Smuggling 2018

Smuggling 2018
26 smuggling cases of various severity have been instituted Photo: The CrimeRussia

The new year of 2018 has just begun, while smugglers of the northwest are eagerly waiting for the ‘black days’ to pass. New sanctions threaten to further hinder the already-complicated shady trade. The CrimeRussia was figuring out the smugglers’ perspectives for the upcoming summer.

26 shady emissaries

This week, Basmanny Court of Moscow is going to resume the trial of St. Petersburg oligarch Dmitry Mikhalchenko. To refresh background: the court has earlier returned the indictment to the prosecutor to rectify defects. According to the court, the investigation had infringed on the suspects’ right to defense. The trial of Mikhalchenko is drawing to a close: the court intends to held three sessions per week, and the verdict is expected to be delivered by the end of the year. However, it is already known that the prosecution of Dmitry Mikhalchenko is just the beginning of the collapse of a huge smuggling empire where the several boxes of expensive alcohol incriminated to the oligarch are just a drop in the ocean.

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Dmitry Mikhalchenko

26 criminal cases of various severity have already been instituted in relation to the smuggling business. The public is aware of the most high-profile ones, including the cases against broker Igor Khavronov (ULS Global and Turkish oligarch Jabrail Karaarslan); fugitive ex-official and fixer Boris Avakyan; Pavel Smolyarchuk, ex-operative of the General Department of Anti-Smuggling of the Federal Customs Service, and Vadim Uvarov, ex-Head of the 7th Department of the Administration “K” of the Internal Security Directorate of the Federal Security Service (FSB) of the Russian Federation; Valery Izrailit, Chairman of the Board of Directors of Ust-Luga Company Open Joint Stock Company; Dmirty Zarubin, owner of Cartier Jewelry House; former customs officers Ivan Lapshin and Pavel Nikolaenkov who used to work under the supervision of Igor Khavronov, Boris Avakyan and other functionaries of the Kingisepp Customs Station; etc... Apparently, not all the participants of this criminal drama have been introduced to the general public yet.

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Broker Igor Khavronov is escorted from the courthouse

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Boris Avakyan

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Pavel Smolyarchuk

Taking the recent events affecting the Northwestern Administration of the Federal Customs Service, parties involved into the foreign trade reasonably suppose that this is not about combating smuggling, but rather about seizing the control over smuggling channels. The recent sanctions play an important role in this story as well.

Our
notes

According to some information, the clearance of smuggled goods takes place at Ust-Luzhsky, Pulkovsky, and Ivangorod customs stations – as well as at the notorious Kingisepp Customs Station.

Two men in a plate 

It is not a secret that the sanctions have caused a significant stress among the food market players, and the demand on brokers able to assist in bypassing bans and minimizing transportation costs has drastically increased. In that situation, the arrests of Dmitry Mikhalchenko and Igor Khavronov literally became the final nail in the coffin of the northwestern smuggling community. 

As The CrimeRussia wrote earlier, initially the Pskov Customs Station – historically providing a broad corridor for arms, tobacco, alcohol, and drug trafficking – has picked up the torch. Now the sanctioned products, that are currently in high demand and may become even more deficient this summer due to the ongoing economic standoff, have been added to that list. Forbidden cheese, alcohol, and meat products are supplied to deli stores and elite restaurants via the Pskov Customs Station. In fall 2017, FSB operatives have arrested in St. Petersburg Sergei Shubin, Deputy Head of the Pskov Customs Station, red-handed during the handover of a bribe. After the searches and arrests of high-profile functionaries of the Northwestern Administration of the Federal Customs Service, the situation on the smuggling market has become even more tense.

