Former Ukrainian President Poroshenko Secretly Controlled Offshore Firms that Banked at Austria’s Raiffeisen
The shell companies handled extravagant transactions on behalf of the former president while the bank turned a blind eye.
Hundreds of thousands of Ukrainians every year take advantage of a special visa allowing them to work in Poland, escaping poverty and unemployment back home. But many of them have been using the visa as a backdoor into the European Union, landing them in a “gray zone” of quasi-legal labor that often leaves them vulnerable to exploitation.
In Estonia, a transnational pipeline of both real and fake companies has sprung up to create documentation for workers that allows them to be nominally employed by Polish firms, then “posted” to the Baltic nation for up to three months, an OCCRP investigation has found.
Once there, the workers can earn more than at home, but are also easily abused by the companies that brought them into the EU — induced to work long hours for less than Estonia’s minimum wage for foreign workers, and sometimes left without pay altogether when the companies disappear.
Poland was projected to issue 900,000 of these visas to Ukrainians last year alone. Known as a “D-visa,” the document grants the right to work in Poland for a year, and be posted to any EU country in the Schengen area for 90 days. This has created a thriving market for fake Polish firms that do nothing but charge fees to issue documents promising to employ foreign workers, according to a 2018 report by Poland’s Supreme Audit Office.
Papers in hand, migrants can then easily enter Estonia or other parts of the Schengen zone through Poland, and may decide to overstay for months after their “posting” is supposed to end. In other cases, they travel to Estonia without being officially posted at all, leaving them totally off the radar of local authorities.
Liis Valk, an expert at the Identity and Status Bureau of the Police and Border Guard Board of Estonia, said migrant laborers frequently enter a number of different EU countries on Polish D-visas.
“The scheme varies in different countries depending on local regulations,” she said. In Estonia, hiring “Polish” workers helps employers cut costs.“I do think that is the main reason why such schemes are used,” she said. “It is to avoid duties, official salary, and paying taxes.”
One of these laborers, Ruslan Batovskyi, bought a Polish D-visa through a Ukrainian agency for around 100 euros in the summer of 2018, hoping he would be able to use it to find better-paid work elsewhere in the EU. He knew he was doing something “semi-legal,” as he put it, but the risk seemed worth taking for the promise of a good job.
He answered an advertisement from an Estonian recruitment firm, Goodstaff, and was quickly sent to the remote northern city of Tapa and set to work in an auto-parts factory. With his D-visa in hand, Batovskyi immediately started working 12 hours a day, for 5 euros an hour.
In spring 2019, Goodstaff started delaying his wages and eventually stopped paying him at all, leaving him stranded in northern Estonia and owed some 2,300 euros ($2,554) in unpaid wages.
Not only did Batovskyi, a veteran of the war in Eastern Ukraine, find himself jobless and broke, but Goodstaff had never paid taxes on him since he entered the country as a “Polish” worker, which left him without health insurance or social security in Estonia.
“What makes me sad is that the law that should protect workers is weak,” he said. “In my situation, I can be left without the money I have earned.”
Poland opened its doors to immigrant workers in 2006 to ease a shortage of labor in the agricultural sector. Initially just a small stream of migrants arrived, but after Russia’s annexation of Crimea in 2014 and the ensuing outbreak of war in Ukraine, the numbers started to rise by as much as 200,000 a year.
“At the beginning it was 100,000 or 200,000 permissions per year, but after the war in eastern Ukraine started, this number instantly grew,” said Pawel Kaczmarczyk, director of the Centre of Migration Research and an adjunct professor at the Faculty of Economic Sciences at the University of Warsaw.
Drowning in paperwork, consular workers started cutting corners. According to the 2018 Polish audit report, the average visa application was rushed through in two to four minutes — barely enough time to check if all the relevant fields in the papers had been filled out.
The report said that Poland’s relatively open system of migration for Ukrainian citizens in particular had been widely exploited, “enabling foreigners to come to the Schengen area for purposes other than the declared employment in Poland.”
In recent years, 72 percent of Ukrainians who applied for a Polish D-visa never went to work for the Polish company that said it would hire them, and 90 percent were never registered with Poland’s health system, according to the report. The auditors also found that 40 percent of these companies didn’t exist at all, reporting no revenues to the state. One even registered a bus stop as its business address.
“The staff of consular offices was definitely insufficient to handle such a large number of visa applications,” the report said. “There is a high probability that some companies were fictitious entities created only to obtain working visas.”
“Declarations of intent [to employ foreign workers] were often the subject of illegal trade,” the auditors added.
In Batovskyi’s case, the Ukrainian agency he used had contacts with Polish firms that could issue a declaration of intent. His Polish visa was tied to a fictitious promise by a factory there to employ him. But he couldn’t remember the name of his so-called employer, or even the town where he was supposed to be working.
