Vladimir Shulmeister
The list of candidates for the post of head of PJSC Ukrzaliznytsia includes many well-known candidates, but the most notorious among them is undoubtedly Vladimir Shulmeister, who, during his one year as First Deputy Minister of Infrastructure, managed to become embroiled in dozens of corruption scandals.
Since the appointment of Dutch citizen Vladimir Shulmeister to a senior position at the Ministry of Infrastructure in December 2014, the media have reported on his extremely dubious reputation. At the time, Ukrainians dreamed of seeing new faces in the government uninvolved in corruption. However, the appointment of Vladimir Shulmeister, a Dutchman and former head of the Foxtrot chain, dismissed for large-scale financial fraud, to a high-ranking position at the Ministry of Infrastructure came as a shock.
From turbine designer to CEO
Shulmeister's official biography, posted on the ministry's website, was brief: he was born in Mykolaiv and graduated from the local shipbuilding institute with a degree in turbine engineering at the dawn of independence. He then moved to the Netherlands, where he continued his studies at the Delft University of Technology. After graduation, he worked for a while at a research institute, but then decided to change careers and joined Fortis Bank as a manager in the grain and oilseeds department. In the early 2000s, he returned to Ukraine and attempted to launch his own business, opening a consulting company, ComFi Solutions SA. But the most interesting chapter of his biography began in November 2005, when Shulmeister was appointed CFO of one of the largest retail chains, Foxtrot. It was here that the young financier with an engineering degree began playing for high stakes and engaging in shady schemes that would later cost his employers millions of hryvnias.
"The Smuggling Department" and Significant Acquaintances
To understand the scale of the fraud, it's worth noting that at the time, Foxtrot was the largest retailer of imported household appliances and electronics in Ukraine. With over 300 stores in Ukraine and abroad and a staff of over 12, the chain's annual turnover amounted to billions of hryvnias. And it was precisely overseeing these colossal financial flows, as well as responsible for payments, including customs, that Schulmeiter, as CFO, was tasked with.
At Foxtrot, Shulmeyter met the current Minister of Agrarian Policy, Oleksiy Pavlenko, who had served as the company's executive director since 2006 and was responsible for the group's investments in Ukraine and Moldova. This meeting largely determined the future career of the current Deputy Minister of Infrastructure. Together with Pavlenko and with the support of Konstantin Ksenich, head of Dobrobut i Zakhist, an insurance company affiliated with Foxtrot, Shulmeyter began actively embezzling the retailer's funds.
For this purpose, a special department was created to oversee the "correct" passage of goods through customs. Within the company, this department, for which Shulmeister was directly responsible, was simply called the "smuggling department." Various schemes were developed to import gray goods into Ukraine and evade customs duties. An important part of Shulmeister and Pavlenko's shady schemes was the insurance company "Dobrobut i Zakhist," through which the proceeds from gray imports were cashed out and laundered. The money was then transferred abroad through offshore companies and used, among other things, to purchase real estate. Shulmeister's experience living abroad proved instrumental in this.
The close corruption network that formed between Shulmeister and Pavlenko is evidenced by the fact that Pavlenko and Shulmeister were ousted from Foxtrot at the same time, in 2009. Such a dramatic reshuffle in the leadership positions of a large company usually doesn't happen without compelling reasons, especially at a time when Ukraine had already passed the peak of the financial crisis. Foxtrot's investors had every reason to fire Pavlenko and Shulmeister, as cash arrears from under-selling and insurance fraud amounted to millions of hryvnias. Besides the tarnished reputation of the largest retailer, Shulmeister left behind a trail of unpaid loans, which placed an additional burden on the group's financial health.
Shulmeister withdrew and converted Foxtrot’s money through Converse Bank, the founder of which was another outstanding figure – the president of the National Sambo Federation of Ukraine, Oleksiy Savchenko (Read more about it in the article The sharp turns of the odious BPP MP Oleksiy SavchenkoUntil 2003, Savchenko worked in the capital's police force and rose to the rank of deputy head of the Kyiv Department for Combating Organized Crime. Incidentally, the current Prosecutor General, Vitaliy Yarema, also worked there at the time. (read more about it in the article Vitaly Yarema, "Honest Cop" and Sergei Dumchev's godfather)After leaving the police in 2003, Savchenko went into business. In 2004, he served as deputy chairman of the board of Yuriy Ivanyushchenko's (also known as Yura Yenakievskyi) Rodovid Bank, and in 2006, he opened his own bank, Conversbank. It's also noteworthy that former Defense Minister Valeriy Heletey also worked in the Kyiv UBOP alongside Savchenko and Yarema. Rumor has it that Heletey lobbied for Shulmeister's appointment to a high-ranking position in the Ministry of Infrastructure.
A foggy past
After leaving Foxtrot, Pavlenko and Shulmeister's paths diverged for a time. Pavlenko began working for an investment company, later becoming a member of the supervisory board of Zhitlobud Group. Shulmeister, however, remained officially unemployed following the high-profile scandal of 2009 and until his appointment as deputy minister. However, it's worth mentioning a fact Shulmeister omitted in his biography. He left Foxtrot far from empty-handed, having managed to "squeeze out" not only the money but also the aforementioned insurance company Dobrobut i Zakhist, which was affiliated with the retailer. A brief news release can still be found online stating that Vladimir Shulmeister was appointed Chairman of the company's Supervisory Board in December 2009. The release also states that "Shulmeister represents the interests of the Cypriot company Abarta Investments, a shareholder in the insurer (62,46%)."
