Why Is A Czech Firm Selling Furniture In Separatist-Controlled Donetsk?
By Yaroslav Kreshko, Sergii Stetsenko, Ivanna Trutnenko, Tony Wesolowsky June 23, 2020
DONETSK, Ukraine -- A blue upholstered wooden chair and a chrome-and-plastic barstool stand in a spartan display window under the flag that Russia-backed forces use for the land they control in Ukraine's Donetsk region. In the adjacent window, a sign boasts in Russian of furniture from the Czech Republic above the name of the firm, Hanak, and its official logo.
The shop is located on a main thoroughfare in the regional capital, Donetsk, which the separatists have held since April 2014, around the start of an ongoing war that has killed more than 13,000 people in eastern Ukraine and displaced more than 1 million.
The European Union and the United States imposed sanctions on Russia for its actions in the area known as the Donbas and its seizure of Ukraine's Crimean Peninsula in March 2014, which came after the Euromaidan protests pushed a Moscow-friendly president from power in Kyiv.
Experts said the Czech firm may or may not be in violation of sanctions imposed by the EU, which has an investment ban on Crimea but not so explicitly in the Donbas.
It may also be in violation of Ukrainian law and could create a public-relations headache for Hanak, especially given how word of the shop came to the attention of much of the outside world.
Two former Czech mercenaries who fought as volunteers alongside the Russia-backed forces filmed a video inside the Hanak showroom in Donetsk and later said they were friends with its Russian owner.
It is unclear what relationship the two have with the store, if any, although some Czech media reports suggested the two went from fighters to furniture salesmen.
The Ukrainian Embassy in the Czech Republic has reacted cautiously, saying it is seeking answers from Prague.
Attempts to reach Hanak for comment were unsuccessful. The Donetsk store was listed on the company's website as of June 23.
Roman Maca wrote one of the first stories on the Hanak store in Donetsk for the Czech news website Hlidaci Pes (Watchdog), which posted it on June 9.
He told RFE/RL's Ukrainian Service that his interest was piqued by the video in the Hanak store of the two former Czech mercenaries who fought on the side of the separatists.
Jiri Urbanek, 42, and Pavel Botka, 29, traveled to eastern Ukraine in 2015. In August 2019, Botka, known by his nom de guerre Kavkaz -- which means Caucasus in Russian -- had a leg amputated due to a mine explosion, according to Hlidaci Pes. The two said in the video they had given up their soldier-for-hire life and converted to Islam, although they added that they would fight again "if needed."
Tomas Forro, a Slovak journalist who interviewed Botka in 2016, said that Botka, among other things, adheres to false claims that Malaysia Airlines Flight MH17 was shot down in July 2014 by a Ukrainian jet fighter -- not by a Russian missile fired from separatist-held territory, as international investigators have said -- and that the Euromaidan movement was organized by CIA agents.
The owner of the Hanak store in Donetsk is reported by Czech media to be Valery Vorobyov, a Russian national who is thought to have lived several years in Donetsk.
According to Maca, Urbanek is a "good friend" of Vorobyov.
"When I spoke to Jiri Urbanek, he said that Vorobyov was a good friend of his and that he had the keys to the store. But Urbanek did not say what he is doing now or plans to do in the near future," Maca said.
Whether or not the store is in violation of Ukrainian law, is something the Ukrainian Embassy in Prague is examining.
"The overall case needs to be examined first before any conclusions can be drawn, because it will depend on the circumstances. After a first glance, it appears there was a violation of [Ukrainian] legislation. We are discussing the extent [of this violation], so we have sent inquiries to this company, as well as the relevant Czech government agencies and business groups to get a complete picture. Based on this information, we will make relevant proposals to the Ukrainian authorities," Ukrainian Ambassador Yevhen Perebyinis told RFE/RL's Ukrainian Service.
Hanak could be in trouble if the goods and materials sold in the Donetsk showroom were moved across the section of the border between Ukraine and Russia that is currently not controlled by Ukraine's border service, said Ukrainian economist Oleksiy Kushch, or if the firm paid any type of "taxes" to the Russia-backed separatists who control Donetsk. Control of the international border by Russia and the separatists is a major obstacle to a peace settlement.
"Here, you need to look at the whole chain of events of the firm's activities. Its business operations; where it pays taxes; how it delivers goods; how it is paid for those goods; how customs agreements are drawn up.... It could be that some of these actions are illegal, according to [Ukrainian] legislation. But the very fact of the physical presence of a business in Donetsk does not violate any of our Ukrainian laws," Kushch explained.
While doing business in separatist-controlled eastern Ukraine may be murky, Western countries have been caught getting around sanctions by doing business in Crimea, where the rules are clearer.
A joint investigation by Current Time, the Russian-language network led by RFE/RL in cooperation with VOA, and the anti-corruption project Municipal Scanner found in 2019 that scores of European companies -- primarily offshore holding firms -- continued to operate and invested in Crimea since the adoption of EU sanctions in response to the Russian land grab.
Written by RFE/RL correspondent Tony Wesolowsky, based on reporting by the RFE/RL Ukrainian Service's Donbas Desk
Copyright (c) 2020. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
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