While the general public is amazed at the scale and luxury of the fortified house of ex-Minister of Ecology Zlochevsky, photographed by journalists, and public activists are unsuccessfully trying to get the Prosecutor General’s Office to initiate a criminal case against this odious character, his replacement, Andrei Mokhnik, resigned along with other “Svobodov” ministers this week . But for almost nine months spent by the “kamikaze government” at the helm of the executive branch, the situation has not fundamentally changed either with the total littering of Ukraine with household waste, or with the shadow streams circulating in the “garbage” sphere. Apparently, they smell very sweet to their controllers.
One of the litmus tests of reforms expected from the post-Maidan government, unnoticed by the general public, is the area of packaging waste management. Here you have European integration – in the EU this issue has long been settled by the relevant directive. And competition – according to government decree, manufacturers and importers of packaged goods have the right to enter into contracts for the provision of services in this area with the state enterprise Ukrekoresursy, directly subordinate to the Cabinet of Ministers of Ukraine, or to independently collect, process and dispose of such waste. And the fight against corruption – after all, under the State Enterprise “Ukrekoresursy”, a huge number of companies and small businesses have been established that have made payment for the provision of such services mandatory. And environmental protection – according to the Ukrainian Packaging and Environmental Coalition (UKRPEC), only 3.65% of household waste is recycled in the country (up to 85% in the EU), and therefore not only landfills, but also roadside ditches, coupled with suburban forests littered with waste.
The heads of Ukrekoresurs, the Ministry of Natural Resources, the Secretariat of the Cabinet of Ministers, on the one hand, and the heads of the Ministry of Economy and State Entrepreneurship, on the other, clashed over hundreds of millions of “garbage” hryvnias. The first prove that it is possible to live according to the old schemes. The latter, in the end, were unable to prove anything, paying with their posts.
Schemes related to the recycling of containers and packaging found themselves at the epicenter of a major political scandal in September 2014. Then the head of the State Service for Regulatory Policy and Entrepreneurship Development, Mikhail Brodsky (he would later be fired as part of the lustration procedure) successfully challenged the claim in the District Administrative Court of Kyiv about the dissolution of this government body. Moreover, during the scandal, the text of the minutes of the meeting of the Ukrainian government surfaced, where the Minister of the Cabinet of Ministers Ostap Semerak directly says: “We are liquidating a body where we cannot replace the leader, and creating another body that will perform the same functions.” The reaction of Prime Minister Arseniy Yatsenyuk is succinct: “You are working clumsily.”
A little earlier, Brodsky writes a letter addressed to Prosecutor General Vitaly Yarema, in which he explains that Semerak is “protecting” the activities of the previous system in the market for the collection, procurement and disposal of containers and packaging materials. And the liquidation of State Entrepreneurship pursues the only goal – “to remove me (Brodsky) as the head of this body from the further path of “successful prosperity” of the corrupt activities of the company and the people who stand behind it.”
Former Minister of Economic Development and Trade Pavel Sheremeta added fuel to the fire by declaring the following at the YES summit: “There is a company called Ukrekoresursy.” She officially recycles the packaging. I tried to destroy this company four times. One time they told me not to touch it, because this company is needed for the flow of money for the election campaign of one of the parties. Another time they told me not to touch her because two parties had already received funding through her.” Sheremeta transparently hinted at the “government-forming” party – the Popular Front, from which Ostap Semerak ran, as well as the VO Svoboda, whose protege Andrei Mokhnik headed the Ministry of Ecology and Natural Resources of Ukraine. It is to this ministry that the environmental inspectorate is subordinate, without which the Ukrekoresursy scheme is impossible in principle.
Accounting kinks
What is the market for packaging waste management in Ukraine today? All packaging, produced in the country or imported, is actually subject to a special tax, which is called “tariffs for services for the collection, preparation and disposal of used containers and packaging materials.” According to the resolution of the Cabinet of Ministers No. 915 of July 26, 2001 and the joint order of the Ministry of Economy, the Ministry of Ecology and the State Customs Service No. 789/414/709 dated
On July 30, 2009, the functions of creating a collection and recycling system were assigned to the state enterprise Ukrekoresursy. That is, domestic producers and importers (when producing goods in packaging or in case of import into the customs territory of Ukraine) must pay Ukrecoresurs in advance.
