In Wartime: Stories from Ukraine

by Tim Judah

The illegal mining industry began to grow in the 1990s as fifty-two of the most unprofitable mines were shut down. Profitable mines were privatized and many of them now belong to Rinat Akhmetov, Ukraine’s richest man and once most powerful oligarch. Up to now state-owned mines have continued to be heavily subsidized though. And this is where the great criminal opportunity opened up. Companies could buy, or illegally mine, coal cheaply and feed this into the state mining system, which gave them a handsome profit paid for by the taxpayer. A detailed study conducted by the Organized Crime and Corruption Reporting Project (OCCRP), a well-known and reputable investigative organization that concentrates on the former communist countries of Europe, calculated that some $678 million had been stolen in 2012 in this way. The government coal subsidy, it said, “is in effect siphoned from state mines into private pockets, as the mines claim to be producing more coal than they actually do produce.”