Organized Crime as Institutional Cluster: Transition from Traditional to Informational Model in Ukraine (SpringerBriefs in Law) 303139531X, 9783031395314

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SpringerBriefs in Law Tetiana Melnychuk

Organized Crime as Institutional Cluster Transition from Traditional to Informational Model in Ukraine

SpringerBriefs in Law

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Tetiana Melnychuk

Organized Crime as Institutional Cluster Transition from Traditional to Informational Model in Ukraine

Tetiana Melnychuk Osnabrück, Germany

ISSN 2192-855X ISSN 2192-8568 (electronic) SpringerBriefs in Law ISBN 978-3-031-39531-4 ISBN 978-3-031-39532-1 (eBook) https://doi.org/10.1007/978-3-031-39532-1 © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Acknowledgements

I would like to thank Osnabrück University and the Centre for European and International Criminal Law Studies for opening their doors and providing an invaluable opportunity to advance my scientific skills, develop critical thinking and research the most acute problems. I especially thank my host professor, Prof. Dr. Arndt Sinn, for his comprehensive support and accurate interpretation of the most controversial ideas in the research. I sincerely thank colleagues from Ukraine and Germany for their motivating words and for their commitment to the ideas of bridging the scientific and practical gaps in the study of crime and its counteraction. And I especially thank Prof. Dr. Viktor Dryomin, whom I consider my professional guide to the world of science and who also contributed to this work.

Funding This work was financially supported by the Volkswagen Foundation under the Visiting Research Program for Ukrainian academics who have fled.

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Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 Organized Crime: The Ukrainian Dimension of Threats and Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2 A Short Literature Review and Some Challenging Questions . . . . . . 1.3 Research Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1

2 Basic Approaches to Organized Crime Conceptualization . . . . . . . . . . 2.1 What Is Organized Crime?: An Overview of Approaches . . . . . . . . . 2.2 The Legalist Approach to Organized Crime Conceptualization . . . . 2.3 The Academic Approach to Organized Crime Conceptualization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 11 12

3 The Concept of Organized Crime as an Institutional Cluster . . . . . . . 3.1 Theoretical Construction and Paradigmal Interpretation of Organized Crime as an Institutional Cluster . . . . . . . . . . . . . . . . . . 3.2 Key Markers of a Criminal Cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Life Cycle of a Criminal Cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 The Structure of a Criminal Cluster . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Profiling and Clustering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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4 Organized Crime in Ukraine and Its Models in Transition . . . . . . . . . 4.1 The Origins of Organized Crime in Ukraine . . . . . . . . . . . . . . . . . . . . 4.2 The Matrix of Organized Crime Models . . . . . . . . . . . . . . . . . . . . . . . 4.3 Quantitative Observations of the Transition of Organized Crime in Ukraine (1991–2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Soviet Era Models of Organized Crime . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Organized Crime Models in Independent Ukraine . . . . . . . . . . . . . . .

41 41 45

1 4 7 9

16 17

21 24 30 31 36 37

48 58 63

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Contents

4.6 Revolution of Dignity and Post-Transition Models of Organized Crime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

76 87

5 The Contemporary Hybrid Model and Organized Crime Clusters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 5.1 Criminal Clusters in Contemporary Ukraine: Actors, Links and Criminal Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 5.2 Amber Fever and Amber Criminal Conflicts: A Cluster Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 6 Enemy at the Gate. The Impact of the Russian War in Ukraine . . . . . 6.1 Challenges for Criminal Justice in Wartime . . . . . . . . . . . . . . . . . . . . 6.2 The Overall Crime Situation in Wartime . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Impact of the War on Organized Crime and Illicit Markets . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

119 119 121 123 130

7 In Lieu of a Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 Appendix A: The Rate of Organized Crime in Ukraine (Dynamic of 1991–2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Appendix B: The Rate of Organized Crime in Ukraine (Monthly Dynamic of 2021–2022) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 Appendix C: The Structure of Organized Crime in Ukraine . . . . . . . . . . . 141 Appendix D: The Geographical Distribution of Organized Crime in Ukraine (Crime Series of 2001–2021) . . . . . . . . . . . . . . . . . 145 Appendix E: The Importance of the Role of Social Groups in the Life of Ukrainian Society . . . . . . . . . . . . . . . . . . . . . . . . 147 Appendix F: Empirical Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

Chapter 1

Introduction

Abstract For a considerable time, the topic of organized crime was due to the rules within Soviet society, taboo in Ukraine. And, for a certain period, it was also silenced as a result of the penetration of organized crime representatives into the highest echelons of power. Today, this problem can openly be considered by the scientific community in dialogue with law enforcement agencies and decision-makers. The Introduction offers a constructive outline of the organized crime threats and responses in Ukraine given the harsh realities faced by the country. It emphasizes the complexity and flexibility of current organized crime structures and the corresponding necessity to revise existing views on its phenomenology and modus operandi. A deeper understanding of these issues will contribute to the development of an optimal strategy, and a balance between repressive and preventive measures, in counteracting organized crime. The Introduction highlights the level of scientific development and obstacles for organized crime research. It also provides a description of the empirical data used and offers an overview of shifts in the methodology of organized crime analysis. The shifts are driven by the extrapolation of the tools of cluster modelling—successfully approbated in the social and economic sciences as a method for the organization of spatially localized systems—to the criminological field.

1.1 Organized Crime: The Ukrainian Dimension of Threats and Responses Crime ignores the rule of law, state order, business ethics and common moral values. It also produces new types of destructive behaviour and new ways of evading control. Fast and flexible transformation reflects the sensible and adaptive nature of criminal activity to the evolution and development of society. Sustainable development and the rule of law are interlinked and mutually reinforcing; crime impedes sustainable development, and achieving sustainable development is an enabling factor for states to effectively prevent and combat crime.1

1

United Nations (2021).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_1

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1 Introduction

Organized crime ranks among stable forms of crime and hence becomes an essential threat to sustainable development at local and global levels. However, organized crime has also evolved, becoming part of a more complicated landscape. Organized crime is an issue of huge social concern, but not as ‘the thing in itself’. The most important question to be addressed is whether it is so influential as to be able to disrupt social and state institutions, as well as to form perceptions concerning organized crime itself. In some instances, organized crime seems to be much more functional than state or non-governmental institutions. It reacts more quickly to the demands for goods and services that are highly sought after or needed, but that are prohibited or which official suppliers are unable to supply. It is capable of serving as the institution of socialization for marginalized persons, recruiting them for its purposes. Furthermore, criminal organizations easily establish transnational connections, finding participants from close ethnic groups abroad to cooperate with, thereby widening criminal markets. At the same time, the states and state officials are bounded by bureaucratic procedures, legal agreements, borders or political controversies concerning international cooperation. Organized crime exploits legislative gaps, benefitting from emerging technologies and digitalization. It provokes destabilization and generates profits from criminal activity with low-risk and long-term perspectives. Organized criminal groups successfully combine coercion and corruption to achieve their main goals, using the advantage of disorder in doing so. The adaptive capabilities of organized crime make it a moving target and stipulate the scientific statements of permanent shifts in its substance. Organized crime and corruption deter both foreign and domestic investment and exacerbate problems of financial flows. It also generates legal nihilism and significantly reduces the quality of social capital. The distinguishing features of contemporary organized crime in Ukraine are determined by its multiple origins, derived from the Soviet legacy and contradictions within the post-transition period. Today, it has hybrid forms of structuring and cooperation, which comprise explicitly criminal actors—with criminal skills and a criminal subculture—who are proud of their membership within the criminal community. It also includes participants from business circles who make profit from illegal markets parasitizing on legal infrastructures. Further, actors affiliated with law enforcement and local or state government agencies are also involved. The latter do not usually associate themselves with the traditional criminal world, but nonetheless exert considerable criminogenic influence by developing and fostering criminal practices in day-to-day social activities. In some cases, their respectable position provides immunity and helps in the avoidance of responsibility under the conditions of a weak justice system affected by corruption. According to the Global Organized Crime Index 2021, Ukraine has one of the highest criminality scores, being ranked third worst out of 44 European countries. It also has one of the lowest resilience scores—41st among 44 European countries—the

1.1 Organized Crime: The Ukrainian Dimension of Threats and Responses

3

result of the government’s poor ability and lack of willingness to tackle organized crime in an open, transparent and effective manner.2 In 2021, Ukraine scored 32/100 on the corruption index of Transparency International and was ranked 121st out of 180 countries globally.3 Despite some progress in counteracting organized crime, the lack of completed judicial proceedings against certain influential criminal organizations resulting in real sentences should be noted in today’s Ukraine. The Ukrainian state has failed to demonstrate its ability, or sufficient political will, in tackling organized crime through formal law and a formal system of counteraction. At the same time, appeals to overcome or completely eliminate organized crime are utopian and populist. Its social conditionality and institutional character testify to its immanence in society. Again, the question of influence arises. What can be done about organized crime? It is possible to keep it within socially tolerable limits, and enable society and the formal criminal justice system to contain and control its impact. Beyond organized crime and corruption personified as the ‘inner enemy’, in 2022, Ukraine faced the unprecedented external challenges of the escalation of Russian armed aggression and the start of a full-scale war on its territory. This situation deepened the existing threats and provoked new criminogenic risks. It also affected crime trends and the ability of law enforcement to counteract these. At the time of writing in 2023, the war is still ongoing and Ukraine bravely and adamantly resists the enemy. In terms of counteraction policy, the state is now looking for an optimal strategy and balance between repressive and preventive measures to combat organized crime, relying on its own experience, as well as borrowing exemplary foreign experience. For a considerable time, the topic of organized crime was taboo in Ukraine due to the rules of Soviet society. And for a certain period, it was also silenced as a result of the penetration of organized crime representatives into the highest echelons of power. Today, this problem can openly be considered by the scientific community in dialogue with law enforcement agencies and decision-makers. This book is an attempt to conceptualize and clarify the essence of organized crime, making a contribution to a deeper and more sophisticated understanding of organized crime’s modus operandi. It suggests paradigm shifts in the methodology of organized crime analysis. Contemporary organized crime is presumed as an institutional cluster in contrast to the concept of multiple offences, associated with organized criminal groups or/and criminal organizations. The research informing this study emphasizes the systemic and self-reproducing essence of organized crime and proposes a framework for organized crime cluster profiling. It is anticipated to provide society, practitioners and decision-makers with comprehensive and reliable information about the consistent patterns of organized crime, its threats and trends.

