The Kostelman family’s business - from cooperation with occupiers in Southeast Ukraine to "strikes" on a supermarket in Odesa

The Kostelman family’s business - from cooperation with occupiers in Southeast Ukraine to "strikes" on a supermarket in Odesa

One of the wealthiest Ukrainian businessmen, co-owner of «Fozzy Group» Volodymyr Kostelman, is considered a victim of Russian aggression in 2022-2023.

However, it is the activities and approaches of the Kostelman family and the structures associated with them that are one of the main reasons for the tragic events in Ukraine from 2014 to 2023.

Contrasts

The success story of the Kostelman family is built on disparities. On the stark differences between their public image from advertisements and the dirty secrets of their internal operations.

For over 10 years, Volodymyr Kostelman has been featured in various «TOP20» and «TOP50» lists of the wealthiest businessmen in Ukraine, regarded as a «Western-style business prodigy.» Allegedly, he started with speculation in Dnipro alongside school friends and achieved success. Through his hard work, he became the owner of one of the largest and most influential retail chains in Ukraine, a dollar millionaire.

In reality, Volodymyr Kostelman comes from an influential family of Russian businessmen of Jewish descent. His father, Mykhaylo Kostelman, developed and managed a gas condensate field in Novy Urengoy, constructed the Urengoy-Nadym-Gryazovets, Urengoy-Petrovsk, Urengoy-Chelyabinsk gas pipelines, the Urengoy-Center gas transportation system, and the transcontinental Urengoy-Pomary pipeline. In 1999, Kostelman Sr. was awarded the title of Honored Builder of the Russian Federation, and in 2000, he received a commendation from the Russian Ministry of Fuel and Energy. From 1990 to 2014, Mykhaylo Kostelman headed the «State-Cooperative Association «Business Partners»» with a statutory fund of 50 million rubles in the Yamalo-Nenets Autonomous Okrug, a region critical to the Kremlin’s oil and gas business.

Volodymyr Kostelman received his first higher education in the region where his father became successful and wealthy—at the Tyumen Industrial Institute. The "school friends" of Kostelman Jr., with whom he supposedly "built a business from scratch" and played music in the rock band "Water Repair," are actually a front, representatives of the Moscow associates of Kostelman Sr. The main loans for the development of one of Ukraine’s largest retail chains were provided to Kostelman Jr. by the Russian "VTB Bank"—known for handling delicate real estate transactions for Russian President Putin and his close circle.

Simultaneously with the expansion of Volodymyr Kostelman’s business into the Ukrainian economy, his mother, Lyudmyla Kostelman, became a Russian businesswoman. Her main legal entity from 2001 to 2017 was LLC "Nizhyn," and she was also connected to LLC "Fozzy-Eurasia" and "Fozzy-Euro."

In 2003, Kostelman Sr. established the company «Bagira-2003» for hotel business operations in the Kanaka Valley near the village of Pryvitne in Greater Alushta, Crimea. However, from 2003 to 2018, «Bagira-2003» was registered under Kostelman Jr. as the founder and owner, and only in 2018 was the asset re-registered to his father, Mykhaylo Kostelman.

Interestingly, the shadow ruler of Greater Alushta is considered to be an Ossetian ethnic group led by FSB functionary Alan Dzhangobegov. Neighbors of the Kostelman family’s hotel business in Crimea include the "Kanaka" boarding house, owned by the Russian state enterprise "Concern PPO Almaz-Antey," which partnered with oligarch Dmytro Firtash until 2014. The Kanaka Valley is also known for its «generals’ cottages,» where high-ranking Russian military officials regularly vacationed even after 1991. Additionally, representatives of an Ossetian ethnic criminal group, engaged in illegal coal mining in Donbas under the patronage of Yefim Zvyahilskyi, a member of the Verkhovna Rada from the 1st to 8th convocations, are also present in the area.

Acquiring a hotel complex in such a location with such neighbors confirms the special connections and status of the Kostelman family among Russian «elites» and their Ukrainian business partners. This is further evidenced by Volodymyr Kostelman’s presence on the supervisory board of the «Jewish Confederation of Ukraine,» where his partners include the Surkis brothers, Oleksandr Rodnyanskyi, Yevhen Chervonenko, Oleksandr Suslenskyi, and others.

In reality, Volodymyr Kostelman is less a «business prodigy» and more a project of Russian clans expanding into the Ukrainian economy with the support of influential religious and ethnic organizations.

Business Secrets

It is believed that the foundation of the Kostelman clan’s business empire is food retail through a network of stores spanning across Ukraine. In truth, the merchants and their top management derive a significant portion of their income from selling shelf space in their vast retail empire. These are large sums, bribes arranged through backroom deals. Gaining access to the shelves of the Kostelman business empire is expensive, with no guarantee of success. There have been cases where 90% of the products remained unsold, and no one bore responsibility.

