight against smuggling.
In response to this, the Prosecutor General, led by Yuriy Lutsenko at the time, protested. He accused the Cabinet of Ministers of violating the Customs Code since only customs officers should be able to conduct checks at checkpoints.
The next milestone in the fight against smugglers was when customs officers uncovered an elaborate scheme by profiting smuggling groups from Odessa headed by convicted smuggler Vadim Alperin.
“I’ll explain how the circuit worked. The Odessa smuggling group has created dozens of one-day firms with fake directors. These companies received a large number of goods from China (shoes, fabrics, bags, etc.). The documents indicated the value of the goods, underestimated ten, or even more times. For example, shoes declared at $ 0.5 per kg! Having received declarations with obvious false data, the customs officers adjusted the customs value to a level that corresponded to the real value of the goods. But representatives of Odessa companies, using article 55 of the TCU, made appropriate financial guarantees to customs accounts, which allowed them to send goods into free circulation. And then, these importing companies turned to one of the Odessa courts. And a group of judges overturned the decisions of the customs, in fact obliging them to clear the goods at a substantially reduced cost and return their financial guarantees to importers,” – Miroslav Prodan wrote on his Facebook page.
The result of the operation was that $20 million was seized from the involved company accounts by the head of the smuggling group, Vadim Alperin.
In August, 2018, Miroslav Prodan removed the head of the State Fiscal Service at the Odessa Customs department, Alexander Vlasov, while an official investigation into the theft of 37 containers with fabric, machinery, tractors, spare parts and other goods were taking place.
Prodan confirmed during the course of the investigation that Stat Fiscal Service officers had established involvement in the theft of containers by the “Aminev-Serdyuk” group. The latter was an employee of the unit of the General Prosecutor’s Office. Through a strange set of coincidences and circumstances, this unit happened to supervise the work of the customs. Ukrainian media at the time suggested that the materials transferred to the NABU on the activities of the smuggling clan Denis Aminev and Sergei Serdyuk will bring detectives to the Attorney General Yuri Lutsenko.
Several other large-scale smuggling schemes and corruption was subsequently uncovered by Prodan’s team, particularly within the forest industry, which was suspected of illegally exporting millions of tons of round timbre under the guise of firewood.
In 2017 alone, the rate of timber export from the country amounted to 2 million tons. Each truck with a load of lumber began to be inspected, photographed, and data entered into the database of the central office of the customs department. The volume of forest smuggling fell sharply as a result of the intervention.
More than half the volume of firewood from Ukraine was exported by state forest enterprises, which are subordinate to the Forest Resources Agency of Ukraine. This department was headed by Vladimir Bondar at the time, who, as Ukrainian media have repeatedly written, is a friend of the prosecutor general Yuri Lutsenko.
Meanwhile, pressure and allegations started to emerge against Prodan and his work. His family and close circle was also targeted by law enforcement agencies and the Prosecutor General’s Office. A series of searches were also conducted on security guards, drivers and relatives.
At the end of August 2018, the conflict reached its climax, and the Prosecutor General, Yury Lutsenko, removed the head of the Specialized Anti-Corruption Prosecutor’s Office (SAP) in order to initiate criminal proceedings against Miroslav Prodan.
In response to the dismissal, the SAP head openly stated that these actions are nothing more than pressure on the SFS to control smuggling flows.
According to him, the prosecutor general opened the case after the schemes of illegal export of forests and shadow schemes at the Odessa customs were revealed, which the SFS had carried out in the framework of the government’s anti-smuggling program.
During the trial, the prosecutor’s office was unable to produce factual evidence of the guilt of Prodan. And on February 28, 2019, Prodan’s lawyer were able to prove that falsification of evidence in the case had taken place. This included fake correspondence by Prodan in Telegram, false information about the income of the family Prodan, among others.
The lawyer stated that the investigation had not provided any evidence that the ex-head of the SFS or his family members have been involved in any misconduct alleged in the case.
On 12 March, 2019, the closure of the Prodan’s case was officially announced.
Under the leadership of Miroslav Prodan, substantial improvements were made in the fight against smuggling. Targets were reached, and processes became more efficient and optimized. All this contributed greatly to Ukraine’s financial well-being and a decrease in corruption. That hard work and results were subsequently reversed after he essentially became a victim of his own success in the fight against corruption.