2 3

Global Initiative Against Transnational Organized Crime (2021). Transparency International (2021).

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1 Introduction

Specifically, the study is focused on the evolution of organized crime models in Ukraine considering the socio-economic, political and ideological background, spatial distribution and diversification of criminal activities, mutual cooperation and interconnections between criminal organizations. The findings of the research are the outcome of detailed analysis and critical assessments of doctrine, statistical databases and empirical observations, as well as of the author’s background and experience.

1.2 A Short Literature Review and Some Challenging Questions The problem of organized crime is multidimensional. As evidenced by publications of recognized scientists worldwide, the greatest academic attention is paid to the conceptual study of the diversity of organized crime manifestations and strategies of counteraction in response to them. Experts in criminal law, criminology, criminal procedure law, forensics, sociology, psychology and public administration scrutinize organized crime with the specialized subject and tools relevant to each field, thereby seeking to fill in the ever-present gaps of this comprehensive ‘puzzle’. It is assumed that the first scientific and official perceptions about organized crime began to take shape in the US. The term ‘organized crime’ was first used in the 1896 annual report of the New York Society for the Prevention of Crime, which resorted to it to refer to gambling and prostitution operations that were protected by public officials.4 As an independent phenomenon, organized crime has been studied and discussed since the late 1920s. The Illinois Crime Survey (1929) is considered to be one of the first studies. Then, the Kefauver Commission was held (1950s). The works of D. Bell and D. Cressey came to prominence in the 1950s and 60s. These were followed by the works of J. Albini (1971), H. Abadinsky (1981), D. C. Smith (1982) and J. Albanese (1995), providing something of the impetus for subsequent studies. The most significant results of theoretical and empirical studies of organized crime in Europe were presented by C. Fijnaut (1983, 1993), E. Savona (1995, 1999), K. Von Lampe (1995, 2002, 2016), P. Van Duyne (1996, 1997), M. Levi (1998, 2002), L. Paoli (2002, 2003), M. Van Dijck (2007), J. Van Dijk (2007) and A. Sinn (2016), among others. These scholars contributed to the conceptualization of the problem of organized crime by raising the most pressing issues relating to the functioning of illegal markets and the operation of criminal organizations. The objectives and aims of the present study are linked to the results of F. Armao’s research (2014), which elaborated a model for analyzing organized crime groups based on two variables drawn from the industrial clusters paradigm: the degree of structurization and life

4

Fijnaut and Paoli (eds) (2004), p. 24.

1.2 A Short Literature Review and Some Challenging Questions

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cycles. The methodological background and key findings of leading European investigations are highly relevant and applicable to Ukrainian researchers and officials given commonalities relating to aspirations of European integration. Among foreign scholars, considerable attention to the study of organized crime in post-Soviet countries, including Ukraine, was paid by L. Shelley (1994, 1998), who comprehensively examined the Soviet legacy in terms of the processes of the interdetermination of organized crime, corruption and shadow economies. A substantial study was also carried out by A. Kupatadze (2010), who explored the nexus between politics, business and organized crime in post-Soviet Eurasia (Georgia, Ukraine, Kyrgyzstan) and then discussed the impact of the Coloured Revolutions on crime and corruption. Since the 1990s, a number of substantial studies on organized crime in Ukraine were presented by N. Gutorova (1996), A. Zelinskyi (1996), V. Vasylevych (1998) and Y. Marchuk (1998). More recent comprehensive studies of organized crime were provided by V. Ushchapovskyi (2000), L. Arkusha (2002, 2011), A. Bova (2002), V. Dryomin (2002, 2003, 2009), O. Lytvak (2002), V. Tuliakov (2002), S. Yefremov (2003), Y. Strelkovska (2008), O. Shostko (2010) and H. Zharovska (2018), among others. Summarizing Ukrainian academic studies, it should be noted that their authors have made a remarkable contribution to the distinction between situational criminal groups and persistent organized criminal groups in the Ukrainian legal system, the identification of the main determinants of their activities, understanding the personality of criminal group members and their interaction with their victims. The contributions of these authors have influenced the formation of criminological policy and the elaboration of institutional and legal countermeasures. It is not an exaggeration to mention that the topic of organized crime is now rather fashionable in Ukrainian academic circles. The Ukrainian search engine for Google Scholar provides approximately 18,700 search results for the keywords ‘organized crime’ in the Ukrainian language. However, there are some problems related to the academic coverage of organized crime in Ukraine. The prevalence of theoretical studies results in an inflation of descriptive works and poor dialogue between academics and practitioners. Qualitative analysis prevails, to the detriment of complex data analysis. A backlog of social and legal controls is a consequence. There is also a need for a comprehensive, coherent concept of organized crime that not only describes but also explains current threats, as well as provides guidance for forecasting trends and developing proportionate proactive measures. Some of the obstacles and problems of organized crime research in Ukraine, given its present reality, should also be noted. Firstly, for quite a long time, the problem of crime as a whole and organized crime, in particular, was ignored by the Soviet state. This was due to a specific state ideology that denied the existence of crime in society. Prostitution, drug abuse, corruption and other ‘social ills’, including organized crime, contradicted the superior views of Socialism. Therefore, from 1935 to 1958, all criminological research was forbidden. It was believed that, if there was no crime, there was no need for research of crime.

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1 Introduction

Nonetheless, since the 1960s, crime research has resumed. However, research on organized crime was restricted and its results were available only to the leadership of the state.5 The topic of organized crime received widespread publicity in the Soviet Union in 1988 after the publication in Literaturnaya of an interview with O. Gurov, a police lieutenant colonel from the All-Russian Research Institute of the Ministry of Internal Affairs of the USSR. He talked openly about the existence of a mafia in the Soviet Union. The interview had no less than the effect of an exploding bomb at the time. In 1989, at the II Congress of People’s Deputies of the USSR, a resolution ‘On strengthening the fight against organized crime’ was adopted. In such a way, the problem of organized crime in the territories of the countries of the Soviet Union was officially recognized. However, a definite scientific lag, caused by decades of banning research can still be seen to exist in these countries when compared with European studies. Second, official statistical data of the time series 1991–2012 and 2013–2021, on the number of detected organized criminal groups and their participants in Ukraine, are incomparable. Due to the reform of the criminal procedure law in 2012, the accounting discipline has significantly changed and artificially adjusted organized crime quantitative observations. Moreover, since 2014, state control over parts of the Ukrainian Donetsk and Luhansk regions and the Autonomous Republic of Crimea has been lost due to their illegitimate annexation by the Russian Federation. No official data on crime in these territories is available, and therefore cannot be taken into account. As a result of the full-scale Russian invasion and military aggression commenced in 2022, statistical observations on crime in certain regions of the south-eastern part of Ukraine are also unavailable due to their temporary occupation. Contradictory evidence is received about the extent and changes in crime, including organized crime, during the war, from official and alternative sources of criminological information. These perceptions stem from both methodological gaps and a lack of information, especially from the areas of hostilities. The spread of disinformation at various levels is also a tool of hybrid warfare and often calls into question the reliability of sources and the accuracy of information. The methodology of wartime research is not well-established and requires the development of reliable standards. Third, a sizable gap can be observed between official data and alternative sources that reflect the high level of latency of organized crime and, partly, the ignorance of real manifestations of organized crime. While law enforcement is reporting a decline in organized crime (focusing predominantly on traditional and low-level groups), providing a reason for the elimination of special units in combatting organized crime in Ukraine (2015), scientists have seen an expansion of organized crime, its infrastructure and impact, stressing the failures of such a management approach. In the end, the variety of scientific views of the problem of organized crime testifies to the main demerit of each study or conception of organized crime being a lack of universality. Each conception, in other words, is valid for certain offences given certain times and conditions. Therefore, in order to research Ukrainian organized 5

Semykopnyi (2011), p. 36.

1.3 Research Methodology

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crime and its models in transition, the context—the economic, social and cultural parameters of development and crime—should be taken into account. Background assessment also helps to consider the possible ideological meaning of previous research.

1.3 Research Methodology A mixed methods approach involving common and special scientific methods, applied through the prism of synergy, was chosen in order to achieve the aims of this research. The research suggests paradigm shifts in the methodology of organized crime analysis and extrapolates the tools of cluster modelling, which has been successfully approbated in social and economic sciences as a method for the organization of spatially localized systems. The cluster method is less traditional in the study of organized crime, but it has shown its effectiveness in previous criminological studies6 as a simplification of processing large and small data sets and application of highly specialized methods of analysis of selected clusters. The main methodological disadvantages of clustering include the lack of unambiguous approaches and criteria to the identification of clusters and their number, the relative dependence of the results on metric data systems, on experts’ opinions and the experience of the researcher. However, cluster analysis for studying organized crime has significant advantages. It allows the identification of the system-forming patterns of organized crime and its advanced structuring, including inter-regional and transnational ties, connections with business and politics, and links to non-criminal—but criminally used—infrastructure. Such analysis, in turn, makes it possible to detect the stakeholders of criminal activity, and to assess not only the degree of threat but also help in taking measures to dismantle such ties. By modelling clusters and identifying unclassified objects—the so-called anomalies—new models of organized crime that do not fit into well-known or generally accepted characteristics could be discovered. Clustering enables forecasting and, accordingly, the elaboration of measures of operational and investigative activities, and covert investigative actions, as well as countermeasures, even in the absence of certain identified signs of crimes or specific persons committing them. It achieves considerable practical significance in the context of extreme latent activity and the institutionalization of organized crime. It also allows advancing proactive, preventive policies depending on the assessment of the stage of development of a crime—the so-called ‘life cycle’. Under such conditions, the criticism of the vagueness and

6

See, for instance, Armao (2014), Clemmow et al. (2022), Moon et al. (2010), Cleff et al. (2013), Van Koppen et al. (2010).

