The parties to the conflict accuse each other of laundering funds from a state-owned coal mining company.
The state-owned Krasnolimanskaya Coal Company is one of the largest coal mining companies in Ukraine. And one of the most troubled.
The enterprise is located near the town of Rodynskoye in the Donetsk region – not far from Krasnoarmeysk and several kilometers from the third line of defense that separates Ukraine from the unrecognized “Donetsk Republic.”
The mine produces coking coal used in metallurgy and energy production. Its management plans to produce over two million tons in 2015. The company currently employs approximately 4,7 people.
An INSIDER correspondent visited Krasnolimanskaya on October 24. Accessing the area isn't easy. The first checkpoint is still a few hundred meters before the mine administration building. People are warming themselves near iron barrels, and the road is blocked by concrete barriers.
A little further away, directly at the entrance to the parking lot in front of the mine administration building, there are also concrete barriers. The mine itself, despite the situation around it, continues to operate normally.
The tense situation is evidenced not only by the checkpoints, but also by the entrance building, where a poster hangs: "President! Protect the workforce!"
History of the "Generals"
Since 1996, the company has been headed by its longtime director, Zinovy Pasternak. The general director of the state-owned enterprise patented a method for coal seam degassing. In fact, the Soviet coal industry had already introduced this method in 1976. But for its use at Krasnolimanskaya, Pasternak transferred royalties to himself and his daughter, Elena Kiseleva.
In 2009, the Security Service opened a criminal case against Pasternak, accusing him of embezzling state funds. After he was removed from the leadership of the state-owned company, his former son-in-law, Konstantin Kiselev, became the "general."
Konstantin Kiselev
However, with the rise of President Viktor Yanukovych to power, Kiselev was also forced to resign as Krasnolimanskaya's CEO. In 2011, Kiselev was replaced by Sergei Volotkovsky, later a member of the Krasnoarmeysk City Council from the Party of Regions.
However, Volotkovsky's tenure as CEO was short-lived. At the end of that year, Alexey Kozlov, who had previously headed Krasnolimanskoye Management Company LLC, took over the state-owned enterprise. The private company had been leasing the coal reserves of the state-owned enterprise since 2003.
From that time on, the state enterprise effectively operated in the interests of an LLC owned by businessmen Sergei Kuzyara and Igor Gumenyuk, the official owner of the Donbassenergo generation company.
However, in 2014, Konstantin Kiselev, who was fired under Yanukovych, returned to the State Enterprise as CEO.
"In September 2014, the Oktiabrsky District Court of Dnipropetrovsk reinstated the director, who had been fired three years earlier," Sergei Kuzyara told INSIDER. "After that, more than 120 people, some wearing Dnipro-1 Battalion insignia, carrying automatic weapons and mortars mounted on pickup trucks, arrived at the plant."
Regimental mine
As the current management of the state-owned enterprise told an INSIDER correspondent, in order to secure control of the mine, Kiselev asked for help from Yuri Bereza, the commander of the Dnepr-1 regiment.
Bereza is a member of the Verkhovna Rada from the People's Front, whose leader is Prime Minister Arseniy Yatsenyuk.
"We were stationed in Peski at the time, and my company commander went to the mines to request timber for dugouts," Yuriy Bereza told INSIDER. "Kiselev himself contacted us and asked us to help him protect the enterprise from Alexander Yanukovych."
The fact is that Serhiy Kuzyara, co-owner of Krasnolimanskoye Management Company LLC, was considered to be Oleksandr Yanukovych's manager, overseeing the coal industry. Based on this, Dnipro-1 assisted the new director in his fight against the LLC.
Sergey Kuzyara
Upon taking over the state-owned enterprise, Kiselev halted the operations of Gumenyuk and Kuzyara's private company. The LLC employees were transferred to the state-owned enterprise. The same thing happened with the coal reserves. Consequently, the state-owned enterprise, unencumbered by a private "sucker," began to gain momentum. Production doubled—from 4-5 tons of coal per day to 8-10 tons.