Another source of income for «Fozzy Group» is operations involving the «laundering» of hundreds of millions of hryvnias through fictitious exports of agricultural products.

The most critical pillar of the Kostelman business empire is the model of «serfdom,» treating junior staff as cattle or slaves. Low salaries, dozens of mostly absurd fines, psychological abuse through «corporate culture,» «free meals» of expired food products, and so on, along with the need to bow to superiors and avoid ridiculous penalties. If a person decides to quit, they are stripped of all bonuses and given only a meager base salary as a farewell.

Kostelman himself and his top managers, in image-building media publications, claim that his business succeeded not on trade but on debts. They regularly took loans from the Russian "VTB Bank" to develop their retail empire. Later, during crises, these debts were effectively written off through restructuring procedures. Additionally, the Kostelman clan failed to repay loans to banks that went bankrupt during the so-called "Bank Fall of Poroshenko-Hontareva" in 2015-2016. «Fozzy Group» and associated entities also refused to settle their debts with the Deposit Guarantee Fund for these bankrupt banks—and faced no consequences.

For manipulations with debts to «VAB Bank,» Kostelman was publicly accused of fraud, and a complaint was filed with the prosecutor’s office. It was reported that he avoided accountability with the help of Oleksandr Ruvin, director of the Kyiv Institute of Forensic Expertise.

The Kostelmans also own banks. The most well-known is the Ukrainian-Israeli «Skhid Bank,» where the chairman of the board is Vadym Morokhovskyi, a former top manager of «Pivdennyi» Bank. In 2018, Kostelman’s «Skhid Bank,» along with Yury Rodin’s Odesa-based «Pivdennyi» Bank, became embroiled in a scandal involving dubious food procurement for the Armed Forces of Ukraine through the suspicious LLC «Resource-Service KM.» It was also revealed that «Skhid» and «Pivdennyi» banks were jointly involved in servicing questionable fuel procurement for the Armed Forces by the company «Trade-Commodity,» linked to President Poroshenko through businessmen Hranovskyi and Adamovskyi. Notably, the «Roshen» corporation of the Poroshenko clan chose to store 300 million hryvnias in Kostelman’s relatively small «Skhid» Bank.

Less known is «Zakhid Bank,» opened in Montenegro, which Kostelman co-owns with Morokhovskyi.

Despite, or perhaps because of, such scandals, the Kostelman clan became one of the wealthiest and most influential in Ukraine. By the beginning of 2021, in addition to two banks, they owned 592 supermarkets under the brands "Silpo," "Le Silpo," "Trash!," "Favore," and "Fozzy," 119 mobile phone retail points under "Ringoo," and 54 pharmacies under «Bila Romashka.» They also controlled an agro-food cluster, including the Nizhyn Cannery, the «Varto» poultry farm, the «Zakarpattia» Agro-Alliance, the Bohuslav Food Products Plant, and Sumyrybhosp, specializing in seafood under LLC «Vohni Hestii.» Furthermore, the Kostelmans controlled 7 restaurants, a delivery service, a travel agency, a national logistics operator, the «Chili» publishing house, construction companies «Bricklayers,» «Magic Village,» and «Lin Becker,» a Kyiv business school, auxiliary trading companies, and a plot of land on the Venetian Island in Kyiv.

Together with his colleague on the supervisory board of the «Jewish Confederation of Ukraine,» a university classmate of Petro Poroshenko’s wife, and influential developer Oleksandr Suslenskyi, Volodymyr Kostelman controls Art Mall in Kyiv. The construction of their shopping and entertainment center was extremely challenging. It is known that the project was completed and opened only thanks to significant financial assistance from Moscow associates of the influential retail clan. The proximity of Kostelman to the Poroshenko clan and the need to invest financial bonuses from the phenomenon of «Shake hands. Hug» also played a role.

Attitude Towards People and Collaboration with Russian Occupiers

Imagine if the largest retailers, «ATB,» «Fozzy,» and «Furshet,» in 2014 had not recognized the Russian occupation of Crimea and simultaneously ceased operations. It’s not guaranteed that the Kremlin, facing a food crisis, would have been able to establish itself on the peninsula. Had they failed in Crimea, the events in Donbas—primarily used to divert attention from Russia’s difficulties in absorbing the peninsula—might not have occurred.

In the situation with Crimea, the Kostelman family took steps to ensure that unspoken agreements on the annexation of Crimea by Putin’s gang were fulfilled. In their coordinate system, facilitating agreements on the surrender of Ukrainian territories to Russians is merely a utilized opportunity to profit from transferring «serfs» from one master to another.

