Mineral extraction means, on the one hand, large profits for those who extract resources and, on the other, major environmental risks. Many minerals, including valuable granite, were mined in Ukraine back in Soviet times. The environment was not given much consideration then.

Because borders in that monstrous country were rather nominal, while the word ‘union’ was only a label, quarries and other enterprises in Ukraine could belong to different republics, including Moldova.

Everything changed after the collapse of the Soviet Union and the demarcation of state borders. Solutions were found fairly quickly for some enterprises that had suddenly become foreign-owned, while others remain unresolved to this day.

NGO Green Leaf together with journalists from Moldova’s TV8 investigated the history of one such quarry in Mykolaiv Oblast. It found itself at the centre of a criminal story, a corporate raid and attempts by big business to ‘privatise’ it for themselves. And while all this continues, the quarry remains an environmental time bomb.

Flooded with water

In Mykolaiv Oblast in southern Ukraine there is a small settlement called Kinetspil. Granite was mined here, near the city of Pervomaisk, for many years. Granite is a rock used as a construction material for major structures — building foundations, railway-bridge piers, embankments, stairs and so on.

Talking with local residents

In Soviet times, about a thousand people worked at the enterprise in three shifts. Granite extraction then provided jobs for many Kinetspil residents. Now, however, according to  local residents, the quarry has been flooded for many years. It is not operating.

According to Inna Tymchenko, associate professor at the Department of Ecology and Landscape Gardening at Shevchenko LNU, Mykolaiv Oblast is overloaded with quarries. Rock extraction is accompanied by a number of environmental risks, including landscape change and impacts on biodiversity:

“Pervomaisk district is a very valuable area. This is the steppe zone of southern Ukraine. It also means (quarry extraction — ed.) disruption of the water regime, both groundwater and surface water. This quarry really is quite large.”

The expert stresses that because the quarry is located close to the Southern Bug River, economic activity inevitably affects the river.

At the same time, Inna Tymchenko emphasises, simply flooding a quarry when an enterprise stops operating for one reason or another is not enough. To reduce negative impacts on the environment, the quarry must be properly mothballed.

Environmental risks

According to environmentalist Vladyslav Balinskyi, the quarry, which was abandoned and flooded about ten years ago, is now a unique area with biodiversity and an established ecosystem. Restarting the enterprise, however, would inevitably affect and pollute the environment. Risks include hazardous dust, which because of the quarry’s proximity to the town may affect local residents, and noise pollution from operating machinery. Nevertheless, negative environmental effects can already be observed today:

“This is an example of the disgraceful use of valuable territories and valuable land. Why? It is a consequence of the Soviet-era approach, because this industrial facility itself represents the Soviet approach. There is such an enormous enterprise almost within the boundaries of a pleasant town. Second, we see remnants of utilities, flooded power-line towers, transformer structures and remnants of the road…”

The greatest danger, in the environmentalist’s view, is the use of water that flows from the flooded quarry into the Southern Bug River. The river is, among other things, a source of drinking water, yet it potentially carries granite-related contamination from the flooded quarry. One of the greatest risks is an elevated radiation background from the granite.

Vladyslav Balinskyi notes that such unique places should serve the community, primarily as recreation and leisure areas. If the owners eventually decide to resume operation of the quarry, an environmental impact assessment procedure must be completed.

And it appears that resuming operation of the quarry is indeed part of the owners’ plans.

Restarting extraction — one month of pumping

Although the quarry is currently under water, restarting it would not be particularly difficult. Security guards at the enterprise’s administrative building in Kinetspil confirmed this to us off camera. According to them, the water simply needs to be pumped out, which would take about a month.

It should be noted that extraction has not taken place here for about ten years, yet the owners still have not liquidated the company. Moreover, an active struggle has developed over the flooded quarry. Until the ownership issue is resolved, the quarry will most likely remain under water.

Thus, since 1998, a foreign company called Pervomaisk Granite and Crushed-Stone Quarry (PGCQ) has been registered under Ukrainian law.

Its owner was the Inmacom concern, which was subordinate to the Ministry of Agriculture and Regional Development of the Republic of Moldova. In 2018, Moldova’s Public Property Agency was registered as the enterprise’s founder.

The Agency is the legal successor of the Moldovan enterprise that operated in Mykolaiv Oblast during the Soviet period.

The Republic of Moldova received ownership of two quarries in what is now Ukraine, one of them in Mykolaiv Oblast, in exchange for transferring control over the Naslavcea dam on the Dniester River.