The prices are as follows: 350 UAH per ton of paper and cardboard packaging, 150 – glass, 200 – wood and textile, 400 – tin, 850 – plastic, 1100 – aluminum or foil, 1250 UAH – combined material. The tariffs were approved over ten years ago, but until now no one has seen their economic justification. And they are mega-overpriced. Since that time, the hryvnia has devalued against the euro three times, but Ukrainian prices are still higher than their European counterparts. For example, the cost of services for the collection and disposal of glass waste is three times higher than in France, and five times higher than in Poland.
This does not mean that in practice “Ukrekoresursy” undertakes to remove, sort and recycle/dispose of 100% of such packaging. As evidenced by the state-owned enterprise’s report for 2011, out of 302.2 thousand tons of packaging received through imports, only 12% of such packaging was disposed of under contracts. There is no open information at all about how such agreements are implemented.
Control over the payment of the “packaging fee” is exercised by the State Environmental Inspectorate. Such an inspector is no less respected than a tax official, because he can issue an order for violation of environmental standards, which will stop the work of any enterprise.
However, in 2001 the government provided that enterprises, organizations and institutions of all forms of ownership can also independently engage in recycling and disposal of packaging. In particular, large retail enterprises and warehouses collect such packaging, sort it and deliver it to processing plants, such as cardboard or glass blowing plants. The funds received from processors largely offset the cost of packaging. But in general, for its processing and disposal, the manufacturing enterprises initially paid off to Ukrekoresursy, which may not even participate in this waste recycling scheme.
The situation is similar at the household level. The future disposal of all containers and other packaging materials that we buy in the store has already been paid for in advance – at the level of the manufacturer or importer and is included in the selling price of such a product. However, we are forced to pay additional services at our place of residence for the removal and placement of this waste in landfills and landfills. With such a system, there is no point in seeking recycling, and therefore valuable packaging waste often ends up not in recycling plants, but in the now notorious landfills.
In other words, fees for the collection, preparation and disposal of containers and packaging materials are charged several times in the Ukrainian economy. Moreover, the system is built in such a way that none of the structures can be held ultimately responsible for the mountains of waste, including those suitable for recycling.
Holes on the border
An even more curious situation has developed with the import of packaged goods from abroad. During the reign of Yanukovych, the following scheme took hold. Each customs office has several structures that are authorized to charge a fee for future sorting, processing and disposal of containers. An environmental inspector working at such a customs office, as a rule, strongly recommends a company to whose account the importer must pay the tariffs established by the Cabinet of Ministers.
It is not at all necessary that it will be Ukrecoresursy. According to information from the State Environmental Inspectorate for 2013, this state-owned enterprise received only 36.3% of environmental payments at the border in the amount of about UAH 99 million: the future disposal of 210 thousand tons of packaging out of a total import volume of 578 thousand was formalized. The remaining payments were received by dozens of private structures . The largest among them are LLC “Vip Consult Ltd”, LLC “Antos-petrol”, LLC “Orlan”, LLC “Eko-Energoprom”. As customs brokers told ZN.UA, many of these structures “don’t worry about recycling,” but any checks bypass them, since they are backed by influential deputies and businessmen.
The Maidan changed the situation only in the sense that electronic customs declarations began to be widely used at customs. Currently, about 93% of imported cargo is processed in this way. It was on printed forms of cargo and customs declarations that environmental inspectors previously affixed a stamp indicating payment of the fee for recycling packaging. The Ministry of Natural Resources has repeatedly asked customs officials to consider the procedure for electronic marking by environmental inspectors, but the State Fiscal Service, which has promoted simplification of customs clearance of goods as its banner, ignored these proposals.
As a result, today many imported goods are allowed into the customs territory of Ukraine without any appropriate permission from environmental inspectors. Payment of the recycling fee has become voluntary. Importers do not see the point in paying, since in the future they will still independently deal with the issues of collecting, sorting and recycling containers and packaging. As is customary in the countries from which the goods are supplied.
A significant share of imports comes to Ukraine from European Union countries, where there is an extended producer responsibility system that ensures the processing and disposal of a significant part of packaging waste. According to Directive 94/62/EC, this figure was set at 50–65% (depending on the type of material), and by Directive 2004/12/EC the recycling standards are further tightened and range from 55 to 80%. Such requirements have been in force in the European Union for ten years.
If we go to Europe, then sooner or later Kyiv will have to fulfill these demands. However, in Ukraine this figure does not exceed 15%, so the system will definitely have to be changed.
The European approach to the “garbage issue” means that the packaging manufacturer or importer, together with local authorities, organizes the collection, processing and disposal of such waste. Under this system, the work of an opaque monopolist is impossible, and domestic producers and importers of products find themselves in equal working conditions in the market.