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1 Introduction

inconclusiveness of clustering, on the contrary, works in favour of solving practical problems of influencing organized crime. The cluster approach helps to optimize and simplify the decision-making process when developing preventive policies or taking preventive measures; unlike classification, it makes it possible to measure the forces of criminal justice and preventive practice, to apply a relevant individual approach or hotspot to units that are not included in the cluster. From a methodological point of view, the study consists of two sections. The first one provides the collection of data. The theoretical database includes a review and content analysis of scientific publications and international and national legal Acts. The empirical database consists of quantitative and qualitative data. Quantitative, secondary data derives from official sources of state bodies and institutions authorized to collect and publish statistical crime reports. The processing of this data gives a picture of the dynamics, structure and spatial distribution of organized crime in Ukraine. The sources of such data are the statistical reports of the Ministry of Internal Affairs of Ukraine and the Prosecutor General’s Office of Ukraine regarding the number of registered crimes, as well as information from the official portal of the justice system of Ukraine regarding convicted persons and sentences. The section combines cross-sectional and longitudinal approaches and uses annual time series data from 1991 to 2022 in Ukraine (Appendices A, B, C and D). Obviously, official data only reflects the activity and efficacy of law enforcement, not the real crime rate. Due to conspiratorial activity, corruption and coercion, organized crime is able to resist investigations and evade social control, in particular by changing jurisdictions. The collection of empirical qualitative data has compensatory importance and is presented in this study through expert interviews with authorities from law enforcement agencies and anonymous civil interviews, selective content analysis of sentences and other court decisions in criminal proceedings against organized crime, selective content analysis of official releases of the press services of law enforcement agencies and journalistic investigative publications on organized crime, reports of governmental and non-governmental institutions and monitoring of mass public opinion as secondary data (Appendices E and F). The second section provides an analysis of data and interpretation of outputs with the application of the heuristic method as a creative way of searching, identifying, processing and organizing the system of regularities, mechanisms and methodological means of anticipation, elements, signs, properties, characteristics of objects and subjects of investigation.

References

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References Armao F (2014) Criminal clusters: state and organised crime in a globalised world. Eur Rev Org Crime 1:122–136 Cleff T, Naderer G, Volkert J (2013) Motives behind white-collar crime: results of a quantitative and qualitative study in Germany. Soc Bus Rev 8(2):145–159 Clemmow C, Gill P, Bouhana N, Silver J, Horgan J (2022) Disaggregating lone-actor grievancefuelled violence: comparing lone-actor terrorists and mass murderers. Terror Polit Violence 34(3):558–584 Fijnaut C, Paoli L (eds) (2004) Organised crime in Europe: concept, patterns and control policies in the European union and beyond. Springer, Dordrecht Global Initiative Against Transnational Organized Crime (2021) Global Organized Crime Index. https://ocindex.net/country/ukraine. Accessed 09 June 2023 Moon T-H, Heo S-Y, Lee S (2010) Spatial analysis of the urban crime for building U-crime prevention service. https://www.gisa-japan.org/content/files/conferences/proceedings/2010cd/papers/ 2B-4.pdf. Accessed 09 June 2023 Semykopnyi A (2011) Borotba z orhanizovanoiu zlochynnistiu v URSR u roky novoi ekonomichnoi polityky (1921–1929 rr) (The fight against organized crime in the Ukrainian SSR in the years of the new economic policy (1921–1929). Bopotbba z opganizovanoo zloqinnicto v UPCP y poki novo| ekonomiqno| politiki (1921–1929 pp)). Dissertation, Kharkiv National University of Internal Affairs Transparency International (2021) Corruption Perceptions Index. https://www.transparency.org/en/ countries/ukraine. Accessed 09 June 2023 United Nations (2021) Kyoto declaration on advancing crime prevention, criminal justice and the rule of law: towards the achievement of the 2030. Agenda for Sustainable Development Fourteenth United Nations Congress on Crime Prevention and Criminal Justice, Kyoto, Japan, 7–12 March 2021. https://www.unodc.org/documents/commissions/CCPCJ/CCPCJ_Sessions/ CCPCJ_30/Kyoto_Declaration_V2102815.pdf. Accessed 09 June 2023 Van Koppen MV, De Poot CJ, Kleemans ER, Nieuwbeerta P (2010) Criminal trajectories in organized crime. Br J Criminol 50(1):102–123

Chapter 2

Basic Approaches to Organized Crime Conceptualization

Abstract Given the controversy over perceptions of organized crime, the chapter contains an assessment of the strengths and limitations of common approaches to the conceptualization and definition of organized crime. The legalist approach involves the definition of organized crime in profile law with formal distinguishing features and/or the consolidation of corpus delicti related to organized crime in the criminal law acts. The chapter provides a critical analysis of the normative definition of organized crime in the law of Ukraine ‘On the Organizational and Legal Fundamentals of Combating Organized Crime’ (1993), as well as to the latest amendments to the Criminal Code of Ukraine (2020) regarding organized crime and ‘thief in law’ influence. The academic approach refers to a system of scientific views that expresses a particular way of presenting, understanding and interpreting organized crime. Typical conceptual approaches for the Ukrainian academic landscape are: (1) organized crime as a substantive phenomenon with the structural characteristics of a collective entity involved in criminal activity; (2) organized crime as a dependent activity, associated with criminal markets; (3) organized crime as an institutional social practice or a social institution.

2.1 What Is Organized Crime?: An Overview of Approaches The basic concept of organized crime aims to answer the main questions: What is organized crime? And how should its essence and manifestations be clarified? Meanwhile, the international and even local perceptions of organized crime are multiconceptional. The definition of organized crime differs from state to state, from agency to agency and research to research. For the purposes of this study, it is necessary to take into account both the legalist (formalist) concept of organized crime and the academic (descriptive or essential) one, as the latter is more flexible and able to compensate for certain gaps in the formalist approach. The legalist approach to organized crime conceptualization involves the definition of organized crime in profile law with formally requisite distinguishing features and/ © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_2

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or the consolidation of corpus delicti related to organized crime in the Criminal Code. The understanding of organized crime under this approach makes a huge impact on the use of punitive measures within criminal liability, specifies the application of non-punitive countermeasures by authorized agencies and defines the subject of national and international cooperation against organized crime. It also influences the quantitative analysis, as only crime detected and recorded according to legal procedure can be taken into consideration in state official reports and observations. The academic approach to organized crime conceptualization refers to a system of scientific views that express a particular way of presenting, understanding and interpreting organized crime. It mostly impacts qualitative analysis, focuses on phenomenology, etiology and the causality of organized crime, and tries to provide society and practitioners with reliable information on organized crime threats. It also serves as a reference point for the development of law and counteraction policy.

2.2 The Legalist Approach to Organized Crime Conceptualization The concept of organized crime as a phenomenon is inherently criminological and, unlike the concept of a crime as a single, specific illegal act, cannot be ‘bound’ by a single normative definition. Most international and national legal acts, therefore, proceed by establishing the concept of features of organized crime as a single crime, but associated with structured groups and their criminal activities. The Palermo Convention of 2000 was developed by the international community as a standard for understanding organized crime and an international instrument for combatting transnational organized crime1 (ratified by Ukraine with declarations and reservations in 2004). The conventional definition of organized crime is based on the criteria of seriousness (severity), participation of a structured organized group, and the aim to obtain, directly or indirectly, financial or other material benefits. At the same time, it is formulated in such a way that it gives wide possibilities for interpretation by national governments and a certain discretion for the domestic rule-making process. The Convention contains criminal law norms, providing standards for the criminalization of acts typically associated with organized crime, as well as criminal procedural norms, which lay the foundation for international cooperation in the fight against transnational crime, and preventive norms, which focus on taking preventive measures. National in terms of criminal law prohibition, these crimes are international in terms of the criminal activity and the actors involved, which is why they fall under the jurisdiction of more than one state.2 1 2

UN General Assembly (2001). Zelinskaya (2006).

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In Ukraine, the normative definition of organized crime refers to the special law of Ukraine, ‘On the Organizational and Legal Fundamentals of Combating Organized Crime’, adopted in 1993. The term ‘organized crime’ in the special Act means a series of criminal offences committed due to the creation and activity of organized criminal groups.3 The features of organized criminal groups refer to the Criminal Code of Ukraine. The legal definition of organized crime is usually criticized due to the extremely poor explanation and incomplete coverage of organized crime varieties. The definition is rather imperfect and descriptive—and does not provide clear criteria for distinguishing organized criminal activity from the activities of situational groups. However, the law was adopted in the early 1990s—in extreme conditions at the beginning of independence, with a significant spread in organized crime—in order to create specialized bodies for combatting organized crime, with a legal framework and legal instruments for active countermeasures. Indeed, these are still valid today. In 2001, the Criminal Code of Ukraine enabled punishment for the criminal activity of organized criminal groups and criminal organizations.4 A criminal offence shall be held to have been committed by an organized group where several persons (three or more) participated in its preparation or commission, who have previously established a stable association for the purpose of committing of this and other offence (or offences) and have been consolidated by a common plan with assigned roles designed to achieve this plan known to all members of the group (Part 3, Article 28). A criminal offence shall be held to have been committed by a criminal organization where it was committed by a stable hierarchical association of several persons (five and more), members or structural units, which have organized themselves, upon a prior conspiracy, to jointly act for the purpose of directly committing of grave or special grave criminal offences by the members of this organization, or supervising or coordinating criminal activity of other persons, or supporting the activity of this criminal organization and other criminal groups (Part 4, Article 28). The common descriptive features of groups and organizations are stability (external, internal), distribution of the functions of participants, the existence of a single plan of criminal activity, and awareness of the existence of a plan. External stability means the ability to resist such groups and law enforcement agencies. Internal stability is associated with the stability of the composition of the participants and the maintenance of discipline within the group. The distinguishing features of criminal organization are greater quantitative composition, hierarchical structure, the ability to unite smaller organized groups, and the committing of grave or special grave criminal offences. The Code also criminalized the activities of a transnational organization (Part 5, Article 143), a gang (Article 257), a terrorist group (Part 4, Article 258), a terrorist organization (Part 4, Article 258), and unlawful paramilitary or armed groups (Article 260). 3 4

Verkhovna Rada of Ukraine (1993). Verkhovna Rada of Ukraine (2001).