However, in 2019 a clone of the Moldovan company appeared in the register — an LLC with exactly the same name, Pervomaisk Granite and Crushed-Stone Quarry. The legal address of this company is in Kyiv. Its founder is listed as Romanian citizen Yevhenii Buzhan, who is also a citizen of the Republic of Moldova.

At the same time, Buzhan is connected with a number of other companies, including enterprises that had also belonged to Moldova since Soviet times. Among them are recreation centres in the resort village of Serhiivka, including Plai and Lazo.

Screenshot from YouControl

It should also be noted that the Moldovan quarry in Mykolaiv Oblast had come under attack before. In 2007, during a struggle for influence over the enterprise, the former director of PGCQ, a 42-year-old Moldovan citizen, was killed. Two contract killers shot the man outside the building where he rented an apartment. The person who ordered the killing and one of the killers were detained immediately and have already received sentences. The second killer managed to escape. For 13 years he hid from justice for the murder, including in the Russian Federation. In 2020, however, he too was arrested. 

In addition, there was reportedly an attempt to seize the property of the Pervomaisk Granite and Crushed-Stone Quarry by creating fictitious accounts payable. Law enforcement opened a case over this in 2015. According to the materials of the investigation, officials of several companies may have been involved in the scheme, including LLC Denkar and private enterprise Yavir.

In 2015, the latter company, together with PGCQ, founded LLC Chausove Granite and Crushed-Stone Quarry with a legal address in Kyiv.

At the beginning of 2021, during hearings of the parliamentary commission for control over public finances concerning Moldovan assets in Ukraine, Yevhenii Buzhan, then an employee of the Public Property Agency, said that the planned bankruptcy of the Moldovan quarry had been organised by Denys Danylchuk, son of the enterprise’s former manager.

“The company was artificially bankrupted by Denkar, 50% of whose shares belonged to the quarry director’s son, Denys Danylchuk, and the other 50% to a woman from the Russian Federation. They drove the company into bankruptcy without involving Moldova, or with the authorities’ tacit consent. The aim was to transfer it to a newly created enterprise and, through a joint-activity agreement, obtain a licence for the new enterprise. We cancelled the rehabilitation plan. I asked Ukraine’s State Property Fund to intervene in this process, and they cancelled the rehabilitation plan, but Moldova’s property was first stolen by the village council. The second time it was stolen by the Chausove Granite and Crushed-Stone Quarry company. The property has not been returned,” Buzhan told members of the commission.

Today, Denys Danylchuk is the manager of Chausove Granite and Crushed-Stone Quarry, while Rustam Mamedov is listed as the company’s beneficiary in its documents. He also owns the Yavir company.

Danylchuk also manages Denkar. As of now, the company’s founders are listed as a woman with Belarusian citizenship and a company from Russia that was liquidated in 2014. Through another Ukrainian company, Danylchuk was the beneficiary of this Moscow firm.

An international scheme

On 5 November 2021, former deputy speaker of the Moldovan parliament Alexandru Slusari wrote on social media that the Republic of Moldova had lost a granite quarry in Ukraine with rock reserves worth three billion euros.

Slusari alleged that former Democratic Party MP Vladimir Andronachi may have been involved in the scheme, with assistance from Yevhenii Buzhan. Buzhan was an employee of the Public Property Agency. According to Slusari, both acted in the interests of prominent Ukrainian businessman Volodymyr Prodyvus.

The matter is that on 5 November 2021, after several unsuccessful attempts, the State Service of Geology and Subsoil of Ukraine managed to sell at auction permits to use the central part of the granite-deposit site in Pervomaisk district, Mykolaiv Oblast. This is the same quarry owned by PGCQ. The sale price fell from an initial UAH 17.1 million — currently about EUR 430,000 — to UAH 8.9 million, or approximately EUR 220,000. The permit went to Bridge Construction Unit No. 112.

Bridge Construction Unit No. 112 is likely part of the business orbit of Ukrainian entrepreneur Volodymyr Prodyvus. For example, the LLC is a co-founder of the corporation Mostobud Group, one of whose beneficiaries is Prodyvus.

Volodymyr Prodyvus is a former member of the Verkhovna Rada of Ukraine and a member of the Party of Regions, which was controlled by fugitive president Viktor Yanukovych. The media have repeatedly reported alleged links between the businessman and the so-called amber mafia — illegal amber miners. In addition, the portal ‘War&and Sanctions‘ states that Prodyvus appeared as a member of a group of Russian ‘thieves-in-law’ in France.

