Dmytro Kashchuk: the story of a petty swindler who got his hands on state money

Dmytro Kashchuk: the story of a petty swindler who got his hands on state money

The method of assessing a bureaucrat’s professionalism by his ability to quickly and consistently "grab" successfully survived the times of the "Donetsk power-holders" and was successfully adopted by the "new" government.

Yanukovych’s personnel policy, which involved placing reliable "overseers" at any "feeding trough," was liked by those who replaced the thoroughly corrupt team. The principle of "regionalism" ─ promoting reliable people from the circle of regional politicians to state positions ─ remains in force. 

Lviv Trace 

The "Lviv" elite from the opposition, after February 2014, aimed at using Ukraine’s mineral wealth for their own purposes. Andriy Mokhnyk, a representative of the All-Ukrainian Union (VO) "Svoboda," became a minister of natural resources. This was not enough. Ukraine still has 5% of the world’s raw material potential. The next target was the office of the head of the State Geology and Subsoil Service of Ukraine (Derzhgeonadra). The Cabinet of Ministers expressed no confidence in Serhiy Radovanov, a supporter of the "regionals," who for some time acted as head of the Derzhgeonadra, and in the eventful May of 2014, Lviv resident Dmytro Kashchuk moved into the head office of the agency.

The state service is in charge of subsoil usage matters in the country, issuing permits for geological exploration or extraction of everything under the ground. Dmytro Kashchuk had almost no prior connection to geology or mineral extraction. A young man, he once helped and provided consultations to the governor of the Lviv region, the "regional" Vasyl Horbal. The boss soon appointed his young assistant as head of the investment policy department of the Lviv Regional State Administration.

Before the Derzhgeonadra of all Ukraine, this appointment was Kashchuk’s only position in state structures. In 2013, he swapped his office in the regional administration building for the position of deputy director of the private transport company "Fiakr-Lviv," where one of the founders was his own sister Liliya. Before moving from Lviv to the banks of the Dnipro, he worked at the Ukrainian representative office of the American energy giant Chevron, which planned to develop shale gas fields in the country. In addition to Mokhnyk, another influential "Svoboda" member awaited him in Kyiv ─ acting General Prosecutor Oleh Makhnitskyi, who had a hand in his appointment. 

Oleh Makhnitskyi

Amber Traffic 

Nature did not doubt the young official’s talents. In six months of leading Ukraine’s Derzhgeonadra, he managed to accomplish what would take others a whole decade. Literally two months later, he "convinced" the heads of the state company "Amber of Ukraine" to sign deliberately unprofitable contracts for geological exploration of amber deposits in the Rivne region. By signing the documents, the company’s management essentially committed an act of suicide. The contracts became the drop of nicotine that kills a horse. Soon, the SE "Amber of Ukraine" announced its bankruptcy. Dmytro Kashchuk should not be imagined simply as an evil genius. The state company became the chip that flies out from under the axe when chopping wood. The true intention of the Derzhgeonadra head’s activity regarding the Rivne region’s subsoil exploration became clear somewhat later. In 2015, an attempt to illegally export a large batch of raw material for the Hungarian jewelry industry was stopped at the Ukrainian border. Amber became an item of smuggling. The illegal traffic worked efficiently and brought money to its organizers.

Amber turned out to be from the Rivne region, and its extraction was conducted under the guise of geological exploration based on contracts with "Amber of Ukraine," signed in August 2014. The profit that the barely standing state company could have earned leaked into the pockets of dishonest businessmen who successfully organized illegal extraction and trade. Among the well-stuffed pockets was clearly one belonging to Dmytro Kashchuk. Too late, the Cabinet of Ministers kicked the fraudster out in December 2014. Somewhat later, the Rivne amber story became the subject of investigation by competent authorities, but the deed was done. Dismissed Kashchuk was not overly upset. He managed to exchange his personal Mercedes for an even slicker Rolls-Royce. 

