YALTA, Crimea—One day in October, a dozen armed men in masks drove up to the gates of Yalta Film Studios. They weren’t actors, and this was no make-believe.
It was a hostile takeover, and the movie sets, littered with debris from a Crimean War reenactment and a faux Mexican village, were the target.
“They forced all the employees onto the ground, sealed off the premises and halted the work of the studio,” said owner Sergei Arshinov.
The studio, nestled in hills overlooking the Black Sea, is just one of thousands of businesses seized from their owners since Crimea was annexed by Russia eight months ago. Crimea’s new pro-Moscow leaders say the takeovers, which they call nationalizations, are indispensable to reverse more than two decades of wholesale plunder by Ukrainian politicians and oligarchs.
But an Associated Press investigation throughout this peninsula the size of Massachusetts found many instances of less noble practices: legal owners strong-armed off their premises; buildings, farms and other prime real estate seized on dubious pretenses, or with no legal justification at all; non-payment of the compensation mandated by the Russian constitution; and targeting of assets belonging to or used by independent news media, the Crimean Tatar ethnic minority and the pro-Kiev branch of the Orthodox Church.
In a preliminary estimate, Ukraine’s Justice Ministry told AP that around 4,000 enterprises, organizations and agencies have had their property expropriated.
Some holdings, from shipyards to health resorts, were publicly earmarked for repossession by Crimea’s regional government, now part of the Russian Federation. Others were simply seized by armed men, sometimes carrying official decrees that were never published or no documentation at all.
Owners have complained that the beneficiaries of some seizures aren’t Crimea’s people, but the local politicians now in charge, backed by Moscow. Their appeals to police, courts and even Russia’s leading authorities, they told AP, have gone nowhere.
“It turns out that, as corrupt as the Ukrainian government was, they didn’t allow themselves to do what the Russian Federation is now doing,” said Zhan Zapruta, lawyer for a bus company seized by armed men in September.
‘Just a Land Grab’
At the 34,600-acre Dobrobut farm in far eastern Crimea, the fields these days lie fallow, and the 26 employees haven’t been paid for months. Men in camouflage stand guard and patrol in a Humvee-like vehicle, ready to chase away would-be visitors.
It was June when two carloads of men arrived at the farm’s squat cement administration building near the Kerch Strait with pistols, clubs and assault rifles, according to managers. In hand, the men had a piece of paper signed by Crimea’s Russia-installed prime minister, Sergei Aksyonov.
The document, seen by the AP but never issued publicly, proclaimed that the land tilled by Dobrobut — under lease from the local village — was being nationalized. The men booted out the workers and took over not only the fields, but also Dobrobut’s buildings, the harvest of 800 tons of barley and 5,000 tons of rapeseed, and the combines, half-dozen tractors and other equipment that the company had been renting, all worth about $1.6 million.
Alexander Garfner, an attorney for Dobrobut, sued in a Crimean court, now part of the Russian justice system. On Sept. 2, the lawsuit was thrown out.
“If we look at the law, then there is no basis for this — it’s simply a takeover,” Garfner said. The nationalization attempt, he said, “was clearly just a land grab, because it’s big money.”
Since joining Russia, Crimea’s leaders have asserted a power none of their counterparts in the vast country’s other regions has: the right to order nationalization of property. They also possess a unique brand of muscle: the so-called self-defense forces that answer to Aksyonov, and helped quash dissent during the campaign to secede from Ukraine in February and March. Those forces, made a permanent police auxiliary force on Nov. 26, have been involved in many of the real estate takeovers.
Aksyonov was installed as prime minister by Russian President Vladimir Putin and reconfirmed by the Crimean parliament in October, after elections rejected by the United States and other Western nations as illegal and invalid. Aksyonov said the nationalization law, enacted Aug. 8, is needed to right the wrongs committed by corrupt Ukrainian officials. In Ukraine, as in much of the former Soviet Union, a lot of state property was sold off to private owners at dust-bin prices because the government was broke, or to benefit cronies.
“Over the past 10 years, the majority of state property was illegally stolen from the government,” Aksyonov told AP. “All sorts of enterprises were privatized via fraudulent schemes and the state didn’t receive any money for those privatizations.”
