Artem Pshonka
The story of the long-suffering "Unified Electronic Ticket" for Kyiv public transport began back in 2013. Back then, the city authorities announced a tender to find an investor to implement the project. They found one—Kharkiv-based Alfa Pay Terminal LLC. The company committed to creating a unified fare payment system for surface and underground transport and investing over 113 million hryvnias in it. Kyiv residents were supposed to be able to use the new system as early as the first quarter of 2014. However, either the investor's insolvency or infighting over market share prevented the situation from moving forward.
The story of one failure
The use of paper tickets, human error, and the lack of automated accounting for concessionary passengers drain Kyiv's budget of up to 30% of revenue. In Western Europe (London, Berlin, and Barcelona), where e-ticketing systems are in place, revenue losses amount to 2-3%, while in Eastern Europe (Prague, Warsaw, and Bratislava), the figure is 3-7%. This is according to statistics from the European Bank for Reconstruction and Development.
Alfa Pay Terminal, which is associated with the controversial Kharkiv mayor Gennady Kernes, has undertaken to bring Kyiv's municipal transport system into line with European standards. Within a year, the company was to adapt 650 metro turnstiles, 232 single-use ticket vending machines, and install 300 card top-up terminals for electronic ticketing. In ground transportation, it was also to install 4,5 validators, 700 POS terminals, and 300 card vending machines.
Two and a half years have passed, but the Alfa Pay Terminal has done virtually nothing. The Kyiv city administration has suspended the investment agreement. What prevented this very attractive project from being implemented?
The program's implementation promises investors a reward of 8,47% of revenue from the capital's passenger transport system for at least 10 years. Kyivpastrans and the Metro each carry approximately two million passengers daily. With fares ranging from 3 to 4 UAH, the reward will amount to almost 1.2 million UAH per day or 438 million UAH per year, more than covering all investor expenses after just the first year of operation.
The colossal excess profits that could be lost to Kharkiv haunted Oleksandr Stepura, CEO of Carbon LLC, who is backed by his longtime business partner, Artem Pshonka, the son of the former Prosecutor General. A conflict erupted that nearly reduced to ashes all the efforts to create a European ticket sales system.
On the arena all the same
Thanks to the high-ranking patronage of Pshonka Jr., the Karbon association has long exploited the Kyiv metro with impunity, supplying token vending machines at inflated prices. Ukrzaliznytsia is another cash cow for Karbon and its subsidiaries. Take, for example, the sale of a Mobile Document Control Terminal (MDCT), which conductors use to scan QR codes on tickets, to UZ. The device, purportedly developed by Plasis, a company part of the Karbon association and co-owned by Artem Pshonka, was sold under the guise of its own design. According to technical experts, the "know-how" was purchased in China, slapped with Ukrainian labels, and sold to Ukrzaliznytsia at a price twice that of the American Motorola brand. The quality of the Chinese counterfeit leaves much to be desired, something the conductors have fully realized—the vaunted MTCD often malfunctions.
But the enterprising company easily got away with the scam. Thanks to Artem Pshonka's efforts, Karbon continued to supply its equipment to the railway and the Kyiv metro. During the "family's" reign, Pshonka Jr. skillfully placed loyal people in key positions at state-owned companies, allowing him to oversee public procurement by Ukrtransgaz, Ukrgazvydobuvannya, and Ukrzaliznytsia.
Artem Pshonka's influence was virtually limitless. He created a shadow prosecutor's office through which he could order the opening or closing of criminal cases, exert pressure on businesses, or even squeeze them outright, according to Focus magazine. Over three years, the "secret" prosecutor's office brought in between $5 and $7 billion for its top brass, according to Igor Shcherbina, head of the Prosecutor General's Office's Main Investigative Directorate.
It would seem that the Plasis company was just a way for Pshonka Jr. to "pick pockets." And yet, media reports claim that Artem Pshonka stopped at nothing, even protecting the gambling business in Ukraine.
Today, when he is forced to hide from Ukrainian justice in Russia (he is accused under Article 191, Part 5), and his accounts in European banks are blocked, Pshonka has taken up his assets with renewed zeal and is trying to use them to get his hand into the Ukrainian budget.
Were they "gone" or just moved?
Plasis and its affiliates have been putting all their efforts into preventing the "Unified Electronic Ticket" project from being implemented by competitors. According to the Politicheskie Izvestia newspaper, the Astek consortium and its affiliate, Card Systems, blocked the system's implementation through their lobbyists at the Security Service of Ukraine (SBU). These organizations were unable to participate in the investment competition because their proposal did not meet the requirements, but they actively sought to overturn its results.
Alfa Pay Terminal ultimately agreed to budge, preserving its own interests. Having done nothing, the Kharkiv-based company plans to sue the Kyiv City State Administration for 574 million hryvnias in compensation for contract termination. It's difficult to calculate how this figure was arrived at. After all, a letter published by former Alfa Pay Terminal director Ruslan Vorohubin states that the company spent only 28 million hryvnias over two and a half years.
Despite the fact that the contract with the previous investor was terminated and a new one has not been found, the Kyiv City State Administration still vows to introduce a Unified Electronic Ticket as early as October of this year.
According to sources close to Oschadbank, he is willing to invest UAH 600 million in the project, but only on the condition that Plasis be the one implementing it. How Pshonka managed to win over Ukraine's largest state-owned bank remains a mystery. It's possible that well-placed people are still helping him. The paradox of the situation is that a man who has repeatedly robbed Ukraine is planning to do so again, this time with the help of a state-owned bank and his own company, Plasis.
Good intentions to save Kyiv's public transportation from collapse are about to be swept away by the mercenary interests of dishonest business groups. Whether other investors will dare to compete for this project is debatable. Plasis has won the territory, or at least staked it out. The Kyiv City State Administration likes to repeat that it welcomes all investors. But in this case, it's like throwing a goat into the garden that's been grazing nearby for a long time.
Oleg Boyko, Antikor
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