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The creation of a criminal organization (including management of such organization or its structural parts, and participation in a criminal organization) is an independent type of criminal activity, for which liability is provided under Article 255 of the Criminal Code. The range of crimes that can be committed by organized criminal groups is not limited by law. In 2020, the Code was supplemented with a number of provisions directly related to organized crime; in particular, the Ukrainian legislator criminalized: the creation of a criminal community, that is the association of two or more criminal organizations and the management of such a community. A more severe punishment is imposed if actions are committed by a person who exercises criminal influence,5 or a person who has the status of an entity of increased criminal influence, including the status of ‘thief in law’6 (Article 255). The following also became independent corpus delicti: wilful establishment or spread of criminal influence in society, including committed in temporary detention facilities, remand centres or penitentiary institutions (Article 255-1), organizing or assisting in the conduct of a criminal gathering (meeting) of representatives of criminal organizations, or organized groups or persons exercising criminal influence, in order to plan the commission of one or more crimes, material support or coordination of criminal activity (Article 255-2), appeal to a person who is known to be guilty of criminal influence, in particular to a person who has the status of an entity of increased criminal influence, including the status of ‘thief in law’ in order to apply such influence (Article 255-3), assistance, which was not promised in advance, to members of criminal organizations and covering up of their criminal activities (Article 256). According to some representatives of law enforcement agencies, until the amendments were made and sanctions against ‘thieves in law’ defined, they remained out of sight of law enforcement agencies, as they were often not directly involved in committing a crime, but even if they were, it was intellectually and technically difficult—if not almost impossible—to document and prove their involvement with evidence appropriate for the court.7 However, the amendments have been heavily criticized by Ukrainian scholars,8 as they are too vague and evaluative, which is unacceptable in the field of criminal repression. Legal norms, such as ‘exert[ing] of criminal influence in society’, ‘entity of increased criminal influence’ or ‘appeal for the purpose of applying influence’ are abstract, blurring the corpus delicti and disorienting law enforcement officers, 5

Under the Code criminal influence shall mean any actions of a person who, due to authority, other personal qualities or capabilities, promotes, encourages, coordinates or exerts other influence on criminal activity, organises or directly distributes funds, property or other assets (income thereof) aimed at providing such activity. 6 Under the Code a person who has the status of an entity of increased criminal influence, including the status of ‘thief in law’ shall be deemed a person who, due to authority, other personal qualities or capabilities, exerts criminal influence and coordinates the criminal activity of other persons who exercise criminal influence. 7 Anonymous interview with an active employee of the Prosecutor General‘s Office of Ukraine, conducted in February 2023. 8 Nikitin (2020).

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by expanding discretion and interpretation at their own discretion, which creates increased risks, including corruption.9 In addition, law enforcement can fall into the trap of focusing on identifying individuals who exercise criminal influence without identifying actual crimes, leaving substantive organized criminal activity on the side lines. The amendments violate the principle of legal certainty, which has been repeatedly emphasized by the European Court of Human Rights. In its judgment of 18 December 2008, in the case of Novik v. Ukraine, the European Court of Human Rights noted that ‘where deprivation of liberty is concerned, it is particularly important that the general principle of legal certainty be satisfied. The requirement of ‘quality of law’ in relation to Article 5 §1 implies that, where a national law authorises a deprivation of liberty, it must be sufficiently assessable, precise and foreseeable in application, in order to avoid all risk of arbitrariness’.10 The concept of ‘thief in law’ reflects the system of values of criminals and is an element of criminal subculture11 used by members of the criminal world in informal communication. It is not inherent in rule-making technique. Enshrining it in law is in fact its completely unjustified formalization. Its legalization contributes to the popularization of criminal subculture and in no way increases the effectiveness of combatting organized crime in Ukraine. On the contrary, it significantly complicates the process of proving the presence/absence of such a form of complicity as a criminal community, the presence/absence of influence and the degree of its insignificance or suspicion. ‘Thief in law’ is an informal status in the criminal hierarchy; it is not regulated by any acts and cannot be confirmed by documents. There are no criteria for identifying a person as a ‘thief in law’ outside the norms of the criminal subculture. To justify the need for change, the Ukrainian legislator referred, in particular, to the experience of Georgia,12 confirmed by the practice of the European Court of Human Rights. Thus, in the case of Ashlarba v. Georgia (Number 5554/08), the High Court ruled that Georgia’s criminalization of a person’s activities in the ‘underworld’ as a representative of a ‘criminal syndicate’ and ignorance of the criminality of the status of a ‘thief in law’ did not violate Article 7 (‘No punishment without law’) of the Convention for the Protection of Human Rights and Fundamental Freedoms. Despite certain similarities in the origins of organized crime in Ukraine and other post-Soviet countries due to the Soviet legacy, borrowing foreign experience, in particular that of Georgia, in addressing the problem of combatting organized crime in Ukraine cannot be done automatically, without taking into account the specifics of the crime situation in Ukraine and its national criminal law system. Thus, the legalistic concept of organized crime in Ukraine, although compliant with international standards, is rather imperfect and limited. Nevertheless, this concept reflects the official position of the state and should not be ignored. 9

The interview with Larysa Arkusha, former employee of operational units serving special units to combat organized crime in Odessa region of Ukraine (1991–2003), conducted in January 2023. 10 Council of Europe: European Court of Human Rights (2008). 11 Kvasha et al. (2015). 12 Office of the President of Ukraine (2019).

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2.3 The Academic Approach to Organized Crime Conceptualization A certain compensatory function for the imperfection of the normative definition is performed by academic (scientific) concepts that broaden the possibilities of studying organized crime origins and contemporary patterns including those not covered by formal law. Regardless of the lack of unity in the views of scholars and consistency in conceptual understandings, the content analysis of scientific works allows us to identify the main and most typical conceptual approaches for the Ukrainian academic landscape. The first conceptual approach defines organized crime as a substantive phenomenon13 with the structural characteristics of a collective entity involved in criminal activity. Proponents of this approach believe that organized crime emerged from professional crime, and means stable cooperation of at least three persons, with hierarchy and assigned functions. It should be understood that this approach is the closest to the formalistic one. It is definitely the most concrete and formalized for understanding and assessing organized crime but, due to this strict framework, it significantly narrows the possibilities of defining the essence, origins, degree of rootedness and influence of organized crime in a particular society. Rather, it refers to orderliness in crime and covers predominantly the traditional models of organized crime. The second concept analyzes organized crime as a dependent activity,14 usually associated with criminal markets. According to this approach, organized crime is a form of shadow economy functioning. It parasitizes on the legal infrastructure of the economy with corruption as a binding attribute. The weak point of this conception is that it does not cover all types of organized crime activities. Organized crime has correlations with a shadow economy but is not necessarily the product of it. The last concept highlights organized crime as an institutional social practice or a social institution.15 As a widespread type of social practice, criminal practice has acquired the features of a specific ‘substantive’ activity, the content of which is the commissioning of crimes. It competes with other social practices: work, recreation, sports and other types of human activity.16 Organized crime in Ukraine has acquired a special quality that not only allows it to be identified as a social institution but also to be considered a systemic feature of contemporary economic and political life in society.17 The main features of organized crime as a social institution are: the duration of existence; regularity (permanence) of functioning; performance of certain social functions (meeting the demand for illegal or scarce goods and services, providing 13

See Abadinsky (2010), Dzhuzha (ed) (2006), Zakaliuk (2007). See Sellin (1963), Albanese (2000), Kalman (2004), Ushchapovskyi (2001). 15 See Potter and Cox (1990), Lyman and Potter (1997), Dryomin (2009). 16 Dryomin (2003), Dryomin (2008). 17 Dryomin (2010), p. 22. 14

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jobs, redistribution of funds, etc.); the existence of a set of rules (rules of conduct), ‘professional’ language (slang),18 rational internal structure, focus on penetration into political, legal and economic institutions of the state.19 The institutional nature of organized crime implies, in particular, the creation of a network of social support from local communities by criminal organizations in order to preserve and regenerate themselves. ‘Systematicity’, institutionality and self-determination are seen not only in crime but also in victimization. The property of mutual determination and intertransition of victimization to crime is revealed by the laws and regularities of self-organization of the system of the social organism described in the theory of synergetics.20 Both victimhood and crime are peculiar forms of adaptation of the deviance process to changes in the social structure.21 T. Kuhn’s introduction of the capacious concept of paradigm (‘disciplinary matrix’)—a widely recognized scientific achievement—provides a model for problem formulation and solution.22 The presented academic concepts are not mutually exclusive. They reflect different levels of organized crime interpretation itself and its development. They are also the paradigms of organized crime relevant to a certain time and certain environment. The conceptualization of organized crime as an institutional activity with advanced structuring and operating, in contrast to the classical standard of an aggregate or static system of heterogeneous but organized crime-associated crimes, allows viewing new essential features of organized crime, the degree of its integration into the overall structure of social relations, its ambivalent nature and the extent of its impact on society. Moreover, the current manifestations and expected trends of organized crime indicate a readiness to launch and develop a new paradigm and determine its new vision as an institutional cluster.