Many cases examined by the AP, however, involved properties that have been in private hands for more than a decade. Also, Russia’s constitution stipulates that private property can be transferred to the government only by court order, with the owners compensated fully and in advance. The Russian government’s Ministry of Crimea, responsible for overseeing the peninsula, said in a statement that it cannot certify whether the nationalization law is unconstitutional, and that Russia’s Supreme Court alone can answer the question.
Aksyonov, though, is adamant: “Why must we tolerate the unscrupulous owners who, thanks to the fact that they used fraudulent schemes or paid bribes to bureaucrats, stole property that should belong to the state?”
‘They Tried to Influence Me’
The seizures investigated by the AP vary in scale and type of assets involved. But many, like Dobrobut, are reliably profitable and would require little additional investment.
Krymavtotrans, the company represented by Zapruta, is the sole legal vendor of bus tickets in Crimea, bringing in $14.6 million in yearly sales. Another business snapped up by the authorities, Krympotrebsoyuz, enjoys a near-monopoly on renting out stalls to traders in the region’s markets.
In northwestern Crimea, armed men seized a 13,000-acre farm along with its crops, mostly forage, because it hadn’t paid off a $1.2 million debt that wasn’t due for another six months. The men carried documents from a Crimean court, shown later to the AP, that ordered the deadline for repayment unexpectedly pushed forward.
A lawyer for the current owner, speaking on condition he not be identified for fear of official reprisal, said there is no way his client can pay, and he may lose the farm as a result. The creditor company did not respond to the AP’s request for comment.
There’s no doubt some of the losers in Crimea’s new order have been Ukrainian magnates or pro-Kiev politicians stripped of their assets. Andrei Senchenko, a seventh-generation Crimean and local leader of Ukraine’s Fatherland party, estimated his own losses at “several tens of millions of dollars,” including shares in a building materials plant and an office center in the regional capital of Simferopol that have been seized.
“They tried to influence me and, what’s more, made me a definite proposition, that I should change my rhetoric and relationship to the occupation of Crimea,” Senchenko said of Crimea’s leaders. “But I gave a clear ‘no.’” His claim could not be independently verified by the AP.
The biggest loser so far has been Ihor Kolomoisky, a Ukrainian oligarch and nationalist firebrand who has helped fund armed militias fighting against pro-Russian rebels in Ukraine’s east. Aksyonov’s government has taken 65 of his properties, including all branches of Privatbank, one of the largest in Crimea.
In some cases, employees appeared happy to be rid of their old bosses. At Krymkhleb, the region’s main producer of bread, workers filmed themselves pouring flour over the head of the general director, a Ukrainian businessman they accused of embezzlement. The Zaliv shipyard, owned by a Ukrainian tycoon, was seized in August and taken over by a Russian-registered company with only $300 to its name, according to Russian public records. But employees told the AP they hoped for an influx of investment and orders for new ships.
‘A Little Piece for Themselves’
Aksyonov has said he is acting on behalf of Crimea and its 2.3 million citizens and has no stake in companies that have been nationalized. But inside and outside the region, some politicians and businessmen have accused the prime minister and his associates of trying to take as much as they can for themselves.
“One must understand that in Crimea, in essence, a gangster regime has been established under the protection of Moscow,” said Sergei Mitrokhin, leader of Russia’s opposition Yabloko party. “Former criminals have come to power, and have started to carve up the property.”
Aksyonov, 41, has been identified by some opponents as a former mid-level gang member known as “Goblin” who in the 1990s was involved in extortion rackets. In 2010, he sued a Crimean politician who claimed he had led an organized crime brigade, but eventually lost the case. Since he has become Crimea’s supreme leader, at least one of his accusers has recanted.
At the state-owned Massandra vineyards and winery in the southern coastal hills, managers told AP that Crimea’s new leaders were eying their property. Crimean authorities have launched a criminal investigation of Massandra’s general director, Nikolai Boyko, for alleged embezzlement, which the winery’s management said is groundless and politically motivated. In the meantime, Crimea’s leaders have been compelled to cede Massandra and its holdings to an agency of the Russian presidency.
They kept only a sliver — a 30-acre plot — under a Sept. 25 decree of the region’s Council of Ministers.
“When our politicians were told to hand over the territory (to the Kremlin), they can’t fail to fulfill that order, because they know they will have to answer for it,” a Massandra executive told AP, on condition of anonymity out of fear of official reprisal. “So they are trying to carry out that order, but nonetheless, take a little piece for themselves.”