“[It says] where I should start working, in a Polish organization,” he explained. “But I didn’t work according to that visa, because I moved on” to Estonia.
In 2018, Poland made changes to its migration system, forcing companies to register workers on arrival in a separate database. Around the same time, Estonia simplified its own system in an effort to encourage workers and employers to go the direct route. More than 9,500 Ukrainians applied directly for Estonian work visas in 2019, up from about 700 in 2017.
The border guards at Tallinn airport were not impressed by the selection of swim fins and tennis rackets packed in the luggage of Ukrainian Ihor Kozachok and his two friends.
He and his friends Rostislav and Sergei landed in the Estonian capital in late July in the hope of finding another job after their Estonian visas had expired. But their cover story that they were returning for a holiday did not persuade the guards on the growing illegal immigration route from Ukraine.
Their lack of ready cash and explanation that they would be staying at their boss’s place didn’t seem to help.
For two days the men were held in the airport’s international zone, where they slept and survived on a stash of cookies and sausages they had brought with them. They were then sent back to Kyiv.
Emeri Põld, the deputy head of Estonia’s Border and Migration Surveillance Division of the North Prefecture, said the number of Ukrainians being stopped at the airport is growing fast. A total of 574 were turned away in the first 11 months of 2019, compared to 28 in all of 2017.
“We suspect these are people coming here for work, but mostly pretend to be tourists. They are people who’d start working illegally” if they entered the country, he said.
Most, however, come by bus or car, according to Liis Valk, an expert at the Identity and Status Bureau of the Police and Border Guard Board of Estonia.
“We don’t have adequate information about the number of workers here. As a rule, they don’t cross the [Schengen] border in Estonia but in other countries, and that means we have no tools to track that,” Valk said.
That is exactly what Kozachok and his friends did. Just two days after they were sent back to Kyiv, their Estonian employer picked them up and drove them across the Polish border. Another twenty-four hours later, they were back in Maardu, a town next to Tallinn. “I am here! We just arrived in Maardu,” Kozachok said in a text shortly after midnight on July 30.
None stayed long. All three went on to work in Finland, where Kozachok said they worked legally. Rostislav went home after a month.
Kozachok said he, too, is heading home for a two- to three-month break in mid-December and then plans to return to Finland through his Estonian employer.
But Kaczmarczyk estimates around 20 percent of all Ukrainians with Polish work visas are still working illegally. And many workers still come to Estonia via Poland.
Belarusian laborer Andrei Tsishko was hired in November 2018 through a Polish company, Belos Revel, to work as a plumber on construction sites in Tallinn for 10 hours a day, six days a week, for 5 euros per hour.
Belos Revel is one of at least four Polish firms owned by Estonian businessman Oleg Nurme, who has single-handedly created his own network of companies to bring laborers into Estonia via Poland. He first hires workers using his Polish companies, then posts them to one of his eight Estonian firms, officially or unofficially. (An Estonian government database has no record that Belos Revel sent any workers to Estonia in 2018, although OCCRP viewed documents issued to Tsishko indicating otherwise.)
“There are very many people in Tallinn who have been through Oleg Nurme’s company,” said Tsishko, adding that he knew of at least 150 foreign workers working for Nurme in Estonia, all on Polish visas. “It’s like a stepping stone for foreign workers. People work for him for some time, and [then] look for a better job.”
Before attempting the journey, Tsishko was given strict instructions about what to do when he crossed from Belarus into the Schengen area. “Oleg instructed me that when crossing the border, I need to tell the border guards I’m going to work in Poland. If I’d tell them I’m going to Tallinn, they would take me off the bus,” Tsishko told OCCRP.
For employers, the appeal of hiring laborers on Polish work visas is simple: They can pay Polish wages.
Estonia’s minimum wage for foreign workers is 1,310 euros (around $1,450) per month, but in Poland, it is just 2,250 zloty ($590). This holds true even for foreign workers who obtain D-visas in Poland before being sent to Estonia.
Recruitment firms usually pay these migrants a per diem fee to cover living costs, making up some of the difference. But these payments are negotiated informally and don’t constitute taxable income, meaning that businesses can escape paying social security and employment taxes. As a result, they have no recourse to the Estonian social security system if they are fired, and can be left stranded.
They are also strictly limited to working there for three months and are then supposed to leave the country. But in practice many of them stay on, entering a “gray zone” of quasi-legal migrant labor that cannot be easily regulated — or protected — by the Estonian state.
In Tsishko’s case, his pay was delayed in February 2019. When he raised the issue with Nurme, he says he was fired.
Nurme told OCCRP that he was initially unable to pay Tsishko’s wages on time because his firm had fallen into debt. But instead of waiting for his money, Tsishko organized a small labor strike and then broke a door in an apartment rented for the workers, so Nurme said he kept the money to cover the repair costs.