References Abadinsky H (2010) Organized crime. Belmont Albanese J (2000) The causes of organized crime: do criminals organize around opportunities for crime or do criminal opportunities create new offenders? J Contemp Crim Justice 16(4):409–423 Council of Europe: European Court of Human Rights (2008) Case of Novik v. Ukraine. Application no. 48068/06, 18 December 2008. https://hudoc.echr.coe.int/app/conversion/docx/pdf?library= ECHR&id=001-90332&filename=CASE%20OF%20NOVIK%20v.%20UKRAINE.pdf&log Event=False. Accessed 9 June 2023 Dryomin V (2003) Prestupnost’ i eyo organizovannye formy kak social’naya praktika (Crime and its organized forms as a social practice. Ppectypnoctb i ee opganizovannye fopmy 18

Gilinskij (2008), p. 31. Dryomin (2010), p. 28. 20 Tuliakov (2000), p. 256. 21 Ibid., p. 254. 22 Kuhn (2012). 19

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kak cocialbnaR ppaktika). In: Dryomin V (ed) Informatsiine zabezpechennia protydii orhanizovanii zlochynnosti. Odesa, pp 12–25 Dryomin V (2008) Kriminal’nye praktiki v sisteme social’nyh praktik: kriminologicheskie problemy (Criminal practices in the system of social practices: criminological problems. Kpiminalbnye ppaktiki v cicteme cocialbnyx ppaktik: kpiminologiqeckie ppoblemy). Paper presented at the All-Ukrainian scientific conference ‘The legal life of modern Ukraine’, Odessa National Law Academy, Odesa, 18–19 April 2008. Materials, pp 401–402 Dryomin V (2009) Zlochynnist yak sotsialna praktyka: instytutsionalna teoriia kryminalizatsii suspilstva (Crime as a social practice: institutional theory of the criminalization of society. Zloqinnictb Rk cocialbna ppaktika: inctitycionalbna teopiR kpiminalizaci| cycpilbctva). Yurydychna literatura, Odesa Dryomin V (2010) Instytutsionalna teoriia zlochynnosti ta kryminalizatsii suspilstva (Institutional theory of crime and society criminalization. Inctitycionalbna teopiR zloqinnocti ta kpiminalizaci| cycpilbctva). Dissertation abstract, National University ‘Odesa Law Academy’ Dzhuzha O (ed) (2006) Kryminolohiia (Criminology. KpiminologiR). Pretsedent, Kyiv Gilinskij Y (2008) Globalizaciya i prestupnost’ (Globalization and crime. GlobalizaciR i ppectypnoctb). Kriminologiya: vchera, segodnya, zavtra 2(15):23–33 Kalman O (2004) Zlochynnist u sferi ekonomiky Ukrainy: teoretychni ta prykladni problemy poperedzhennia (Crime in the economic sphere of Ukraine: theoretical and applied problems of prevention. Zloqinnictb y cfepi ekonomiki Ukpa|ni: teopetiqni ta ppikladni ppoblemi popepedKennR). Dissertation, Yaroslav Mudryi National Law Academy of Ukraine Kuhn T (2012) The structure of scientific revolutions. University of Chicago Press Kvasha O, Hatseliuk V, Peremot S (2015) Problemy vnesennia poniattia ‘zlodii u zakoni’ do Kryminalnoho kodeksu Ukrainy (Problems of introducing the concept of ‘Thief in Law’ to the criminal code of Ukraine, Ppoblemi vnecennR ponRttR ‘zlodiN y zakoni’ do Kpiminalbnogo kodekcy Ukpa|ni). Pravova Derzhava 26:366–376 Lyman M, Potter G (1997) Organized crime. Prentice Hall, Upper Saddle River Nikitin A (2020) ‘Zlodii u zakoni’ u kryminalnomu zakonodavstvi: zarubizhnyi dosvid ta protses zaprovadzhennia v Ukraini (‘Thief in law’ in criminal law: Foreign experience and the process of implementation in Ukraine. ‘ZlodiN y zakoni’ y kpiminalbnomy zakonodavctvi: zapybiKniN docvid ta ppocec zappovadKennR v Ukpa|ni). Porivnialno-Analitychne Pravo 2:167–170 Office of the President of Ukraine (2019) Explanatory note to the draft law of Ukraine ‘On amendments to the criminal code of ukraine on liability for crimes committed by a criminal community’ of 02 December 2019. https://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=67506& pf35401=512431. Accessed 9 June 2023 Potter G, Cox T (1990) A community paradigm of organized crime. Am J Crim Justice 15:1–23 Sellin T (1963) Organized crime as a business enterprise. Ann Amer Acad Polit Soc Sci 347(May):12–19 Tuliakov V (2000) Viktymolohiia (sotsialni ta kryminolohichni problemy) (Victimology (Social and criminological problems). BiktimologiR (cocialbni ta kpiminologiqni ppoblemi)). Yurydychna literatura, Odesa UN General Assembly (2001) United Nations convention against transnational organized crime of 15 November 2000, adopted by General Assembly resolution 55/25, 8 January 2001. https:// www.unodc.org/unodc/en/organized-crime/intro/UNTOC.html. Accessed 9 June 2023 Ushchapovskyi V (2001) Tinova ekonomika yak dzherelo zhyvlennia orhanizovanoi zlochynnosti (The shadow economy as a source of power for organized crime. Tinbova ekonomika Rk dKepelo KivlennR opganizovano| zloqinnocti). Pravo Ukrainy 4:48–51 Verkhovna Rada of Ukraine (1993) On the organizational and legal framework for combating organized crime. The Law of Ukraine of 30 June1993. The Bulletin of the Verkhovna Rada of Ukraine 35:358

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Verkhovna Rada of Ukraine (2001) Criminal code of Ukraine of 05 April 2001. The Bulletin of the Verkhovna Rada of Ukraine 25:131 Zakaliuk A (2007) Kryminolohichna kharakterystyka ta zapobihannia vchynenniu okremykh vydiv zlochyniv (Criminological characteristics and prevention of certain types of crimes. Kpiminologiqna xapaktepictika ta zapobigannR vqinenno okpemix vidiv zloqiniv). In Yure, Kyiv Zelinskaya N (2006) Mezhdunarodnye prestupleniya i mezhdunarodnaya prestupnost’ (International crimes and international crime. MeKdynapodnye ppectypleniR i meKdynapodnaR ppectypnoctb). Yurydychna literatura, Odesa

Chapter 3

The Concept of Organized Crime as an Institutional Cluster

Abstract The imperfection of existing approaches to the interpretation of the phenomenology of organized crime has stimulated the search for a new crossdisciplinary concept. Organized crime in today’s world is increasingly moving from rigidly structured entities to decentralization with unclear, blurred edges and a hybrid structure, which is dictated by the rationality of adapting to social change, including the emergence of new widespread demands for illegal goods and services, new ways to evade social control, the prevalence of poly-criminal activities, the involvement in general digitalization, and so on. From the perspective of institutionalism and theory of clusters, the chapter tests the hypothesis that organized crime functions in the manner of an institutional cluster with a specific advanced spatial and/or sectoral organization but is not limited to exclusively economic criminal activities. The concept of organized crime as an institutional cluster includes the following essential elements: key markers and features of a criminal cluster, the life cycle of a criminal cluster, the typical structure model of a criminal cluster, profiling and clustering (identification of criminal clusters).

3.1 Theoretical Construction and Paradigmal Interpretation of Organized Crime as an Institutional Cluster The institutional nature of organized crime is determined by its trajectory of development, in the course of which it has become a prominent actor in economy, politics and social life, and has entrenched itself in established social practices. The functionality of organized crime, which seeks to displace or substitute formal institutions, prolongs the transformation periods of state-building and fuels instability. Organized crime reproduces in a vicious cycle as a cause and consequence of social crises. Delinquent behaviour serves as a tool for adaptation in the anomic state of society, and dysfunctions of social and state institutions inevitably lead to the formation of compensatory shadow mechanisms and criminal practices. In this case, the subject is not individuals or groups who deliberately violate the law and are marginalized on the side lines

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_3

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of society, but criminal institutions that extend their influence beyond the criminal sphere. The concept of institutionalism appeared in 1918, and is indebted to the American economist W. Hamilton. He defined an institution as a widespread way of thinking or acting that is fixed in the habits of a group and the customs of a people. In his view, institutions record established procedures that reflect the general consent and agreement that has been established in society. By institutions, he meant customs, corporations, trade unions and the state.1 D. North, the economic historian, became an influential figure in the new institutional economics in 1990s. Institutions, in D. North’s understanding, are the rules of the game in society, the human-made restrictive frameworks that organize relationships between people, and the system of measures that ensure their implementation.2 Hence, institutions are not exclusively external elements (rules of behaviour and enforcement mechanisms) but also include the way of thinking, the roles of agents, and the perceptions of those roles (expected status roles and personal identity) in social practice or system. Institutionalism as an interdisciplinary methodological theory has actively penetrated criminological science and contemporary crime research.3 From the point of view of institutionalism, organized crime is difficult to prevent or neutralize, and not only because of its persistent or secretive nature. Even in the ideal imaginary situation of detecting and prosecuting a single criminal group or a plurality of them, criminal practices continue and reproduce through routine and being ingrained in the consciousness of certain categories of people. It is obvious that evolutionary trends and deep determinants are at work, which are also embedded in the imbalances in the development of localized systems of the legal social landscape. On the background of the globalization-localization dichotomy characteristic of today’s world, the concept of clusters has gained popularity in assessing the prospects for the development of the organization of localized systems and the institutional interaction of its actors. The concept has found effective application in the economies of both developed and developing countries. It has also subsequently served as a basis for structuring social associations beyond the purely economic sphere. Although there is an extensive, constantly growing literature on the cluster approach,4 the conceptualization of cluster theories is still in progress. The most famous scholar of the cluster idea is M. Porter, who popularized the phenomenon and offered the classic definition of a cluster. Namely, a cluster is geographically concentrated group of interconnected companies, specialized service providers and firms in their respective industries, as well as related organizations (e.g. universities, standardization agencies, trade blocs) in certain areas that compete but also