Aksyonov said the nationalization law will remain in force for around 12 months to facilitate Crimea’s integration into Russia. But it carries no automatic expiry date, and managers at Massandra and other business people told AP they fear it may be used by local authorities as long as valuable assets remain for the taking.
‘We’re Left With Ruins’
Along with politicians, some minorities and news media hostile to annexation are also facing loss of property.
Crimea’s 300,000 Tatar Muslims feel particularly vulnerable because of their tenuous hold on the homes and land they inhabit, and their history under Moscow’s rule. Uprooted and deported in 1944 under Josef Stalin, many Crimean Tatars have since returned to cement-block homes built on vacant lots that they do not legally own.
Crimea’s new leaders have repeatedly assured the Tatars they have nothing to fear, but Sityaga Kazakov, who runs a Tatar cultural center in the seaside town of Alushta, said his experience shows otherwise. He was told last month his organization’s lease agreement with municipal authorities, supposed to run until 2016, was being canceled and the property put up for competitive bid. The Tatar center stands to lose $15,000 it spent on improving the building.
“I can’t say that we loved Ukraine very much, but at least we lived within some kind of legal framework and not chaos,” Kazakov said. “We knew how much we needed to pay in order to continue working. There was a kind of stability.”
The Mejlis, the self-governing body of the Tatars, boldly continued to fly a Ukrainian flag over its headquarters in Simferopol for months after the takeover by Moscow. On Sept. 16, masked men raided the building, hauled down the blue-and-yellow banner, and spent hours searching the premises, which remain under lock and key by Crimean authorities.
These days, the newsroom of the privately owned Black Sea Television and Radio Station, which broadcast for 22 years and was critical of the Russian takeover, is also dark, empty and cold. Acting under a court order, bailiffs arrived on the premises Aug. 1, sealed off the building and seized TV cameras, computers and other equipment.
Cables were torn out, and electronics worth thousands of dollars were manhandled and trashed, employees say.
“After this debacle, we’re left with ruins instead of a TV company,” said Lyudmila Zhuravleva, Black Sea TV’s acting president. “They clearly made it their job to eliminate our company in general so that even later, when we get our property back, we won’t be able to function.”
Grounds for the seizure: a debt of $76,000 claimed by another broadcaster that belongs now to the Crimean government. Court documents show Zhuravleva paid the amount days after the seizure. Despite a judge’s order last month in her favor, the company is still waiting to get its property back.
Since March, 11 of the 18 functioning parishes of the pro-Kiev branch of the Orthodox Church have been shut. Archbishop Kliment, the denomination’s leader in Crimea, said the church lost two locations when the Russians seized military bases from Ukrainian forces, and another three after donors came under duress from authorities.
“They started to pressure them, to threaten them, to tell them they would have problems with their businesses,” the archbishop said. “And so, to not bring harm to those who helped us for so many years, we willingly gave up those properties.”
The church’s crown jewel in Crimea, the Cathedral of Saints Vladimir and Olga in Simferopol, is also facing closure. For 12 years the church has paid a symbolic rent of 1 Ukrainian hryvnia — less than 7 U.S. cents — a year to rent the building, a former military academy.
But the month after Crimea was declared part of Russia, the government said the annual rent for the Cathedral of Saints Vladimir and Olga would be raised to 600,000 hryvnia, or around $38,700, which according to an audit is double the value of the building. Kliment said officials told him they want to boost government revenues, and that there is no reason his church should pay less than the fair-market rate.
‘Who Am I Supposed to Sue?’
For losers in Crimea’s great property grab, there is often no redress.
In April, Trans-Bud, a construction and transport company, delivered 54 vehicles, from excavators to dump trucks, to a Simferopol-based firm, Krymsky Passazh. But the customer never paid the $5.2 million bill, and the equipment is now in the hands of camouflage-clad self-defense forces. The AP contacted Krymsky Passazh three times, but each time a woman hung up when questioned about the equipment deal.
Trans-Bud took the matter to the police, company director Vadim Padalko said. Padalko and an investigator drove to the scene, where an armed guard put the policeman on the phone with his boss.
