In the capital, the confrontation between small entrepreneurs operating in temporary structures (such as temporary buildings, kiosks, stalls, and small architectural forms) and the leadership of the Kyiv City State Administration (KCSA) is escalating. Small businesses are outraged by pressure from officials, which is facilitating the monopolization of the market by large "players." It recently emerged that the capital's leadership, despite a moratorium on the installation of new temporary structures, is actively assisting entrepreneurs with their ties to increase the number of kiosks in the city. Specifically, over the past three years, the KCSA has legalized approximately four to five dozen commercial structures installed as part of investment projects, which are in fact intended to be outdoor restrooms and tourist information centers (TICs). Influential figures in this field, including the former head of the Kyiv Improvement Municipal Enterprise and former Kyiv City Council member Andriy Andreyev (pictured right), likely play a significant role in these schemes.
As KV learned from responses from Kyiv City State Administration structures to editorial inquiries, at least four to five dozen new commercial aircraft have appeared in the capital in recent years on highly dubious grounds.
We are talking about the responses of the Department of Economy and Investment and the Department of Urban Development and Architecture of the Kyiv City State Administration, which are dated March 22, 2021.
As is well known, issuing permits for the installation of modular toilets in the capital has been prohibited since 2012. Therefore, according to official data, all the new structures that regularly appear in various districts of the capital are nothing more than "old" modular toilets, for which permits were issued before 2012, and which are simply being moved by entrepreneurs from other locations with the assistance of officials. However, it's no secret that there are no restrictions in the capital that cannot be circumvented: according to officials, over the past three years, approximately four dozen (various estimates range from 38 to 51) modular toilets and information centers, installed as part of so-called "investment projects," have miraculously "transformed" into ordinary kiosks.
With the Kyiv City State Administration launching a large-scale "campaign" to renew permits for the installation of aircraft in the spring of 2021, and amid rumors of the introduction of a mechanism for selling space for such structures through electronic auctions, KV decided to analyze the legalization schemes for new kiosks, stalls, and other small retail establishments in the capital. This is especially relevant given the escalating conflict between dozens of small entrepreneurs who conduct their business in such structures and the senior management of the Kyiv City State Administration.
"Ex-toilets"
On November 9, 2009, the Main Department of Economy and Investment of the Kyiv City State Administration (now the Department of Economy and Investment), Kyivkommunservis, and Tut-Service LLC (*) signed investment agreement No. 049-13/i/112 for the installation of modular toilets in Kyiv. According to the agreement, the investor was to install 120 such units in the capital (with the option to install more). However, officials did not specify whether Tut-Service LLC was required to pay any funds to the capital's budget, the term of the investment agreement, or the location of the modules.
According to a response from the Kyiv City State Administration's Department of Urban Development and Architecture, throughout 2015, this agency executed equity participation agreements for the maintenance of public amenities involving the installation of modular toilets. Officials did not specify how many such agreements were signed. However, according to the Kyiv City State Administration's Department of Economy and Investments, as of May 3, 2018, Tut-Servis LLC had installed less than half of the toilet modules stipulated in the agreement—a total of 35.
As KV learned from the state register of court decisions, on July 2, 2018, the Kyiv Commercial Court opened bankruptcy proceedings against Tut-Service LLC (case No. 910/6679/18). The grounds for this were the company's outstanding debts to Joint-Stock Commercial Industrial and Investment Bank PJSC in the amount of UAH 11,3 million. On October 10, 2018, the court declared Tut-Service LLC bankrupt and initiated liquidation proceedings against it.
According to case materials, in early 2019, the bank decided to auction off toilet units belonging to Tut-Service LLC. The court documents already mentioned 36 such units (one more than the Kyiv City State Administration department had reported) and clarified their locations. These units were divided into three lots, and the total auction price was expected to be at least 1,5 million hryvnias. The Kyiv Universal Commodity Exchange was designated as the auction organizer.
An excerpt from the case file showing the locations of toilets as of 2019
On July 24, 2019, AAA Project LLC (**) was declared the winner of this auction, bidding UAH 1,54 million for the toilet units. The following day, July 25, 2019, a purchase and sale agreement for these units was signed between the liquidator of Tut-Service LLC and AAA Project LLC. On September 30, 2019, the Kyiv Commercial Court declared Tut-Service LLC bankrupt.
According to the Kyiv City State Administration's Department of Economy and Investments, Tut-Service LLC was dissolved on October 22, 2019, and this information was recorded in the state register of legal entities, sole proprietors, and public organizations. Consequently, on the same day, according to officials, the aforementioned investment agreement was officially terminated.
Shortly before this, on September 11, 2019, the Kyiv City State Administration's Commission on Supreme Court Affairs instructed the Kyiv City State Administration's Department of Urban Development and Architecture to renegotiate the share participation agreements—this was necessary to legalize the activities of the new owner, AAA Project LLC, in the modular restrooms. Subsequently, at the request of AAA Project LLC, the said department changed the functional purpose of some of the modular restrooms from "public restrooms" to "sale of food and consumer goods" and "fast food establishments."