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Sergei Shubin (on the right)

In that context, two people have suddenly became the leaders in shady supplies of goods. The first of them is Igor Kovalev, owner of Chaikhona № 1 restaurant chain and TL (TRANSLOGIX) Group Customs Broker and Logistics Operator. According to some information, Kovalev was a good friend of Khavronov prior to his arrest; many players believe that not only does Kovalev substitute Khavronov on the customs market, but also protects his interests and prevents the competitors from laying hands on the Turkish direction. Reportedly, he has close ties with the above-mentioned 7th Department of the Administration “K” of the FSB Directorate of Internal Security that was actively involved into the smuggling business of Igor Khavronov. Allegedly, Kovalev also maintains friendly ties with Aleksander German, Head of the Northwestern Administration of the Federal Customs Service, – although in the light of the recent events, these ties are useless for him. After the searches of his subordinates by the FSB, the general has submitted a resignation letter. But Kovalev is actively exploring the Pskov direction as well – recently his representation offices have been launched in Pskov and Riga. 

The second contender for the ‘smuggling crown’ is well-known Dmitry Pushilin, a magician of electronic declarations. At some point, he was called “the last northwestern king of smuggling”. Today he is considered the only big player on the transshipment market. In addition, Pushilin is a master of annihilation able to destroy at once huge volumes of sanctioned products arriving for safe custody to Tsitadel (Citadel) Limited Liability Company from, let’s say, the Baltic Customs Station. It is not a secret for nobody that the seized groceries are easily sold to affiliated dummy companies, while the savory delicacies are destroyed only on paper.

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Dmitry Pushilin

Our
notes

According to the sources, the smugglers’ profits are distributed as follows: 45% of the gain go to the smugglers; 45% – to their respected partners in law enforcement structures; while 10% are used for further business development. However, this ratio may change significantly should some enforcement structure overcome its rivals. In that situation, the law enforcement ‘patrons’ may gain up to 60% of the profit, brokers – some 30%, while the remaining 10% still must be used for business development.

The third is unknown 

As a result of the recent clampdown on the smuggling, Port Ust-Luga, once a stronghold of shady business, has almost fallen out of the race. The fat years – when the ascension of broker Igor Khavronov has coincided with the launch of one of the largest transshipment ports – became history. The port may be seized by parties unfamiliar to the detained broker and his partners. According to our sources, a great game is currently ongoing in the circles of power – and the unofficial beneficiary of Port Ust-Luga is going to win the main prize. Currently, the Federal Customs Service and Federal Security Service are struggling for that port fiercely. The appointment of a successor to disgraced Aleksander German should clarify the situation – this figure has to weight the scales on behalf of one of the parties. 

Structures controlled by Dmitry Mikhalchenko are more lucky. The oligarch currently has no official ties with Port Bronka – but the family of Evgeny Murov, ex-Head of the Federal Protection Service, is directly associated with it. In addition, former FSB general Nikolai Negodov has entrenched himself firmly in Bronka. There is no doubt: outsiders shall not pass there.

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Primorsk commercial seaport

But as of a sudden, the port in Primorsk has joined the game. Aleksander Drozdenko, Governor of the Leningrad Region, has recently announced after a meeting with Prime Minister Dmitry Medvedev that “a major terminal complex with a capacity of 100 million tons of cargo per year” is to be built there soon. Of course, the new complex will be provided with railroad and automobile access routes, as well as required power sources. The port in Primorsk will be awarded the status that neither Bronka nor Ust-Luga possess – the first free port on the Baltic Sea. This status stipulates a special customs, tax, and investment regime.

Our
notes

The commercial seaport in Primorsk is the largest Russian oil loading port on the Baltic Sea. It serves tankers with deadweight of up to 150 thousand tons and is large enough to accommodate ocean-going vessels.

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Evgeny Murov

This undoubtedly progressive business statement has got a mixed reaction. According to the foreign trade business circles, this decision was made because Evgeny Murov has seized Port Bronka and can’t be removed from there, while Port Ust-Luga is in the midst of a battle. In the meantime, some strongly motivated third party badly needs a free port – not only by the name, but really free from squabbles between law enforcement agencies, tentacles of former ‘respectable businessmen’, and interests of high-ranked functionaries. The sources believe that this ‘third force’ has a good chance to become the new “northwestern king of smuggling”. Still, the game of ports has just begun.

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