“You’re protecting an asshole,” Nurme said of Tsishko, who found another job in Tallinn and is now working legally.
He denied that he had cheated any of his Ukrainian employees, saying he paid them the official Polish minimum wage, as required by law, plus a per diem. He was frank about the advantages of hiring gray-zone workers via Poland.
“On top of the 1,300 euros [you would need to pay the worker], the tax would be an additional 650 euros a month. Who would want to pay it?” he asked.
The Estonian Police and Border Guard Board registered some 32,500 foreign workers during the first 11 months of 2019, about 75 percent of them from Ukraine. The figure includes all workers who entered the country legally with the right to work — including those who entered on Polish D-visas.
Working long hours for less than half of Estonia’s official minimum wage, these migrants are highly visible in factories and the construction sector, where they hold 8 percent of all jobs. In a country with a population of barely 1.3 million, the impact of tens of thousands of foreign workers is significant. Estonia’s Central Bank estimated that migrant workers contributed as much as a third of the country’s GDP growth of 3.9 percent in 2018.
But Estonian tax authorities struggle to track them.
Reliable figures are hard to come by, but the tax and customs board estimates the state missed out on 16.5 million euros ($18 million) of tax revenue for the year ending Sept. 30, 2019, from workers laboring in the gray zone. OCCRP’s calculations show that each illegal worker equates to at least 634 euros (over $700) of lost tax revenue every month.
“When we cross-matched the databases, we discovered that roughly two out of three workers are considered to be in the risk group of tax avoidance,” said Jevgeni Shoron, a lead auditor at the Estonian tax and customs board.
One common trick is to under-report how much migrants work. Emeri Põld, deputy head of the Border and Migration Surveillance Division of the North Prefecture of Estonia’s Police and Border Guard, said many put in “a crazy number of hours” for their pay. “There are people who are reported as working part-time, which means that they can be paid less. And there are people who officially earn such a salary and the taxes are paid, but the employer actually pays them less in hand,” he said.
Through analyzing Estonia’s Posted Worker Database, OCCRP identified at least 18 Polish companies that sent Eastern European workers to Estonia over the past 12 months. Most were established by Estonians in the past two years.
OCCRP also looked at more than 1,000 active online advertisements aimed at attracting Ukrainians to Estonia and found that the average starting pay was just 4 euros per hour for 250 or even 300 hours of work a month. Estonia’s legal limit is 208 hours per month, which is supposed to include overtime for anything over 40 hours per week.
One typical ad posted on Eurabota (“EUwork”), a popular jobs website in Ukraine, promised: “Cement works, reinforcement and formwork. Pay: 1,500+ euros a month. Accommodation costs: 100-150 euros a month. Working time: 250 hours a month.”
Reporters contacted 10 different employers on the site, all of which charged a fee of 50 to 300 euros even to apply for a job. Few complied with Ukrainian requirements that work contracts be offered in Ukrainian. None would identify the actual employer that was offering the job.
“The employer will look at you. You will work there for three months without a visa. If you suit them, they will do the paperwork for you to stay longer,” said a manager of Nikiloz-job, a Ukranian company seeking forklift operators to work in Estonia.
Those who fail to impress the boss must pay their own way home, she said.
But even the best workers are at risk of abuses due to their irregular status.
Batovskyi, the auto-parts worker, said he was initially content with his working conditions and salary, as the cost of living in northern Estonia is relatively low and many people there speak Russian, like him. In December 2018, Goodstaff offered him a new year-long employment contract that would allow him to obtain a proper Estonian work visa.
However, the contract he signed was in Estonian and he did not understand it. A reporter reviewed the document and found it falsely claimed that Batovskyi would be doing construction work in Tallinn for just 40 hours per week.
A few months later, Goodstaff stopped paying him, leaving him some 2,300 euros ($2,600) out of pocket. He appealed in May to Estonia’s Labor Inspectorate for help. The body found in his favor, and awarded him an extra 1,965 euros ($2,220) in compensation for the extraordinary termination of his contract. But he still hasn’t seen any of that money.
An Estonian bailiff told him there was little chance he would ever be compensated due to the state of the company’s finances. Goodstaff was established in January 2017, and the following year the company reported nearly 500,000 euros ($572,000) of annual turnover. But in the third quarter of 2019, it suddenly tanked. The company reported a turnover of only 58,000 euros (over $63,000) and said it had just one employee. According to Estonia’s tax and customs board, Goodstaff currently owes the state nearly 73,000 euros ($81,000) in taxes.
OCCRP identified five other Ukrainians working at the Tapa auto-parts factory who were also left unpaid by Goodstaff. They all said they had dealt primarily with a Goodstaff board member called Tarko Tamman, whom they considered the company’s boss.
Tamman used to go by the name Tarko Meringo, but changed it some time after being released from a seven-year prison sentence for multiple crimes, including extortion, robbery, and making death threats, OCCRP found.