Volodymyr Prodyvus. Photo from the internet

However, it appears that Prodyvus did not try to take over the granite quarry in Mykolaiv Oblast without assistance from representatives of the Moldovan authorities.

Thus, former representative of Moldova’s Public Property Agency in Ukraine Yevhenii Buzhan is listed as the founder of several companies whose legal address coincides with the legal address of Prodyvus’s company, namely Kyiv, 5 Pankivska Street.   

Screenshot from YouControl

The connection between the granite quarry in Pervomaisk, Yevhenii Buzhan and former Moldovan MP Vladimir Andronachi is also confirmed by another Ukrainian citizen, Viktor Kanaiev, who acted as Andronachi’s intermediary in several transactions.

Vladimir Andronachi. Photo from the internet

Viktor Kanaiev was manager of the clone company Pervomaisk Granite and Crushed-Stone Quarry LLC founded by Buzhan.

In Chișinău, Kanaiev appeared as the founder of Furnizare Energie, a company associated with Andronachi. Kanaiev was also listed in documents as the founder of a UK company that owns the National Hotel, whose beneficiary is believed to be Andronachi.

Viktor Kanaiev is also linked to a scandal involving Moldova losing the consulate building in Odesa, whose trail also leads to Andronachi.

At parliamentary hearings two years ago, former Public Property Agency employee Yevhenii Buzhan denied being Andronachi’s man or acting in the interests of businessman Volodymyr Prodyvus.

Asked why he had registered the clone quarry company in Pervomaisk in his own name, Buzhan said that in this way he had blocked an attempt by the family of former enterprise director Anatolii Danylchuk to seize the quarry.

“I acted preventively, when I was not an employee of the Public Property Agency, by sending information notes to the authorities. After learning that Denys Danylchuk had already seized the quarry and told the local council in Pervomaisk that Moldova was launching a new company whose name he had already reserved, I asked registrars in Kyiv to register a company in my name unlawfully so as not to allow Denys to do it. They already had a council decision ready to transfer the assets to this new company. We registered the company in our name to prevent that from happening. The company was only registered; it had no bank accounts and nothing else at all.”

Journalists also sent a request to Prodyvus’s Mostobud company asking it to comment on its plans for the granite quarry. At the time of publication, however, the company had not responded.

The Moldovan company plans to obtain extraction permits

In October 2021, the Public Property Agency appointed a new manager for the Pervomaisk quarry. The new management went to court seeking cancellation of the licence issued through the auction to a company associated with businessman Volodymyr Prodyvus.

“This is connected primarily with the fact that in 2021 the State Service of Geology and Subsoil sold an extraction licence covering half of the land plot belonging to PGCQ to Prodyvus’s enterprise, Bridge Construction Unit 112. PGCQ has 63 hectares of land that were granted for permanent use back in Soviet times, and corresponding documents were signed with Ukraine. Yet in 2021, despite an ongoing court dispute over the extraction licence, the State Service of Geology and Subsoil put half of PGCQ’s licensed area up for auction for  development of the quarry,” explains Nataliia Prometna, personal assistant to the acting director of PGCQ.

She says that the state service put the land plots up for auction twice. The auction was held only on the third attempt. However, Prodyvus’s enterprise cannot carry out extraction because it cannot formalise land-use documents, since these land plots belong to PGCQ.

According to her, the Republic of Moldova has so far participated in one court case, which concerned renewal of the special extraction permit for the company that should be issued by the State Service of Geology and Subsoil. The company lost its permit back in 2015 because the quarry had already ceased operating at that time. The Supreme Court considered the case in the summer of this year:

“As of now, following the Supreme Court’s decision obliging the State Service of Geology and Subsoil to consider PGCQ’s application, we have no information about the Service’s decision. We sent a request. It is with the State Service of Geology and Subsoil, and so far we have not been informed of the outcome of the review.”

In response to a request concerning the situation around the quarry, the State Service of Geology and Subsoil refused to provide information, citing martial law in Ukraine.

Nataliia Prometna stresses that PGCQ currently cannot extract granite because it lacks a permit.

According to her, the main task now is to restore the boundaries of PGCQ’s land plots after the territorial-administrative reform carried out in Ukraine in recent years. Previously the plots were located within village-council territories, but the territorial arrangement has since changed. Design documentation has already been prepared. The enterprise therefore plans to approve the land-plot boundaries in the near future.