1

Nureev and Dement’ev (eds) (2005), p. 10. North (1991). 3 Dryomin (2009). 4 See Feser and Bergman (2000), Markusen (1996), Martin and Sunley (2003), Sonis et al. (2008), Titze et al. (2011), Sokolenko (2004), Pushkar and Fedorova (2011), Herasymchuk and Smolych (2014), Okseniuk (2018). 2

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work together.5 Typical, specific key elements and features of a cluster could also be complemented by the absence of strict boundaries, innovation, specialization, critical mass, the cluster life cycle6 ; obtaining a final synergistic beneficial result by each of the participants,7 and increasing the competitiveness of industrial associations.8 An institutional cluster is a multifunctional and networked system of interaction between independent institutions, each of which is purposefully involved in collective action. Clusters, like other local production systems, consist of a multitude of legally independent agents connected by relationships, forming groups and coalitions, and various hybrid forms of coordination. Depending on the type of integrating links, there are two basic types of clusters: vertically integrated clusters made up of industries that are linked through buyer–seller relationships; horizontally integrated clusters, including industries that might share a common market for end products, use a common technology or labour force skills, or require similar natural resources.9 Instruments that might characterize a cluster structure include, but are not limited to, the following: cooperation, competition, communication, coordination, equality, partnership and social trust.10 At the same time, it has been observed that cluster formations can have negative as well as positive effects. Since a cluster is an open system that constantly interacts with the external environment, its negative impact on that environment can be detrimental to itself. A cluster of negative social development is considered as a set of individuals, business structures, government organizations and criminal groups involved in illegal or criminal business, that lead to a growing negative social effect experienced by all groups of a population.11 Contemporary organized crime is increasingly moving from rigidly structured entities to decentralization with unclear, blurred edges and a hybrid structure that is dictated by the rationality of adapting to social changes, including the emergence of new widespread demands for illegal goods and services, and new ways to evade social control. The transition from mono- to poly-criminal activities, involvement in general digitalization, etc., are also hallmarks of much of today’s organized crime. At the same time, organized crime is proving effective in generating excessive profits and influencing society as result of the benefits of such structuring and dynamic institutional interaction. These considerations give rise to the hypothesis that organized crime functions in the manner of an industrial cluster with a specific, advanced spatial and/or sectoral organization—but it is not limited to exclusively economic criminal activities. Confirmation of this hypothesis will contribute to the formation of a holistic concept and

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See Porter (1998, 2003). Andersson et al. (2004), pp. 13–44. 7 Sokolenko (2002), p. 264. 8 Voinarenko and Dubnytskyi (2019), p. 111. 9 United Nations Economic Commission for Europe (2008), p. 107. 10 Samiilenko (2020), pp. 75–76. 11 Maliarenko and Oliinyk (2010). 6

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promotion of the methodological paradigm of organized crime as an institutional cluster in academic circles and the practice of preventive impact on organized crime. Taking into account previous achievements of the ontology and methodology of cluster analysis, the study of organized crime as a criminal cluster shifts the emphasis and the traditional format of criminological research, which frequently equates the concepts of ‘crime’ and ‘criminal activity’, and unjustifiably ignores the ‘surrounding criminal environment’, which is not formally covered by criminal law, but which often ensures the performance of criminal activity and is a prerequisite for its fulfilment. Moreover, from the point of view of the cluster approach, a criminal act is not an isolated act, but a link in the chain of a certain system of actions and the result of the collective efforts of interconnected actors. In order to understand the phenomenology of organized crime, it is important to analyze the internal dynamic structure of criminal communities. It is even more important to understand how they are embedded in other social systems, as they do not operate in isolation from social processes. The specificity of organized crime as an institutional cluster lies in its dual (socioeconomic) nature. As an association of actors, it is a social phenomenon and, by its functions, it is a quasi-economic system. The model of a criminal cluster shows internal ties between organized criminal groups (competition-cooperation) and their links with non-organized crime, representatives of governmental authorities and local communities. It also traces the peculiarities of organized crime’s response to the needs of illicit markets, borrowing technologies, logistics, experience and information from legal institutions and infrastructure. Extrapolation of the achievements of the cluster approach to criminological science allows for the formulation of the concept of organized crime as an institutional cluster based on the following essential elements: key markers and features of a criminal cluster, the life cycle and typical structure of a criminal cluster, profiling and clustering (identification of criminal clusters).

3.2 Key Markers of a Criminal Cluster In determining the identifying features (markers) of a criminal cluster, it is assumed that a cluster is an advanced type of structuring and organization of systemic criminal activity. The features of a criminal cluster include: Geographical proximity (localization) and/or criminal branch proximity (concentration). The formation of an organized crime cluster is based on the elements of localization (spatial dimension in a specific temporal context) and branch proximity (supply and demand in illegal markets, profitability of a particular type of criminal activity). Geographical or branch proximity is characteristic of a cluster not just because of the commonality of territories or crime fields, but because of the commonality of principles of functioning in these territories or fields—for example, the affinity of corrupt practices. In this regard, geographical (spatial) and sectoral

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proximity is viewed as a complementary factor in the formation of institutional, social and, ultimately, the cognitive proximity12 of criminal clusters. The institutional proximity of a criminal cluster refers to the relationship between criminal groups, the degree of influence on society, interdependence with the state of legal institutions, and the state of the legal system and the norms and rules of behaviour that have been developed. Social capital forms informal ties, and the degree of trust, cohesion and communication in the criminal environment. Cognitive proximity is related to the willingness to share and exchange tacit knowledge in order to ensure the effectiveness of criminal activity. Due to the localized nature of criminal clusters, the institutions and norms adopted by them quickly spread to a country’s population through the legitimization of violence, human rights violations, the introduction of similar practices in neighbouring territories, and so on.13 Despite the relative spatial localization and/or sectoral concentration of a cluster, organized crime seeks to expand its sphere of influence and establish inter-regional ties with groups outside the cluster. Just as some industrial clusters tend to branch out beyond their national borders, some clans create transnational networks and agreements to better fulfil their aims.14 Explicit criminal specialization of a regular core activity, but the tendency to diversification. The specialization of organized criminal activity unites organized and professional crime.15 It emerges from the regularity of the use of specialized knowledge, skills and abilities, and rationalizes criminal behaviour, turning it into an occupation. On the one hand, routine is a consequence of regularity but, on the other hand, it is also a driver of further development and an expanded self-reproduction of criminal activity. Due to specialization, various technologies of criminal activity are developed, and criminal ‘know-how’ with elements of innovation is produced. The sustainability of specialization of criminal practices and related corruption relations is the ‘glue’ that binds the relationships of criminals together even in the absence of a clear structure. Organized crime as a criminal legal category is not limited to any set of corpus delicti.16 At the same time, organized crime is usually associated with typical serious criminal activities. For a particular criminal cluster, certain types of criminal activity become the core, i.e. those that constitute the main idea and essence of the cluster. Since organized crime is prone to the rapid development of new criminal technologies and the desire for profits, there is a tendency to diversify and carry out poly-criminal activities as core activities. From the point of view of praxeology, core criminal activity is essential and substantive, since it brings the main profit, but it is inevitably accompanied by instrumental (auxiliary) types of criminal activity, in particular, money laundering, which has no significant substantive sense. In addition, organized 12

Boschma (2005), pp. 63–64. Maliarenko and Oliinyk (2010). 14 Armao (2014). 15 Danshyn (2002). 16 Yefremov (2002), p. 91. 13

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3 The Concept of Organized Crime as an Institutional Cluster

criminal activity is associated with certain situational or permissive crimes, such as carrying weapons and drug possession, which also do not have much independent significance. However, they are the easiest to prove and can serve as a way to, at least temporarily, neutralize separate links or contact persons within a criminal cluster. Preventive practice often unjustifiably ignores the possibility of influencing situational criminal activities that enable organized crime to be exposed from below. This method does not have such a devastating effect on a cluster or a specific group as catching ‘big fish’ or key participants, but should not be overlooked by law enforcement agencies. In addition, the specialization of organized crime is inseparable from the specialization of victimization, as certain crime types have a close victim-criminal relationship.17 For these reasons, in the context of preventive impact, for example, on drug or human trafficking, the strategies that focus mainly on drug production or suppliers of human beings and ignore the specifics of the consumers of illegal services are defective. In some cases, a criminal cluster involves the interaction of a criminal group as a collective criminal actor with a victim as a collective victimization actor (a corporation in cyber fraud, participants in large-scale pyramid schemes, or local communities suffering from criminal violence or terror). Heterogeneous autonomous actors with functional dependence on the components of a criminal cluster. Organized crime is heterogeneous18 ; it includes diverse elements, from individuals to structural, vertically and horizontally organized actors. When grouped together in a cluster, they make decisions relatively independently but use each other’s services, the same infrastructure or logistics to achieve their goals. Cluster entities have flexible models of organization and unclear borders in terms of the number of permanent organized groups and their life cycle in the temporal dimension. This means that organized crime as a cluster involves an undetermined number of actors, and their relationships are dynamic. While this may create some uncertainty in terms of identification, it usually works in favour of qualitative analysis. The latency and secrecy of organized crime make it unreliable to use official statistics on the number of cases detected by law enforcement agencies as a basis for assessing the state of organized crime in a country, as such data reflects the effectiveness of law enforcement agencies, not the actual state of organized crime. At the same time, determining the exact number of groups and their members operating in a country is not a goal in itself for cluster analysis, since not only the quantity but also the ‘quality’ of the links between the elements of the cluster structure and the degree of influence on society are subject to assessment for the purpose of developing an appropriate prevention policy. The vagueness of cluster edges determines the elaboration of data mining techniques based on fuzzy clustering, in which elements of the input set are assigned to one or another cluster based on the value of the membership function. In general, clusters can be of any shape and have no centres at all. The structure allows for effective isolation of the management layer from the executors and thus minimizes the 17 18

Tuliakov (2000). Komirchyi (2017).