The relevant department also did not specify when exactly officials approved the "conversion" of restrooms into kiosks and mini-cafes, nor how many facilities underwent this "metamorphosis." It likely involved 31-32 facilities, since as of March 22, 2021, only four equity participation agreements had been signed between the Kyiv City State Administration's urban development department and AAA Project LLC specifically for the installation of "modular restrooms."
As reported to KV by the Department of Urban Development and Architecture of the Kyiv City State Administration, on July 9, 2020, the Commission on Armed Forces at the Kyiv City State Administration approved the relocation of structures belonging to AAA Project LLC to new locations that were approved by the Kyiv City District State Administrations (DSAs).
"This is a very cunning scheme that has deprived Kyiv residents and visitors of outdoor restrooms and allowed for an increase in the number of retail outlets on the city streets. According to my information, these structures have taken up high-traffic spots that most entrepreneurs can only dream of. It's no secret that renting real estate in the capital is an excellent source of 'passive income.' And, as far as I know, just a few months ago, renting one of these 'former restrooms' cost entrepreneurs 25-60 hryvnias per month—I don't think the prices are much different now. Therefore, one can only guess how much the owners of AAA Project earn in total. The main question is how legal is the placement of such structures, since they were installed as part of an investment project that is now no longer in effect," the owner of a kiosk in the Shevchenkivskyi district of the capital told KV on condition of anonymity.
Incidentally, like many of his colleagues, this entrepreneur doesn't want his name out in the open. Following KV's recent publications about the capital's military-industrial complex, officials from the Kyiv City State Administration's Department of Urban Development and Architecture launched an investigation to identify who exactly is leaking information about the capital's abuses to journalists. Furthermore, the Kyiv City State Administration is already threatening some entrepreneurs with non-renewal of their permits and stricter inspections.
Non-tourist centers
On July 7, 2012, the Main Department of Economy and Investment of the Kyiv City State Administration, the Kyiv City Tourist Information Center (KCTIC) and the Kyiv Information and Reference Enterprise Kyivmiskspravka (***) signed investment agreement No. 049-13/i/118 for the installation of tourist information centers (TIC) in the capital. According to the terms of the agreement, Kyivmiskspravka was to install 23 such centers with an area of 4 square meters, 9 square meters and 18 square meters. The agreement was valid for 15 years from the date of its official registration. The TICs were to, in particular, provide simultaneous translation services, provide information on tourist routes, sell souvenirs, etc. - that is, to assist tourists visiting the capital in every possible way, including foreigners. Whether the investor was required to pay anything to the capital's budget and where these facilities were to be located, officials also did not specify.
According to the state register of court decisions, on December 18, 2013, the parties entered into an agreement to change the party in the said investment agreement, replacing Kyivgorspravka LLC with Universum-2000 LLC (****).
According to the Kyiv City State Administration's Department of Urban Development and Architecture, equity participation agreements for the placement of TICs were signed in 2014. Officials again did not specify how many such agreements were signed at that time. Meanwhile, as of February 18, 2021, 19 of the 23 planned TICs had been installed, and as of March 22, 2021, seven equity participation agreements for their placement had been signed between the Kyiv City State Administration and Tour Info LLC (the new name of Universum-2000 LLC). The Kyiv City State Administration remained silent on the fate of the agreements for the other 12 such sites. It's quite possible that the activities of these TICs were also somehow repurposed.
As KV has discovered, in March 2019, Tour Info LLC approached the Kyiv City Tic Center (KGTIC) with a request to approve changes to the locations of seven TICs and to expand the range of services available to all established facilities. Specifically, the investor proposed that these centers also be allowed to sell coffee and soft drinks, provide advertising services, and sell parking passes and tickets. In other words, the proposal was to convert the TICs into regular retail kiosks. On April 2, 2019, the Investment Commission of the Kyiv City State Administration (KCSA) approved these changes.
Six months later, in November 2019, Tour Info LLC approached the Kyiv City State Administration's Department of Economy and Investments and the Kyiv City TicC Enterprise with a request to sign an additional agreement that would formalize the aforementioned changes. However, for unknown reasons, these entities refused to sign. In December 2019, Tour Info LLC filed a claim with the Kyiv Commercial Court to have this additional agreement recognized. On April 22, 2020, the court fully satisfied the investor's claims. Notably, neither the relevant department nor the Kyiv City TicC Enterprise appealed this verdict in the appellate court.
"Of course, no one caught the officials red-handed, but I personally believe this story is an example of collusion between the authorities and businessmen close to them. I'm sure that from the very beginning, the Kyiv City State Administration planned to convert the TICs into regular kiosks—this is one of the many loopholes for circumventing the moratorium on the installation of temporary structures, which has been in place since 2012. I also believe that Klitschko's (Kyiv Mayor – KV) subordinates were afraid to expand the TICs' scope of activity themselves and advised their owners to go to court, promising to "flush" the case," a kiosk owner in the Obolonskyi district told KV.