Nataliia Prometna believes that registering an LLC with the same name as PGCQ was an attempt by Prodyvus to appropriate an enterprise belonging to the Republic of Moldova. She says Yevhenii Buzhan, a Romanian citizen who also holds Moldovan citizenship, assisted in this.

“In 2019 they appointed their own person as director of PGCQ. As far as I remember, it was Skrypnyk, a person controlled by Buzhan. They physically seized PGCQ. They entered the quarry grounds with guards. Later they sold all the equipment to neighbouring quarries and removed it for scrap metal. They then re-registered the foreign enterprise PGCQ, changing its location to 5 Pankivska Street, Kyiv. They created a clone and called it PGCQ Limited Liability Company.”

At the parliamentary commission hearings, Yevhenii Buzhan admitted entering the quarry grounds with security personnel but accused Denys Danylchuk of selling the quarry’s property for scrap.

“I wrote letters to the authorities saying that the quarry was being stripped. We had ten production lines. Some 1,200 people worked there. Now only one line remains. The others were dismantled for scrap. We entered the site with Alpha (a law-enforcement special unit — ed.), just so you understand,” he said.

The war halted work on the criminal investigation

Moldovan prosecutors have been investigating attempts to seize the property of the granite quarry in Pervomaisk illegally for almost three years. In response to a TV8 request, the Anti-Corruption Prosecutor’s Office said it was conducting a criminal case opened on 22 February 2021 by the General Prosecutor’s Office service responsible for investigating fraud against the environment and public interests.

So far, prosecutors have questioned several witnesses and examined documents and electronic devices seized from the Public Property Agency and the government. The process is being delayed by slow responses from the Ukrainian authorities.

“From 22 April 2021 to 10 September 2021, a number of requests for international legal assistance in criminal proceedings were sent to the competent Ukrainian authorities. As a result, for objective reasons (the introduction of martial law throughout Ukraine from 24 February 2022 because of Russia’s aggression — ed.), and on the basis of a communication from the Embassy of Ukraine in the Republic of Moldova, the letters rogatory (requests for information from other countries — ed.) were partially executed. At present, the investigative body must assess the relevance of the information received from Ukraine and decide whether it is appropriate to begin legal procedures for creating joint investigation teams with the competent Ukrainian authorities,” the Anti-Corruption Prosecutor’s Office clarified.

The institution did not say whether there are suspects or accused persons in the criminal case concerning the Pervomaisk quarry.

Public Property Agency director Roman Cojuhari said he did not know whether current or former Agency employees were subjects of criminal prosecution.

It was not possible to speak with Vladimir Andronachi, whom former MP Alexandru Slusari publicly accused of participating in the scheme to deprive the Republic of Moldova of the Pervomaisk quarry. A TV8 reporter attended one of the court hearings in a case in which the former Democratic Party MP is accused of fraud connected with financial manipulation at Banca de Economii. Andronachi, however, refused to comment.

The quarry audit was never carried out

Two years ago, the Public Property Agency announced that the Pervomaisk quarry would be audited. Because of the war, however, the audit was never conducted.

“Today we cannot speak about a classical audit carried out by an auditing company. It is more a review of activities, especially under conditions of war in Ukraine, when conducting full financial audits is a sufficiently difficult process. The activities of the previous management were reviewed, but an audit in the full sense was not carried out because of the war,” explained Public Property Agency director Roman Cojuhari.

In the near future, a Public Property Agency team plans to travel to the Pervomaisk quarry to inspect the actual situation on site.

Security guards employed by the Moldovan enterprise currently work on the quarry grounds. Although the quarry itself is flooded, there are plans to resume its operation.

“In a short period of time, we want to bring all the documentation and activities of these enterprises into compliance with the law so that they can function fully. We are confident that the war will end and that, during the country’s reconstruction, these quarries will be needed and will be able to provide substantial benefits both to the Republic of Moldova and to Ukraine,” Roman Cojuhari said.

According to information provided by the Public Property Agency, Ukraine’s State Service of Geology and Subsoil estimated that the Pervomaisk quarry could yield approximately 26 million cubic metres of granite. At market prices, the value of these reserves exceeds USD 44 million.

Thus, it is likely that the Pervomaisk Granite and Crushed-Stone Quarry will resume operation in the foreseeable future. In addition to bringing profits to its owners, this also threatens the region with environmental problems.

The investigation was conducted by Olena Chernyshova, Vladyslav Balinskyi, Yuliia Braslavska, Stela Mihailovici and Mariana Recean.

This material was produced with the support of Journalismfund Europe