3.2 Key Markers of a Criminal Cluster

27

risk of exposure for the leaders, which makes the organization minimally vulnerable to social control since the source of criminal activity in any situation is maximally protected by the very way the community is organized.19 The interactional links, based on both competition and cooperation. In contrast to industrial clusters, there is not always a formalized coordination between criminal groups within a cluster; they act relatively autonomously, but share a common criminal interest and the goal of obtaining financial or other benefits. In the struggle for dominance in certain territories or criminal markets, competition sometimes turns into a fierce struggle,20 involving the use of purely criminal means, including the physical elimination of competitors. At the same time, there are weak and strong ties between different participants and groups of participants. In some cases, weak ties are more effective. A powerful criminogenic potential comes not so much from the frequency and duration of contact both within the group and with the criminal environment around it, but from the potential reliable possibility of ‘on demand’ relations, as well as from the functional or personal capabilities to perform a task or achieve a certain goal for the entire cluster. Bruinsma and Bernasco (2004) showed that three separate network clusters are linked together in the smuggling of stolen cars from the Netherlands to a foreign country (a network cluster of local thieves, one of local recyclers or body-switchers, and one of the importers abroad and transporters), with only a single individual needed to connect between each of the clusters, but no other connections.21 The digitalization of crime reduces the personalization and identification of participants, which is common in the criminal world, but this does not affect the stability and effectiveness of interaction. Long-term perspective with certain life cycle, external and internal stability. The internal stability of a criminal cluster means the stability of criminal activity regardless of the change or replacement of key actors or their role in the criminal structure. Internal resilience is based on a common goal and motivation for criminal activity, the maintenance of discipline, and power-subordination relationships based on coercion, ethnicity or cohesion through personal qualities. The presence of a common plan and even limited awareness of the details of this plan also psychologically bring participants closer together. External resilience refers to the ability of a cluster to compete with other criminal groups outside the cluster in the struggle for dominance in certain territories or certain criminal fields. Unlike industrial clusters, where the life cycle and success are ensured by, among other things, coordination, cooperation and optimization to reduce costs and increase efficiency, criminal clusters are quite vulnerable in the context of intra-species competition. External resilience also implies a system of protection against positive forms of social control, in particular, opposition to law enforcement agencies and courts

19

Zharovska (2015). Rushchenko (2010). 21 Bruinsma and Bernasco (2004). 20

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3 The Concept of Organized Crime as an Institutional Cluster

based on corruption or intimidation,22 the presence of powerful positions in the media discrediting the state’s attempts to fight organized crime effectively and the presence of highly qualified professionals creating a cover group (including lawyers, etc.). Although clusters and cluster initiatives are an ongoing phenomenon with longterm prospects, certain elements of organized crime as a cluster do not demonstrate resilience and may leave the cluster, as well as the cluster itself being capable of regression. In addition, the sustainability of certain groups in certain jurisdictions is a variable parameter. When studying phenomenology, an assessment of the so-called life cycle of a cluster should be taken into account. Criminogenic synergistic effect on a community. A criminal cluster is able to create synergistic effects,23 which means increasing the potential and effectiveness of criminal activity through an agreed cluster strategy, in particular, enhancing the criminal competitiveness of organized crime—achieving effect while minimizing costs or efforts. The institutional nature of criminal clusters allows them to generate subclusters, create criminal hubs and carry out criminal investment in criminal startups. The diffusion of criminal clusters within the socio-economic environment and their ability to lobby criminal interests is also observed. The presence of organized criminal groups in a specific territory tends to alter the normal dynamics of political and economic systems by fuelling unfair competition practices—i.e. by offering politicians the possibility of guaranteed victory in elections through the purchasing of votes, and businessmen the possibility of operating in a controlled and noncompetitive market.24 Sometimes there is a combination of functions of participants as members of organized criminal groups and leaders of public opinion, economic agglomerations and political processes, which bring together organized crime and white-collar crime. Unlike legitimate industrial clusters, where formal (official) ties prevail, organized crime uses the legal infrastructure, establishing cross-ties and combining criminal and legal activities. At the same time, it is difficult to separate legal, shadow and illegal activities, as they often occur in parallel or overlap. The penetration of socio-economic legal spheres provides opportunities and means for concealing illegal activities, creates additional mechanisms for laundering illegally obtained assets and serves as a source for reporting legally obtained income in tax documents. In transitional societies, a phenomenology of transformation of purely criminal business into legal business is observed. This pattern is not an end in itself for organized crime, but reflects the illegality of the startup capital accumulated by certain of today’s corporations or businessmen. Financial offences and crimes make it possible to achieve economic success in the absence of legal mechanisms, or at least to obtain startup capital.

22

Arkusha (2002). Holik (2015), Palyvoda and Plavan (2016). 24 Armao (2014). 23

3.2 Key Markers of a Criminal Cluster

29

Law enforcement should collect information on both illicit links (co-offender and formal criminal organization ties) and legal links (business and kinship relationships) between individuals in criminal networks. Ignoring non-criminal binding mechanisms would increase node and tie exclusion (the number of missing actors and ties) and increase the fuzzy boundaries of criminal networks.25 Organized crime strives not only to exert influence and lobby for its own interests, but also to gain social support by using the media and information influence through social networks, spreading a criminal subculture and romanticizing the criminal way of thinking and living. The public support of organized crime reflects the desire to restore or obtain some kind of justice through organized crime, rather than through state institutions in case of their dysfunction. The degree of influence is evidenced by the penetration of criminal subcultural elements into the general culture of society, as well as the use of informal norms developed by criminal communities to regulate out-of-criminal relations. In a process of evolution, organized crime has created its own rules, norms of behaviour and codes of honour to regulate relations within criminal communities as an alternative to state laws that were ignored by criminals.26 As organized crime has expanded its influence on society, unwritten criminal laws have expanded their ‘jurisdiction’ and have been transformed into a regulator for consulting and conflict resolution in the non-criminal environment. Unwritten laws are strictly enforced. Unlike the ‘bird’ language of formal law,27 they are mostly understandable and stable, so they are considered to be fair. They also ensure that punishment for their violation is inevitable, as opposed to the possibility of evading formal justice. Such alternative justice in post-Soviet countries became widespread in the 1990s, after the collapse of the Soviet Union and as a result of a legal vacuum and anomie that were not filled by law enforcement or judicial systems. Criminal notions allowed extortion from newly established businessmen but condemned unreasonable, arbitrary and excessive extortion.28 In today’s reality, such practices mainly find manifestation in the creation of advisory structures (similar to bureaucratic ones) that make decisions on the distribution of spheres of influence or territory of activity of individual organized criminal groups.29

25

Malm et al. (2010). Soboliev and Yarmysh (2001). 27 Bird language is a phraseological term for a type of speech overloaded with specific terms and obscure meanings, understandable only to a few people. 28 Volkov (2016). 29 Rushchenko (2014). 26

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3 The Concept of Organized Crime as an Institutional Cluster

Fig. 3.1 Life cycle of a criminal cluster

3.3 Life Cycle of a Criminal Cluster Similar to industrial clusters, organized crime clusters have certain functional models, containing phases30 or stages with a variety of development scenarios (Fig. 3.1). The first stage, emergence, is the proactive cultivation of interaction between individual actors based on geographical or sectoral proximity in the existence of favourable conditions in a certain area at a certain time (demand for goods or services that are excluded from civilian circulation or are in limited supply, weakness of state institutions, low social mobility of the population and non-working social elevators that often provoke ‘employment’ in criminal activities). The second stage, development, is accompanied by active actions, when organized crime manifests itself by committing crimes, seeks to gain a foothold and establish control over a certain territory, filling a vacuum or displacing less stable and weaker groups. This is a stage of a kind of ‘testing’ of criminal activity, seeking possible opponents, stakeholders and vectors for the advancement of criminal activity. This stage is quite vulnerable and, in the presence of, for example, active counteraction to criminal activity by the state and law enforcement agencies, or other circumstances that are destructive for organized crime, decline is possible. If decline is avoided, the third stage, operation, comes into play, which involves a certain stabilization, consolidation of criminal practices and reduction of confrontation, including violent confrontation, due to the penetration of organized crime into the local economy, politics and influence on government. As a rule, during this period, the cluster accumulates sufficient tangible and intangible resources for the expanded reproduction of criminal activity; strategic long-term plans are developed, in contrast to current short-term ones, and the level of specialization increases. The fourth stage, transition, which can also be described as transformation, highlights the cluster’s ability to adapt to changes in the social context or crises, reorganizing and renovating its organization and governing strategies, if necessary, or 30

Armao (2014).

3.4 The Structure of a Criminal Cluster

31

showing signs of degradation and extinction. At this stage, coalitions and links with other clusters may emerge. In the process of transformation, the model of functioning of a criminal cluster may also change while adapting to changing historical conditions and circumstances. Transformation and renaissance are ensured by innovation. Thus, for example, drug dealers can create a stir in the consumer market by providing prestige goods, for example, new types of synthetic drugs, which, in the consumer’s estimation, support him or her to a higher level on the social ladder. The institutionalization of organized crime occurs gradually and foresees the process during which criminal practices become regular, long-term and ‘overgrown’ with all the signs of an institution.31 At the same time, it should be taken into account that the development of organized crime as a cluster can be non-linear, both reactive and proactive, not always associated with quantitative changes, but qualitative ones. In particular, the shadow structure of Ukrainian post-Socialist society significantly differs from the shadow economy of developed countries, not only in terms of its scale but also in its qualitative characteristics. A shadow economy is not the issue but a shadow society with a shadow state and its shadow institutions of legislative, executive and judicial power, repressive apparatus, economic activity, etc., is at stake. The blocking of draft laws and decisions of executive authorities, which can cause losses to shadow structures, the informal agreements between shadow dealers and relevant official controlling agencies—all of these are the institutional components of the shadow part of social order32 and a particularly favourable background for the development and institutionalization of organized crime.