At the same time, there are also specially authorized companies (Recovering Organizations) in the European Union that are responsible for complying with established recycling and disposal standards. However, their activities, unlike the situation with Ukrecoresurs, are subject to very careful state and public control. Services are paid only upon disposal of the packaging, and not in the form of a 100% prepayment. Including for non-existent services, as is the case in Ukraine. In the West, things are much stricter when it comes to taking into account recyclable packaging: double counting is almost impossible.
Corrupt business
from the Ministry of Natural Resources
It would seem, what would be simpler – to make the practice of working with waste the same as is customary in EU member countries? The Council of Entrepreneurs under the Cabinet of Ministers, the American Chamber of Commerce, as well as the heads of specialized industrial associations approached the government with this idea. In their appeals, entrepreneurs focus the Prime Minister’s attention on the corruption component that has developed in the economy in connection with the activities of the state enterprise Ukrecoresursy. As a solution, they propose to support on behalf of the government the bill “On packaging and packaging waste” (No. 4266a, submitted to the Verkhovna Rada of the 7th convocation by people’s deputies K. Lyapina, Y. Derevianko, A. Mirny, O. Prodan and Y. Shapovalov). This project was developed by a working group under the Ministry of Natural Resources with the involvement of public organizations and industrialists and is intended to introduce a system for managing packaging waste on the basis of a market economy and European legislation. This deprives the state-owned enterprise Ukrekoresursy of its privileged position in the market.
Prime Minister Yatsenyuk June 16 this year. imposes a visa: “I ask you to take measures for demonopolization. Make a model like in the EU” and instructs a number of subordinates (including the then ministers Sheremeta, Mokhnik, Shlapak, Groysman and Petrenko, Read more about him in the article by Pavel Petrenko. “Pocket” boy of Yatsenyuk’s “Family”) process these requests and inform the Cabinet of Ministers.
However, a month and a half later, on July 29, an order from Deputy Prime Minister Groysman appears, in which he “draws attention to the formal approach to the execution of the prime minister’s instructions.”
As ZN.UA found out, the Deputy Prime Minister was angered by the position of the Ministry of Ecology and Natural Resources, which blocked the process of reforms in this area, despite the efforts of the Ministry of Economy and State Enterprise. The head of the department, Mokhnik, wrote a letter to the Ministry of Economic Development and Trade, in which he referred to a number of court decisions designed to preserve the old order in the field of packaging recycling. At the same time, the Minister of Ecology did not forget to lobby for the initiative to allow his subordinates to put a personal stamp not on the customs declaration, since this is now impossible, but on shipping documents. And prohibit customs clearance of goods without such an environmentalist visa.
In another letter, Mokhnik’s deputy A. Nastasenko clarifies that there is a decision of the District Administrative Court of Kyiv, by which the resolution of the State Entrepreneurship No. 21 of February 21, 2014 (implied the abolition of the previous procedure for handling packaging waste, approved by the resolution of the Cabinet of Ministers of Ukraine No. 915 of July 26, 2001 and by a joint order of the Ministry of Economy, the Ministry of Environment and the State Customs Service dated No. 789/414/709 of July 30, 2009) was declared invalid.
Nastasenko, who joined the new supervisory board of Ukrecoresurs, also informs his colleagues from the Ministry of Economy that the bill “On Packaging and Packaging Waste” has been returned for revision, despite being approved by the Ministry of Justice back in 2013. The reason was a change in the heads of government agencies, who then agreed on the bill.
However, the bill “On Packaging and Packaging Waste” was withdrawn not in February (immediately after the change of government), but only in July, when Prime Minister Yatsenyuk instructed to speed up the process of introducing European packaging recycling standards. As it turned out, the document was returned for revision by the Cabinet Secretariat. This body is headed by the Minister of the Cabinet of Ministers Semerak.
In May, the state enterprise “Ukrekoresursy” was headed by Ara Safaryan, who had previously implemented a project in Dzerzhinsk (Donetsk region) to reconstruct a boiler house through “green” investments within the framework of the Kyoto Protocol. These are the same amounts from the sale of greenhouse gas emission quotas by Ukraine that were received during Tymoshenko’s premiership. And which, according to the prosecutor’s office, were spent inappropriately.
It is curious that Semerak, who lobbied for Safaryan’s candidacy during the years of the “Kyoto scandal,” was a people’s deputy from BYuT and a member of the political council of Tymoshenko’s party. Now he is on the list of the Popular Front headed by Yatsenyuk.
