Boris Ostapyuk: the elusive plunderer of Ukrzaliznytsia. PART 1

Why is Ukraine’s rail transport the most wretched and unprofitable in Europe? This question should be addressed to one of the former heads of Ukrzaliznytsia, Boris Ostapyuk. After all, it was he who turned the railway networks into schemes for his corruption scams, he was caught more than once, was fired for this, was even put on the wanted list – but always returned again and occupied even higher positions. Now he dreams of returning again, with the help of his influential patrons and accomplices from the People’s Front and Batkivshchyna.

Where do the rails of corruption come from?

Ostapyuk Boris Yaroslavovich was born on March 31, 1961 in the village of Sloboda, Kolomoisky district, Ivano-Frankivsk region. His early biography is full of large gaps and contradictory “versions”. This is quite logical for a person who regularly found himself at the center of corruption scandals and tried to clean up his past in order to return to the leadership chair with a “clean record”.

Thus, according to the current official biography of Ostapyuk, in 1987 he graduated from the Dnepropetrovsk Institute of Railway Engineers (now the National University of Railway Transport) with a degree in car building, where he also received two more higher educations in 2001 (specializing in rolling stock and special equipment) and in 2003 (specializing in management of organizations). What Boris Ostapyuk did from the moment he graduated from school (1976 or 1978) until entering the university (1982) is not disclosed in this biography. It does state that in 1987 Ostapyuk began his career as a foreman at the Lviv passenger car depot, where he worked until 2000 and rose to the rank of chief. This information is indirectly confirmed by the fact that Ostapyuk had an apartment in Lviv (at 11 Syaivo Street), where he was registered with his wife Ivanna and children Boris and Yulianna.

However, another, earlier version of Borys Ostapyuk’s biography can be found in the media. It says that after the eighth grade, he entered the Chernivtsi Technical School of Railway Transport (now the Transport College), then served in the army, but began working in 1981 at the Volnovakha depot of the Donetsk Railway. Then he entered the Dnepropetrovsk Institute of Railway Engineers, after which, until 2000, he worked not only on the Donetsk and Lviv Railways, but also in senior positions on the Dnieper Railway (in the mid-90s). If this version of Ostapyuk’s biography is real, then it turns out that later, for some reason, he deliberately hid part of his past. But why? What did he do on the Dnieper Railway?

However, it is reliably known that Ostapyuk stepped onto the slippery path of corruption in Lviv, since by the time of his importance in Kyiv he was already a member of the so-called “railway mafia”, created in the 90s on the Lviv Railway under the “roof” of its then head Georgy Kirpa.

In 2000, both versions of Ostapyuk’s biography converge into one line – when he took up the position of first deputy director of the State Enterprise for Logistics and Technical Support of Railway Transport “Ukrzaliznychpostach”. According to information received Skeleton.Info from Ostapyuk’s circle (he himself “lost” all this information), and before his appointment to this position he specialized in supplies and repairs, which is a real gold mine in Ukrzaliznytsia.

The fact is that the corruption schemes around Ukrzaliznytsia (UZ) have their own specifics. This state enterprise has a monopoly on freight and passenger transportation services, for which it collects payments, and also owns a network of railways, carriages and locomotives, stations and depots. UZ cannot transfer these functions and property rights to enterprises that are not part of its structure, and especially not to private firms. But how do corrupt officials feed on it? First of all, by stealing money from Ukrzaliznytsia through the tender procurement system, through the repair of tracks, rolling stock and stations, through the provision of secondary services (passenger service, ticket sales). So the positions of supply and repair base managers at Ukrzaliznytsia have always been very lucrative. Especially on the Lviv Railway, where entire clans have risen on this, seeking to take over the entire Ukrzaliznytsia. That is why there were so many people at the head of the Ukrainian railways who came from the management of the Lviv Railway and from the western region in general: Georgy Kirpa, Vasyl Gladkikh, Vasyl Melnychuk, Mykhailo Kostyuk, Boris Ostapyuk.