Therefore, on April 29, 2014, even before the escalation of the conflict in Donbas, top managers associated with the Kostelman business empire created companies in Russian registers to conduct business in Crimea. These include "Krymtorg-S," "Krymtorg-E," "Krymtorg-B," and "Krymtorg-R." The owner of these legal entities was the Moscow-based LLC «Nizhyn,» owned by Lyudmyla Kostelman. Additional Russian legal entities, organized to service gardens, logistics, and livestock enterprises of the Kostelman clan in occupied Crimea, were also linked to this «cluster» of companies.

At the same time, the companies of Ukrainian retail giants began operating under the umbrella of the so-called «head» of Crimea, Serhiy «Goblin» Aksenov, and the FSB-controlled criminal group «Seilem.» Under «understood» conditions, part of the income went to Aksenov and his partners. In return, through Moldovan connections, they helped the Kostelman clan establish not entirely legal supplies to Transnistria.

Notably, when «professional Tatar» Refat Chubarov was engaged in the «transport blockade of Crimea» in 2015-2016, he did not mention the Kostelman clan, which clearly collaborated with the occupiers, in his angry interviews. Trucks of «Fozzy» and «Silpo» faced no difficulties crossing the border between Kherson region and Crimea.

In 2017, Lyudmyla Kostelman’s LLC «Nizhyn» ceased operations. The Kostelman businesses continued to operate in Crimea under the management of trusted individuals, shielded by «matryoshka» structures of companies that founded each other in a loop.

The Crimean segment of the Kostelman business empire continued under the patronage of their partner and, concurrently, representative of Sergey «Goblin» Aksenov, Vyacheslav Tashkinov. This was through his legal entity, LLC «Krymfrukt,» which also exists in Ukrainian registers. Overall management and corporate culture remained with the Kostelmans. These enterprises still use the corporate email of «Fozzy Group.»

"Silpo" continued to operate in Crimea as "Silpo" until September 2022. After that, they underwent a cosmetic rebranding and were transformed into supermarkets of the «Yabluko» chain—also owned by Vyacheslav Tashkinov. However, as evidenced by a receipt in our possession, even as of September 2023, the legal entity remains part of the auxiliary network structure of the Kostelman clan. This is LLC «EKC Etalon,» where the founder is listed as a professional «director» and «founder» (of 12 organizations simultaneously) Anastasiya Popova. She serves as a «front chairman» for Tashkinov and the Kostelman clan.

Interestingly, in Yalta, the «Silpo» that became «Yabluko» operates in the «Konfetti» shopping center—a mall that is part of Ramzan Kadyrov’s business empire through his «front» Sergey Klimov. This has long been a known fact in professional circles. Thus, long ago, Kostelman’s top managers negotiated cooperation with Kadyrov’s top managers, and this collaboration, de jure, continues to this day, even amidst the escalation of the war.

As of 2023, Lyudmyla Kostelman continues to deal in real estate in Moscow, while Mykhaylo Kostelman manages the hotel business among Crimean junipers in Kanaka. This is despite the fact that relatives of oligarchs who fell out of favor with Zelenskyy, such as Kolomoisky, had their assets in Crimea confiscated by the occupiers.

The magnate’s daughter, Zarina Kostelman, primarily lives in the UK, where she owns the company Kosa Art Group Ltd, which previously organized joint art performances with Russians in Venice. Together with her parents, Volodymyr Kostelman’s daughter Zarina also owns a company in the Czech Republic dealing with tourism and resort real estate in Karlovy Vary.

By some miraculous means, at a time when many influential clans, even with their front persons, have ended up on various sanctions lists, the Kostelmans manage to conduct business seamlessly in Russia, Ukraine, occupied Ukrainian territories, the UK, and the EU simultaneously. Moreover, in 2023, «Fozzy Group» announced plans to expand into Poland amid the noise of war.

Paradoxes occur—de jure, the «taxes» paid by Volodymyr Kostelman’s parents in Russia partially funded the missiles that bombed a warehouse in Kyiv region belonging to the clan and a supermarket in Odesa. There were injuries and severe casualties.

At the same time, Volodymyr Kostelman is one of the few Ukrainian dollar millionaires and owners of system-forming businesses who has not clearly spoken out about the escalation of the conflict with Russia. Only once, on June 17, 2023, as a member of the supervisory board of the «Jewish Confederation of Ukraine,» did Volodymyr Kostelman sign a joint communiqué condemning Russian President Putin’s statement that «Zelenskyy is not Jewish but a disgrace to the nation.» The destruction of a logistics warehouse and severe injuries to employees of his business empire’s supermarket did not prompt Volodymyr Kostelman to take any public steps.

Overall, the expansion of the Kostelman business empire from 2014 to 2022 occurred because they, along with many other Ukrainian dollar millionaires, placed a long-term bet on Russia. And lost. That is why Volodymyr Kostelman refrains from making statements about the war.