Another one of the unpaid auto-factory workers, Dmitrij Matviichuk, had been working in Estonia to save up for his wife’s cancer treatment. In a text to Tamman, she wrote: “We need [the] money for injections and pills, but you decided you probably need it more. I hope you will make the right decision and pay my husband what you owe him.”
The money, about two weeks of wages worth over 500 euros, never arrived.
Contacted by OCCRP, Tamman acknowledged he hadn’t paid some of his employees, but denied he had intentionally cheated anyone. He blamed the factory for not paying him, and the workers themselves for making trouble.
“Maybe 10 percent [of the workers] or even fewer have been left without their last two weeks’ pay,” Tamman said. He insisted that some had been fired for good cause, including missing work due to excessive drinking. But he also faulted them for appealing to authorities for their wages.
“They needed to wait, but they didn’t wait and went to the Labor Inspectorate, and that’s why they didn’t receive the money,” Tamman said.
Last month, all the shares in Goodstaff were transferred to a man with a reputation for helping owners extract themselves from bankrupt companies without paying off debts. Tamman said he expects the company to go “on the shelf” soon, and for his accounts to be blocked.
OCCRP found that Tamman also owns a company in Poland, as well as having connections to three other Estonian companies that operate in construction, metalworks and transport — all industries that tend to employ a lot of foreign labor. A fourth construction company, which he stepped down from earlier this year, was the only one that ever filed annual financial statements, in 2016 and 2017; the others have never filed any at all.
Stories like these have become familiar to Sirle Blumberg, who has spent the last 20 years working for an organization that helps victims of human trafficking in Estonia.
When she started out with the group, Living for Tomorrow, in the 1990s, most of the calls for help they received were from Estonian men and women stranded in Scandinavian countries due to labor fraud or sex trafficking.
Last year, her organization was integrated into the Estonian Social Insurance Board, where Blumberg became the head of the human trafficking counseling service. Almost all of the more than 600 calls she received in 2019 were from Ukrainians, Moldovans, and Belarusians working in Estonia.
Most of the calls come on Friday evening, often from workers who haven’t been paid in a long time but who are still working. She and her team help them file claims with Estonia’s Labor Inspectorate, which received nearly 160 complaints in the first 11 months of 2019, up from a handful in 2018.
“I’ve never before seen so many tears cried by men as I’ve seen lately,” she said. “They are starving and are living in unreasonable conditions. … First they need someone to just listen to them, then we can start gathering evidence to prove where and how they were working.”
Even those who do file complaints rarely get far. Employers often ignore Labor Inspectorate hearings, so the body rules on their cases in absentia. And even if the decision favors the workers, it doesn’t mean the company will actually pay up. If a labor company gets on the radar of police or inspectors, the operators can easily abandon it and continue business as a new entity.
This is a reality Ukrainian welders Ihor Bolilyi and Oleksandr Pidvorchanskyi learned the hard way. They were brought to Estonia by a recruitment firm called Flincona, which operated in a very similar fashion to Goodstaff.
In April, the Labor Inspectorate ruled that Flincona should pay them a total of more than 10,800 euros ($12,000) of back pay. At first, the two men hoped a bailiff would ensure they got their money. Eight months later, they still have not received anything.
“The bailiff told us the only possibility is to sue, but we don’t have the money for that,” Bolilyi said.
The man behind Flincona, Andrei Baulin, left that company’s board just before the ruling, but not the lucrative recruitment field. After stepping down from Flincona, he started advertising for more Ukrainian workers to come to Estonia through another company he owned, Amfacon. He did not reply to repeated requests for comment.
Another Estonian construction and outsourcing company, Global Manpower, owes Ukrainian Iurii Sergiiev over 5,100 euros ($5,800) and his countryman Volodymyr Khomov close to 6,000 euros (around $6,800).
Global Manpower reported almost 1.4 million euros ($1.56 million) of turnover in 2018 and claimed to have more than 50 staff, but its business also collapsed earlier this year. The company is now defunct and owes the state more than 138,000 euros ($153,000) in taxes.
Sander Laja, the man behind Global Manpower, said the company went under because clients failed to pay their bills. He plans to file for bankruptcy soon. Then, he said, his creditors — and around 20 foreign workers who are owed wages — can file their claims.
“I will never get into this business again,” he said.
As for Batovskyi, he turned to forestry to make ends meet, then went home to Ukraine in December. He is considering suing Goodstaff, despite the high cost of legal action, in the hope of recouping his lost wages and other compensation.
He needs the money: He wants to start taking English and IT classes, and save up to buy an apartment in Kyiv. But it’s also a matter of principle for him.
“I want to finish what was started,’’ he said. “I am offended because, as it turns out, I worked two months for nothing.”
Polish investigative journalism center Fundacja Reporterów contributed reporting.