“On the way back he (the investigator) asked me: ‘Why didn’t you tell me this was going to be nationalized?’ ” Padalko told AP. “I said, ‘What is being nationalized? This is private property!’ By the time we were back (at the police station) they had decided that no crime could be established.”
Ukrainian tax registers show Krymsky Passazh was co-founded by the sister of a Simferopol City Council member.
“On the local level nothing is going to happen,” Padalko said. “The prosecutor’s office is controlled; the police are controlled. Everything is done with a phone call. It’s utter lawlessness.”
Mikhail Sirotyuk has had no greater success in getting police or government officials to react to the loss of his poultry farm, seized by a would-be business partner and a half-dozen men in April.
The farm’s 50,000 quail are still producing meat and eggs, but their owner isn’t making any money from them, and hasn’t been allowed back on his property.
Sirotyuk, whose office in the rural village of Trudovoe is decorated with portraits of Putin and religious icons, has changed the locks out of fear of what may happen next. One man who took part in the farm’s seizure, he said, was recently elected to a nearby village council on behalf of Aksyonov’s political party.
“I’m not against United Russia, but I can’t be quiet when he’s raiding my business,” Sirotyuk said.
Some owners have gone to court but found it fruitless — especially in dealing with the self-defense forces that have carried out many seizures. A bill introduced in Russia’s parliament would also exonerate the armed men for crimes committed from the period of Crimea’s annexation through early 2015.
“The problem is, who am I supposed to sue?” said Garfner, the lawyer for Dobrobut. “There is some Ivan Ivanovich Pupkin on the property, but we don’t know whether he is actually Pupkin. We try to sue Pupkin, but that turns out to be somebody else who was sleeping at home the whole time. We can sue people every day in bunches, but who?”
Officials at Krymavtotrans, the bus company, said they went straight to the top, sending repeated letters to the offices of Putin and Russian Prime Minister Dmitry Medvedev. The reported result to date: nothing.
“I had counted on an immediate reaction from the federal authorities, and instead there has been no reaction at all,” said Zapruta, the company’s lawyer.
The Russian Ministry of Crimea told AP it has received no complaints from local businesses.
‘It’s a Circus’
For many in Crimea, euphoria over union with Russia has ebbed, and the property grab is one reason. Food prices have also surged, the inflow of tourists to the Black Sea peninsula’s beaches, spas and hotels has flagged, and the hoped-for flood of investment from Russia has yet to happen.
Serhii Kostynskyi, a former Crimea-based businessman, journalist, and analyst, is one of the many thousands who have left to live and work in mainland Ukraine. He likens present-day Crimea to a town captured by an army and handed over to the victorious soldiers to loot.
“It’s a total policy of banditry,” said Kostynskyi, citing a term from the Russian underworld: bespredel, or utter lawlessness.
The nationalizations may be only an initial stage. In October, Crimea’s legislature adopted another law that empowers local leaders to sell off government property. Legislator Yevgeniya Dobrynya said in a statement the goal is refilling Crimea’s coffers, and attracting investors to put “significant money” into the economy.
Mitrokhin, the leader of Russia’s Yabloko party, accused Crimean leaders of engineering a scheme to put nationalized assets into their own hands via straw buyers. A month after issuing a public letter to the Russian prosecutor’s office asking them to halt the nationalizations, he told the AP he had obtained no response.
The attorney for a labor union whose property holdings in many Crimean cities have been threatened with nationalization said people here are living in legal limbo. “It’s a circus — everything is up in the air,” said the lawyer, who requested anonymity out of fear of official reprisal.
When Crimea joined Russia, she added, “nobody understood that.”
Aksyonov denied any legitimate owner or business person had been hurt in the property seizures. “There is not a single person who today has suffered any harm,” he told AP.
But at Yalta Studios, they tell a different story. They managed to get the armed men to quit the premises in late October, but haven’t been able to register yet as a Russian company. Without that status, they can’t legally remain in business after Jan. 1.
The owners told AP they’ve plowed $16 million into the studio since becoming sole proprietors in 2004. As compensation for the sets, cameras and lighting equipment, costumes and props and other lost property, they say they’ve been offered $1 million. A studio employee, who spoke on condition of anonymity out of fear of official reprisal, said he doubts they'll get anything from Crimean authorities in the end.
“It’s a robbery,” the employee said, “pure and simple.”
From The Associated Press