The five years following Foxtrot are described in Shulmeister's biography with a single line: "2009-2014 – Partner in various Private Equity projects." Very little is known about these projects, or about the details of Shulmeister's biography. Shulmeister's investor interests extend across various sectors of the economy, from food processing to alternative energy. The list of projects associated with his name includes the IQClinic diagnostic clinics, the Energomashproekt project company, the Gradoil plant (now owned by Kernel), and a startup seeking investment targets in Eastern Europe. Their success is difficult to judge. But it is telling that Shulmeister took out multimillion-dollar loans for each of his projects, loans he was unable to repay.
"Don't step on the same rake again"
Pavlenko and Shulmeister's paths crossed in the new Cabinet of Ministers formed after the snap parliamentary elections. Pavlenko became Minister of Agriculture, while Shulmeister unexpectedly found himself in the Ministry of Infrastructure. Moreover, this man with no relevant experience was entrusted with several strategic areas at once. At the ministry, he was responsible for maritime affairs, aviation, Ukrposhta, Ukravtodor, and, most importantly, property and security matters.
Immediately after the Dutchman's appointment, a flurry of media reports began circulating about Shulmeister's actions running counter to state interests and circumventing the law. Essentially, the Ministry of Infrastructure became Shulmeister's second "Foxtrot," with even larger-scale scams. Describing them in a separate article would be quite problematic, lest it devolve into a crime novel.
However, Shulmeister's numerous acts of corruption while serving as Deputy Minister of Infrastructure have been well documented online, and entire series of investigative journalism articles have even been devoted to them, links to one of which we provide below:
The corrupt business of the First Protector of the Minister of Infrastructure of Ukraine Shulmeister Volodymyr. Part 1 (Shchiptsov)
The corrupt business of the First Protector of the Minister of Infrastructure of Ukraine Shulmeister Volodymyr. Part 2 (Vaskov)
The corrupt business of the First Protector of the Minister of Infrastructure of Ukraine Shulmeister Volodymyr. Part 3 (Antonyuk)
The corrupt business of the First Protector of the Minister of Infrastructure of Ukraine Shulmeister Volodymyr. Part 4 (Prokhorenko)
Russian raiding of the Ilyichevsk Port – at the hands of the Ukrainian official Shulmeister
Nevertheless, we cannot fail to mention one of Shulmeister's corruption scandals. In the fall of 2015, journalists discovered inaccurate information in Shulmeister's income declaration. Specifically, he understated the area of his house in Koncha-Zaspa by almost half and omitted another house located on his property. After a series of media publications, Shulmeister admitted he had submitted an incorrect declaration, calling it a "technical error." Knowingly submitting false information by a government official is a criminal offense (Article 366 of the Criminal Code of Ukraine, "Declaring false information"), punishable by up to two years in prison.
However, the scandal was hushed up and Shulmeister, instead of sitting in prison, is participating in the competition to become the head of Ukrzaliznytsia.
Clearly, a scandal involving such a high-ranking government official could have been hushed up either with large sums of money or with the help of powerful patrons. Shulmeister apparently didn't have large sums of money—this became clear thanks to another scandal that erupted in the summer of 2015. It was revealed that Mikhail Beilin, an adviser to Boris Lozhkin, the head of the Presidential Administration, was paying Shulmeister an additional $30 monthly in "illegal cash."
The "envelope salary" scandal exposed Shulmeister's patrons ("employers"). INSIDER project director and journalist Sergei Shcherbina stated that the information that the head of the Presidential Administration, Boris Lozhkin, oversees the work of the Ministry of Infrastructure through his advisor and partner, Mikhail Beilin, seems entirely logical.
"Recently, an investigation in Austria against Lozhkin regarding the fact that Kurchenko's money, paid for UMH, was funneled through that jurisdiction, became public.
Kurchenko's money ended up in an Austrian account owned by INTEGRITY INTERNATIONAL HOLDINGS LTD (BVI), whose majority shareholder is the head of the Presidential Administration. In this regard, it is interesting that INTEGRITY was a partner in 2008 with NBM Television, better known as Petro Poroshenko's Channel 5. The project was called NBM-Radio. But this fact is more or less common knowledge," the journalist writes.
"What's more amusing," Shcherbina continues. "According to the Offshoreleaks database, besides Lozhkin and his associates, another shareholder of INTEGRITY was the Cypriot NN & MC Services Limited. According to the island's registry, this company is owned by a Cypriot citizen, Nikos Neophytou. A citizen with the same name became an auditor of the Ukrainian insurance company Dobrobut ta Zakhist in April of this year. This company is affiliated with... First Deputy Minister of Infrastructure Volodymyr Shulmeister. Apparently, these respected individuals use the same Cypriot lawyers. Against this backdrop, the information that Lozhkin, through his advisor and partner Mikhail Beilin, oversees the work of the Ministry of Infrastructure seems entirely logical. That's how we live," the journalist wrote.
Well, knowing the unlimited power of the Dutchman Schulmeister's affiliated partners, it's quite likely they'll push him into the position of head of PJSC Ukrzaliznytsia. And then there's no doubt the railway agency will be mired in an endless series of corruption scandals.
Mikhail Beilin. "The Overseer" from the AP
Alexey Pavlenko, the "Undertaker" of Ukraine's agro-industrial complex
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