In August, Konstantin Kiselev won the Ministry of Energy and Coal Industry’s competition for the position of General Director of the State Enterprise “Krasnolimanskaya Management Company”.
However, in September, Kiselev had a conflict with MP Yuriy Bereza.
"Seeing the company's dynamic development, he declared himself the mine's owner. And that's how he presented himself in Kyiv," says Evgeniy Kostennikov, deputy general director of the Krasnolimanskaya state enterprise. "He forced his people to be appointed first deputy and commercial director, and began signing contracts on behalf of the company that we knew nothing about."
According to Bereza, the conflict began because Kiselev used company funds to purchase equipment instead of paying wages to the team. Allegedly, when the MP began to complain to the mine's management about this, their relationship deteriorated.
"I supported Kiselev more than anyone else. But I promised people salaries," Bereza says.
At the end of September, an audio recording was posted on the mine's website in which a voice resembling Yuriy Bereza demanded 5 million hryvnias for mine security and one-time payments for "resolving issues."
Bereza claims that the footage in the video was edited.
Everyone is under arrest
Kiselev's extreme independence did not go unnoticed by the mine's management. On October 16, Kiselev was detained by SBU officers.
The conflict was exacerbated by the fact that Energy and Coal Industry Minister Volodymyr Demchyshyn, a protégé of President Petro Poroshenko, initially opposed Kiselyov. Kostennikov believes that Demchyshyn, along with MP Bereza, are attempting to wrest control of the company. This theory seems unlikely, given that the minister has had a rocky relationship with Arseniy Yatsenyuk, whose political party includes Bereza, from his first day on the job.
However, Donetsk Oblast Governor Pavel Zhebrivsky showed his loyalty to the "general." However, this was of little help to Kiselev.
According to Demchyshyn, Kiselev and his predecessor, Kozlov, are suspected of embezzling 300 million hryvnias of state funds. However, the minister's statements make it impossible to determine who stole these funds or how.
For example, the prosecutor's office accused Kiselev of using inventory leased by a private company owned by Kuzyara and Gumenyuk. Considering that the LLC had been parasitizing on the state-owned enterprise for a long time, this charge is a pure formality.
The court ordered Kiselev to be held in custody for two months. Bail was set at 20 million hryvnias. Two of his deputies, Yevgeny Kostennikov and Denis Mikhailov, were also arrested.
All this is happening against the backdrop of rallies and pickets by Krasnolimanskaya employees who have come out in support of their manager.
Why is the team defending Kiselev?
"The miners don't support the manager, but rather the stability of wage payments," Demchyshyn said in response to INSIDER's question.
The minister's logic is clear. Last year, the Ministry of Energy and Coal Industry created the state-owned enterprise "State Coal Company" (SCC), which became the operator of coal from state-owned mines in place of the bankrupt state-owned enterprise "Coal of Ukraine."
The State Coal Company (GUK) purchases coal from state-owned enterprises and sells it to consumers. With this company's help, Demchyshyn regulates the imbalance in coal costs between various enterprises. The operator delays payments to profitable mines, such as Krasnolimanskaya, for coal shipped. Meanwhile, unprofitable mines receive funds in full to pay off unpaid wages.
According to Krasnolimanskaya Deputy Director Kostennikov, the State Management Company owes the mine 43 million hryvnias for delivered products. Demchyshyn claims the debt is 24 million hryvnias.
Who will head the company now?
Krasnolimanskaya's management fears that this person will be acting CEO Vitaly Zyuzko, allegedly Bereza's protégé. Bereza himself says he doesn't even know this person.
In turn, the minister assures that Zyuzko will not become CEO.
"I don't support Zyuzko," Demchishin said. "He was Kiselev's deputy, and he bears responsibility for the leader's actions."
For now, Kiselev himself and his deputies Kostennikov and Mikhailov are in custody in Kramatorsk. The fight for this valuable asset continues.
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