In the previous two years, the State Enterprise “Ukrekoresursy” was headed by Dmitry Radionov, who was the creation of the son of ex-Prosecutor General Pshonka. More than one criminal case has been opened against Radionov – Safaryan did not fail to personally announce this at a recent press conference. However, Radionov unexpectedly “pops up” as the head of another state enterprise, “Ukrainian Environmental Initiatives,” directly subordinate to the Ministry of Natural Resources.
Idle garbage trucks
Back in 2011, auditors of the Accounts Chamber came to the conclusion that the state company Ukrekoresursy does not provide the functions of developing and organizing the implementation of a system for collecting, storing and recycling waste. “Full collection, transportation, recycling, destruction and burial of household waste and limiting their harmful effects on the environment are not ensured, which ultimately leads to an additional burden on the State Budget of Ukraine,” reads the decision of the board of the Accounting Chamber.
The head of the State Enterprise “Ukrekoresursy” Safaryan admitted that the targeted funds received by this enterprise in recent years were used extremely ineffectively. Thus, 27 units of leased special equipment worth UAH 40.3 million are idle. Ara Safaryan agrees that his predecessors did not take effective steps to solve the problem of handling used packaging in any locality, and almost all of the enterprise’s work was aimed at “laundering” funds. Thus, according to accounting data, the total cost of acquired but not put into operation property and equipment as of July 1, 2014 is UAH 136.2 million (excluding VAT).
The main activity of the enterprise in recent years, the head of Ukrecoresurs indicates: leasing property to close private enterprises and providing them with financial support, purchasing equipment at inflated prices, transferring significant amounts of funds for recycling services, which in fact do not affect the increase in volumes recycling of materials from which containers and packaging are made. Safaryan prefers not to specify what has fundamentally changed in the activities of the state-owned company lately, limiting himself to the war with the “perpetrators.”
In developed countries, the lion’s share of municipal solid waste is recycled. This area serves as an uninterrupted supplier of cheap recyclable materials and is designed to bring additional revenue to the state budget, and not be a corruption trough for officials of the Ministry of Natural Resources and other services. And the point here is not in the names of specific officials, but in the mechanism of the packaging waste recycling system – it must be European, that is, transparent and highly competitive. Otherwise, you shouldn’t be surprised at the expensive packaging and huge deposits of garbage on the unique Ukrainian black soils.
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In an explanation addressed to ZN.UA after the publication “You are working clumsily” (No. 33 of September 19, 2014), along with a demand to refute certain allegedly falsely stated facts, the Ministry of Ecology and Natural Resources of Ukraine announced that it would like to transfer the State Corporation “Ukrekoresursy” (in the letter they call it “Ukrekomresursy” in the old fashion) to their own subordination. Now Mokhnik’s former department has proposed to do this with good intentions.
the purpose of “taking into account public opinion and to prevent and prevent the functioning of possible corruption schemes.” As the Ministry of Natural Resources stated, this decision was allegedly agreed upon with all central executive authorities. However, we know that neither the Ministry of Economic Development and Trade nor the Ministry of Regional Development gave their consent to the transfer of Ukrekoresursy from the sphere of subordination of the Cabinet of Ministers.
In its letter to ZN.UA, the Ministry of Natural Resources also writes that it is in favor of canceling joint order No. 789/414/709. “This document, as not providing a transparent and competitive management procedure, was recently canceled on the initiative of the Ministry of Natural Resources, together with the Ministry of Economic Development and the Ministry of Revenue, but soon, contrary to the opinion of the relevant ministries and the public, the court restored the validity of this order,” the government agency complains. However, here the relevant ministry forgets to add that, in fact, it… supported that court decision.
We are talking about the decision of the District Administrative Court of Kyiv dated May 13
2014 according to a claim filed by the State Corporation “Ukrekoresursy” against State Entrepreneurship. The Ministry of Natural Resources was identified as a third party to this trial, however, as indicated in the court materials, its representatives did not appear at the court hearing, although they were notified of the date, time and place of the court hearing. Moreover, the District Administrative Court in its decision reports that the ministry provided its written explanations, where it asked the court… to satisfy the claims. That is, to cancel the decision of the State Enterprise to invalidate joint order No. 789/414/709.
As ZN.UA managed to find out, today the last court decision is the decision of the Supreme Administrative Court of Ukraine dated October 28, 2014, which partially satisfied the complaints of the Ministry of Justice and the “Ukrainian Packaging and Environmental Coalition” and sent the cases for consideration to the court of first instance. So the struggle for control over waste collection, sorting and recycling schemes will unfold with renewed vigor as soon as a new government is formed.
Andrey Blinov, Veronika Nagaevskaya, ZN.UA