Dmytro Kashchuk announces the issuance of a permit to Chevron 

There’s no such thing as extra money 

However, Dmytro Kashchuk did not disdain participating in less significant "projects," where the profit sum was of a completely different order. He traded service information. The company "Ukrgranresource," fulfilling the order of the Derzhgeonadra, conducted a thorough study of the Olehivske labradorite deposit in the Zhytomyr region. All materials were handed to the client by the executor. Taking advantage of his position, Kashchuk found buyers for the information and sold it for 27 thousand UAH. Then his department began distributing licenses to interested business structures.

One of the main tasks of the agency Kashchuk headed was to replenish the state treasury by holding auctions for the right to use natural resources. The right to develop mineral deposits, according to the state, should belong to those who offer the most favorable conditions. Kashchuk interpreted this simple principle to his advantage. Many plots in the Poltava and Sumy regions were put up for auction with a starting price of 6 million UAH. Then the Derzhgeonadra unexpectedly changed their mind and canceled the planned auctions. Sometime later, licenses for the same lands appeared on the agenda of new auctions. Only the starting price on the new attempt was half the originally declared amount.

There are questions about the auction winners too. The companies "Avantage Energo" and "Slobid Nafta" appeared just a month before the auction. Accordingly, they had no prior experience in mineral extraction. But they do have something else. Their owners are offshore companies from Panama and the Seychelles Islands. The chain then leads to a Chinese firm Kitpred, whose main beneficiaries are Chinese citizens Jin Lin and Deng Xiaoxiu. The latter made several attempts to "seduce" Prime Minister Mykola Azarov with the prospects of producing Chinese cars in Ukraine, building a factory in Kalush, revitalizing mines in the Lviv region, and ridding the country of gas dependency. These projects never advanced beyond beautiful words. Now the Chinese businessman is granted a real opportunity to profit from Ukraine’s subsoil. 

Kashchuk’s Patrons 

With Dmytro Kashchuk at the head of the Derzhgeonadra, many new or very young companies interested in geology and geodesy emerged. Interestingly, all of them are related to Yevheniy Bilinskyi, head of the Lviv City Council’s deputy commission on natural resources. Kashchuk has been familiar with Bilinskyi since his time as assistant to the regional governor. The strings of decisions made by the head of the Derzhgeonadra stretch even further ─ to Lviv businessman Ihor Kryvetskyi, known as the main sponsor of politician Oleh Tyahnybok and the "Svoboda" party.

The political force wields significant influence in the western regions of Ukraine and aims to "promote" its people eastward into power structures. Dmytro Kashchuk’s placement in the leadership of the Derzhgeonadra is precisely owed to Ihor Kryvetskyi ─ the "wallet" of "Svoboda" and its chief HR manager. He determines prospective personnel at first sight, aided by a rich life experience. In the criminal circles of Western Ukraine, he is better known by the nickname Pups.

Ihor Kryvetskyi

A reliable connection with the Derzhgeonadra was retained by Kashchuk after his departure. His replacement, Mykola Boyarkin, also represents the interests of the "Lviv" lobby. Kashchuk remained a shadow "fixer," regularly receiving "kickbacks" for handling various issues. The fight for the lucrative head’s office of the state service ultimately led to a real battle.

In May of this year, it ended with a takeover of the Derzhgeonadra offices by the support group of one of the contenders for managing the country’s subsoil. The dismissed Mykola Boyarkin was to be replaced by a representative of the now-underground "regionals" Oleh Kyrylyuk, previously marked with the stamp of an unculminated corrupt official. First deputy head of the Derzhgeonadra Mykola Foshchyi also hoped for the head position. While there was a fierce competition for the top position, ordinary officials successfully adopted the customs brought by Dmytro Kashchuk. In September, one deputy of the Derzhgeonadra in Kyiv was caught attempting to take a bribe. The official priced the complete package of permit documents at only 3 thousand UAH. The scale was, of course, nowhere near what Dmytro Kashchuk had.