The late Georgy Kirpa was the “father” of all these railway clans, just as Leonid Kuchma was the “father” of many Ukrainian oligarchic groups. For example, it was not without Kirpa’s help that the clan of Mykhailo Kostyuk and the Dubnevych brothers rose to prominence: he promoted their track repair business and himself received dividends from it. They competed with the clan of Boris Ostapyuk, who also owed his rise to Kirpa. So, when in 2000 Kirpa transferred to Kyiv to the position of deputy head of Ukrzaliznytsia, Ostapchuk immediately arrived in the capital with him, receiving the position of deputy director of Ukrzaliznychpostach. And when Kirpa became general director of UZ in 2001, Ostapyuk immediately became director of Ukrzaliznychpostach.

Gradually, Ostapyuk created his own clan: it included his old acquaintances from Lviv Railways, and even a couple of “fellow villagers”. He always places his team of trusted people in key positions and has his own corrupt connections with high-ranking officials, politicians and major businessmen. Among his strategic partners (and accomplices) of the last few years are Maksym Burbak and Leonid Yurushev, thanks to whom he received the position of CEO of UZ in 2014, and on whom he still counts, hoping to return to this chair again. And, as is known, both of these individuals are very close to the leader of the “People’s Front” Arseniy Yatsenyuk.

Railway “overseer”

So, in 2000-2002, Boris Ostapyuk headed Ukrzaliznychpostach, and in 2002-2005, he held the positions of first deputy head of the Main Passenger Department of UZ, and then head of the Main Department of Material and Technical Support and Procurement of UZ. That is, numerous flows of purchases and payment for services went through him.

It was a golden age: the head of Ukrzaliznytsia, Georgy Kirpa, lobbied Kuchma for the need to “reform” the industry, asked for permission to raise tariffs and increase state subsidies – and his subordinates were actively “sawing up” the multi-billion budget of the railway. Borys Ostapyuk was one of them. Although the media has almost no information about his vigorous activity during that period, you can still find something – for example, the “underwear scam”. Kirpa declared his intentions to improve the level of service on passenger trains, and they began to charge a fee for this, in addition to the cost of the ticket. In fact, nothing changed: the carriages were dirty, stuffy in the summer and drafty in the winter, the underwear was old and washed out.

In December 2004, Georgiy Kyrpa committed suicide, taking many secrets of Ukrzaliznytsia with him to the grave, including the secrets of Ostapyuk’s first schemes. But if Maidan was fatal for Kyrpa, for Borys Ostapyuk, on the contrary, it opened the way to new heights. In 2005, he became deputy general director of Ukrzaliznytsia, and in October of the same year, he created the state enterprise Ukrzaliznychpassservis. Although 100% of its shares belonged to UZ, Ostapyuk was the director of the enterprise (until its liquidation). Ukrzaliznychpassservis took over the functions of servicing passenger rail transport – that is, with the help of this enterprise, Ostapyuk kept this profitable sphere under his personal control. And then the corruption “miracles” began!

But, keeping to the chronology, let us first mention one incident that Ostapyuk tried to erase from his biography. After all, you won’t see in it that on September 7, 2006, by order of the new Yanukovych government, he was dismissed from the post of deputy director of Ukrzaliznytsia, and returned to his post only on December 26, 2007, by order of the Tymoshenko government. But there is no gap of almost one and a half years in his management experience because Ostapyuk, through the Kyiv District Administrative Court, achieved recognition of his dismissal in 2006 as illegal, and even ripped off the state’s salary for this period (and his salary was about 8 thousand hryvnia per month). But it was even more important for Ostapyuk to “erase” the reason for his dismissal. And it, according to Skeleton.Infoconsisted in the fact that the deputy director of Ukrzaliznytsia was caught in corruption on an especially large scale: in 2005-2006, Boris Ostapyuk provided a “preferential tariff” for freight transportation for Intertrans CJSC and T-Trans LLC (EDRPOU 32829313), causing Ukrzaliznytsia damages in the amount of almost 150 million hryvnia!