Beneficiaries of the scheme
According to the Youcontrol analytics system, Tut-Service LLC (the investor that installed the toilet modules) was registered in Kyiv in September 2008. The ultimate beneficiary of this company is listed as Zhanna Ostrovska, a Kyiv resident, who was also listed as the last director of this LLC before its liquidation. Furthermore, as KV reported, in 2013, this company was linked to then-Deputy Head of the Kyiv City State Administration Anatoliy Holubchenko (he held this position from 2006 to 2013).
The Kyiv-based AAA Project LLC (the new owner of the toilet modules) was established in June 2019, a month before the modules were purchased. The company's founders are listed as Kyiv residents Gennady Stolyarchuk, Ivan Lisovyi, and Anton Antipov, who is also listed as the director of the LLC.
According to a KV source in the Kyiv City State Administration, this company is a project of Andriy Andreyev, now the former head of the Kyiv Improvement Municipal Enterprise (2017-2019) and a member of the Kyiv City Council of the previous 8th convocation (Solidarity faction), and his close associate, Oleksandr Horbach, former head of the department for military deployment and approval of advertising locations at the Kyiv City State Administration's Department of Urban Development and Architecture (he worked in this department for about five years). Allegedly, all the founders are so-called "pounds"—that is, front men. According to the source, the "AAA" in the company's name stands for "Andriy Andreyev and Oleksandr."
As KV reported, the activities of these officials during their tenure at the Kyiv City State Administration were repeatedly criticized by the owners of the military units and were also investigated by law enforcement. This particularly concerns Andreev, who, while heading the Kyiv Improvement Municipal Enterprise, was the focus of police attention for the possible misappropriation of budget funds during the dismantling of the kiosks.
Kyivgorspravka LLC (the "first" investor to establish the TIC) was founded in Kyiv in February 1998. The company's ultimate beneficiaries are listed as Kyiv residents Svetlana Panfilova and Alisa Serebryanik, who is also listed as the director of the LLC.
Kyiv-based Tour Info LLC (the current investor of TIC) was registered in December 1999. The company's ultimate beneficiaries are Denys Andreychuk, a resident of Korosten in the Zhytomyr region, and Kyiv residents Inga Ganul and Andriy Yamkovoy, who is also listed as the director of this LLC. The company's founders also include Olga Kozlovskaya, a resident of Nemyriv in the Vinnytsia region, and Ihor Gnatyuk, a resident of the village of Ploske in the Brovarsky district of the Kyiv region. It is noteworthy that from 2007 to 2016, Mykola Ganul, likely a relative of Inga Ganul, was listed as one of the founders of Tour Info LLC.
Olga Kozlovska is the wife of Oleh Kozlovskiy, Deputy Head of the National Police of Ukraine (in this position since January 2019), who is better known for his service in various positions within the Security Service of Ukraine (SBU) from 1993 to 2018, with breaks. Meanwhile, the aforementioned Mykola Ganul is the founder of the Croissant & Coffee chain of restaurants and the head of the National Retail Organization, a public union established in 2013 "to facilitate interaction between retailers and all branches of government."
It should be noted that Tour Info LLC, as well as Coffee and Croissant LLC and Ganul LLC, both owned by Nikolai Ganul, were involved in criminal case No. 32018000000000032 of May 7, 2018, regarding tax evasion in 2017-2019 on an especially large scale (Part 3 of Article 212 of the Criminal Code of Ukraine).
Thus, investigators from the State Fiscal Service (SFS) established that officials of the aforementioned and other companies may have sold tobacco products without using transaction recorders and without reflecting this data in their accounting records, thereby evading excise taxes. Moreover, according to the investigation, the alleged violators conducted these activities in small architectural structures—shops, retail kiosks, bus stops, and waiting areas at public transport stops. It is unknown whether this case is currently being investigated: the "last" court ruling dates back to August 2, 2019.
Excerpt from the case materials
As KV recently reported, Kyiv entrepreneurs who conduct their commercial activities in the Armed Forces are sounding the alarm. According to them, monopolization of this market is gaining momentum in Kyiv: Kyiv City State Administration structures are exerting bureaucratic pressure on undesirable entrepreneurs, while favored ones are being helped in every way possible to expand their kiosk networks. Lawyer Oleksandr Melnyk confirms that scams are underway, involving the purchase of businesses from small entrepreneurs for pennies, the consolidation of information coupons, and the transfer of certain individuals to lucrative positions in the Armed Forces. The situation appears to have worsened since the arrival of Vitali Klitschko's current deputy, Oleksiy Kuleba, who is linked to Andriy Yermak, head of the Presidential Office, at the Kyiv City State Administration.
As a reminder, Natalia Melnyk (pictured center) has been heading the Kyiv City State Administration's Department of Economy and Investments since February 16, 2018. Oleksandr Svistunov (pictured left) has headed the Kyiv City State Administration's Department of Urban Development and Architecture since November 1, 2016.
* TOV “Tut-Service” (EDRPOU code: 36148075);
** LLC “AAA Project” (EDRPOU code: 43066101);
*** TOV “Kyiv Municipal Dovidkovo-Information Enterprise “Kyiv Municipal Dovidka” (EDRPOU code: 14349410);
**** TOV “Tour Info” (EDRPOU code: 30637601).
Photo: collage by KV
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