The director and actual owner of Intertrans was Nikolai Kovzel, an extremely interesting figure, one of the legends of Ukrainian corruption! He also started at Lviv Railways, only in the food and commercial sector. His mother was close friends with Kirpa, so she got her son a job at the ORS of Lviv Railways, where he created various commercial firms in the 90s. When “Uncle Zhora” transferred to Kyiv in 2000, Nikolai Kovzel headed the State Enterprise Intertrans (since 2004 – CJSC), one of the largest transport companies in Ukraine, and soon took it over. He is also associated with T-Trans LLC (according to some information, Kovzel withdrew profits from Intertrans through it). Until the end of 2004, Kirpa provided Kovzel with benefits, since 2005, Boris Ostapyuk provided them. And judging by the scope of Kovzel’s activities (he drove a Rolls-Royce Phantom, bought with money from Intertrans), he was then one of Ostapyuk’s main “companions”.

Nikolai Kovzel also has a brother, Petro, who became a judge of the Kyiv District Administrative Court in 2007 – not without the help of Nikolai Kovzev, who, as the media wrote, practically “bought” him this position from the BYuT member Vasyl Onopenko (then head of the Supreme Court). And it was the newly appointed judge Petro Kovzel who made the decision recognizing Ostapyuk’s dismissal as illegal!

Also, the company “T-Trans” controlled by Kovzel had a director, Oleksandr Danilchuk, who in those years was the head of the Rivne organization of the BYuT, and from 2006 to 2010, the head of the Rivne regional council. Through him, Kovzel himself became close to Yulia Tymoshenko (their houses were even next to each other in Koncha-Zaspa), and was twice (in 2006 and 2007) elected as a people’s deputy on the BYuT list (both times buying himself seat No. 53). Thus, it becomes clear why Borys Ostapyuk was hastily returned to his post on December 26, 2007, literally in the very first hours of the new Tymoshenko government.

Returning to his post, Boris Ostapyuk also showed fantastic activity in the last days of the outgoing year, and literally in two days he again placed his people in key positions. The saying “time is money” sounded literally for the railway corrupt officials, because it was about closing old annual budgets and estimates, and approving new ones. And so on December 28, 2007, Ostapyuk assembled a new composition of the Tariff Commission of “Ukrzaliznytsia” (order of “UZ” from 28.12.07 634-Ts), which hastily returned the “reducing coefficients” on freight rates for ZAO “Intertrans” and OOO “T-Trans” …

In 2008-2009, Boris Ostapyuk returned to his “laundry schemes”, which he carried out through Ukrzaliznychpassservis and a number of commercial contractor companies. Among them, Razvitie 21 Vek LLC, co-owned by Leonid Yurushev, first appeared. It began winning tenders for laundry and carriage cleaning services, but the opportunity to simply earn money was not enough for Yurushev, and Ostapyuk would not have received much from this. And they came up with another scheme: at first, Razvitie 21 Vek won tenders quite honestly, offering a lower price, but then the terms of the contract were revised, and the cost of the company’s services increased almost twice! According to sources Skeleton.Info, Ostapyuk worked with other commercial contractors using the same scheme.

But the scam didn’t end there. The fact is that if Development 21st Century and other companies contracted by Ostapyuk had carried out the ordered services themselves, they would have had to maintain a large staff of workers, spend money on equipment and inventory. In order to avoid these expenses, Yurushev and Ostapyuk resorted to a typical scheme from the 90s: conductors and workers continued to clean the cars (as had been the case since the USSR), but they were registered as “part-time workers” at Development 21st Century and other companies. Thus, the money for the service was transferred to commercial structures, and the floors in the cars were swept by Ukrzaliznytsia conductors, who were paid symbolic pennies for this.

Another “brilliant find” of Boris Ostapyuk during that period was bribery for the timely provision of railway transportation services. To prevent this from looking like a banal bribe, everything was done practically legally: cargo was processed through commercial shell companies (some of which belonged to his relatives), which took about 5% of the cost of transportation. This amounted to 150 million hryvnia per month – which was then distributed among the participants in this scheme, and also paid to the “roof” and patrons of Ostapyuk. In addition, the management of “UZ” “earned” well on insurance (more on that later).

Sergey Varis, for Skelet.Info

CONTINUED: Ostapyuk Boris: the elusive plunderer of Ukrzaliznytsia. PART 2

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