3.4 The Structure of a Criminal Cluster The criminal network shows significant clustering, which supports the perception that subgroups matter in criminal organizations.33 As a rule, the way of structuring is secondary and depends on the type of criminal activity. In the case of poly-criminal activity, the main (‘core’) type of criminal activity is decisive in understanding the organizational structure. In order to determine the structure of the criminal cluster, a methodological approach similar to the methodology of economic cluster analysis based on system analysis was applied. The proposed cluster model is typical and can be modified when analyzing a specific criminal cluster based on empirically confirmed data. In a structural sense, an organized crime cluster is analyzed from the perspective of actors directly involved in criminal and criminal-serving activities and their joint interactions (‘internal’ links), as well as agents who do not actually belong 31

Gilinskij (2008), p. 31. Nureev and Dement’ev (eds) (2005), pp. 69–70. 33 Calderoni and Piccardi (2014). 32

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3 The Concept of Organized Crime as an Institutional Cluster

Fig. 3.2 The structure of a criminal cluster

to the cluster permanently or temporarily, but with whom the cluster interacts when using common infrastructure, including legal infrastructure or resources, distributing criminal budgets and investing in the black market or injecting already laundered funds into the official economy (external links). Depending on the type of criminal activity, cluster actors and interaction agents act as consumers (customers), suppliers, controllers or intermediaries (Fig. 3.2). When assessing the structure and features of a cluster, it is crucial to understand that the strategy of the criminal cluster is not the strategy of the largest participant, finisher and/or monopolist, but a common vision agreed upon by everyone, which, in one way or another, takes into account the interests of all cluster participants. In such a way, all of them become stakeholders of criminal activity. At the core of the cluster structure are groups that perform the main criminal role and service branches that provide logistical, protective and service functions, connected by a coordinating link. The permanent ‘core’ of the cluster often uses freeriders—periodic, one-time criminal connections, assembled to perform specific onetime tasks. Persons (groups of persons) involved on a temporary basis do not belong to the category of trusted persons and permanent hierarchy, making the structure of the cluster blurred. The use of these opportunities requires organized crime members to take a certain risk and establish connections with persons who are not part of

3.4 The Structure of a Criminal Cluster

33

their inner circle. But the quality of communication is sometimes measured not by tightness, but by effectiveness. Members of organized criminal groups commit crimes together with persons who are not members of the group. The relative importance of these non-group members can sometimes be higher than members of their own group, taking into account the quality of the ties. While access to other members of an organized crime group is certainly an asset that allows group members to flourish during their membership of the group, contacts within the group are unlikely to bring new opportunities to which other members do not have direct access.34 Criminal clusters develop systemic relationships with other players present in the same area of settlement in the same way as industrial clusters. In the case of organized criminal groups, this may mean not only clans belonging to other criminal clusters but also businesses that operate in the legitimate market, as well as political representatives with whom the clans develop relationships.35 The external relations of the cluster are ambivalent, mostly valuable and beneficial for both sides of the interaction, and highlight the functionality and, therefore, the persistence of organized crime in a particular community. In its relations with the community, organized crime is focused on providing goods and services for which there is a demand, but which are formally prohibited in society or are not satisfied by legal means. The ways to satisfy such needs are, of course, illegal. The functionality, in this case, is reinforced by the lack of consumer culture—the average consumer does not care much about the source of the goods they need, especially if they are cheaper than on the official market. This applies, in particular, to counterfeit products. In turn, organized crime receives profit as payment for the provision of illegal goods and services. Organized crime as an institutional cluster is also capable of increasing the social mobility of the population through a range of social and professional connections for those who do not have access to legal means of access.36 Criminal socialization satisfies the needs of individuals included in the staff of criminal organizations for self-realization and development, improvement of social status, belonging to a social group, and recognition and approval of their activities. Socialization through entry into criminal structures is especially relevant for marginalized groups of the population. Recruitment to criminal organizations imitates employment and the acquisition of skills in certain types of activities (usually criminal). Organized crime provides unofficial employment for the population by attracting leading specialists and professionals, fostering entrepreneurial talent, and offering training for a ‘career’ in the underground economy. Moreover, even under such conditions, the usual rules for the economic cycle are applied: division of labour, project budget, bonus system, etc. Criminals use the terminology of official employment: ‘to work’ means to commit crimes.

34

Bouchard and Malm (2016). Armao (2014). 36 Potter (1994). 35

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3 The Concept of Organized Crime as an Institutional Cluster

In their relations with state or local authorities, organized criminal groups seek alliances depending on the type and scope of their criminal activities. Criminal groups involved in drug trafficking ally with the police, while money launderers ally with special services to combat tax and other economic crimes. If the fight against a particular type of criminal activity is divided among law enforcement agencies, such as alcohol or cigarette smuggling, which is handled not only by customs but also by fiscal agencies, the strategy of organized criminals will be to find contacts in each of these agencies. By engaging in mercenary corrupt practices for the benefit of mafia structures, state officials are included in a system of relationships that are in antagonistic conflict with the interests of society and the state. The systematic receipt of remuneration for services rendered by criminals is associated with a salary or periodic wages, and is sometimes treated as the main source of income.37 Incorporated into the system of organized crime, with its inherently rigid, binding rules, methods of coercion based on violence, threats or blackmail and sanctions for breaking the rules, in most cases does not allow officials to unilaterally abandon the role they have taken on. And, herein, is fundamental difference between corruptibility and trivial bribery. In addition, during the transitional period, when the effect of state regulation of social relations is weakened and a crisis of legitimacy occurs, the main agent that actively takes on the task of regulating social relations is organized crime. It imitates the functions of the state authorities: tax collection (racketeering), economic and political administration (territorial distribution of spheres of influence), creation of state authorities—law enforcement agencies (armed groups) and creation of its own system of norms and subculture. In this case, two parallel governance systems can exist within the same society at the same time, as in Ukraine in the 1990s, when newly established entrepreneurs actually paid taxes to two budgets—the official state budget and the unofficial criminal budget, which was often covered by local law enforcement agencies. In an effort to gain real power not only in the underground world, organized crime is able to finance the political system, promote its candidates for elected office and influence the adoption of certain high-level management decisions. The paradox is that organized crime and society sometimes interact in the shortterm on the principle of ‘win–win’ relations, ignoring the significance of the longterm destructive prospects for the rule of law and civil society. A cluster’s openness to cooperation and desire to develop new markets and increase profits also explains the powerful contacts and ties of criminal clusters with organized groups outside its borders, including international crime groups. Strategic logistics ports and long-standing trade routes are contributing to the rise of organized crime. The flip-side of such interactions is competition and frequent criminal wars in the struggle for dominance. Local unorganized crime can be controlled by a criminal cluster in order to extract certain fees for continuing criminal activity and serve as a recruitment resource.

37

Dryomin (2005).

3.4 The Structure of a Criminal Cluster

35

Ukraine has examples of organized crime using street situational groups to destabilize the political situation, artificially create social tension and intimidate the population.38 Among the constituent features of organized crime and the elements of the cluster structure characterizing the criminal environment, its infrastructure is also considered.39 Similar to large industrial clusters, which include not only production enterprises, but also supporting layout, logistics, scientific and other institutions and distribution networks,40 organized crime is able to concentrate around itself a service resource base. The crime infrastructure is supposed to make it possible to commit a crime, ensure the long-term existence of criminal technologies, schemes, etc. and perform the function of providing organized criminal groups with such resources: human—by creating conditions for recruitment or involvement of potential participants in criminal activities; intellectual—by providing persons capable of acting as developers of criminal technologies by their intellectual and professional standing, as well as minimizing the risks of falling into the view of law enforcement agencies; financial—in which each existing criminal scheme requires funding to implement criminal plans (to ensure the flow of funds through bank accounts, to purchase and sell goods or services), as well as to bribe participants (officials) who are involved in criminal schemes, etc.; creation of safe conditions for covering up criminal activities and avoiding criminal liability, which includes: corruption component, legal cover (lawyers), maximum reduction of time for the implementation of criminal plans, etc.; structural—i.e. the creation of artificial or use of existing institutions, enterprises or organizations that will ensure the implementation of criminal technology, as well as the legalization of the proceeds of crime; communicative—providing a system, forms of communication between the participants of a criminal environment, to form a positive or neutral attitude in society to various types of crimes by its representatives, especially when the state becomes the victim, taking advantage of the negative attitude of society to the institutions of power.41

38

Chaplyk (2013). See Dolzhenkov (2002), Albul (2014). 40 Samiilenko (2020), p. 77. 41 Nekrasov (2013), pp. 167–168. 39

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3 The Concept of Organized Crime as an Institutional Cluster

3.5 Profiling and Clustering The main advantage of the cluster approach as a method of intelligent data analysis and assessment of localized system organizing is the ability to establish the presence and nature of hidden patterns in the data, while traditional methods are mainly concerned with the parametric assessment of already-established patterns. The benefits of cluster analysis also include the ability to: identify key individuals, events, relationships and patterns that may not always be detected by other means; quickly identify key individuals, relationships between them and their connection to key events using the key relationship analysis functions; identify possible intermediaries between seemingly unrelated entities in the network; and examine data in detail to identify unobvious relationships, patterns and trends in complex data.42 Cluster analysis is based on both the achievements and capabilities of structural and systemic analysis, and criminal analysis using intelligent platforms,43 such as ePOOLICE,44 and involves a sequence of actions: (1) descriptive phase—a collection of data and identification of features (numerical and categorical/quantitative and qualitative) for organized criminal groups and the criminal environment that can be used to find overt and covert links between groups or individual members; in other words, criminological profiling and identification of a potential cluster (clusters and subclusters) and/or its structural parts; (2) the prognostic phase, the actual identification of clusters based on systematic expert data analysis or the use of specialized programmes for automatic processing of data sets; (3) the practical/transformative/ interpretive phase related to threat assessment, building models of cluster structure, forecasts and developing a prevention and investigation strategy. The cluster paradigm does not provide organized crime with revolutionary new features, but it allows us to reassess and rethink its phenomenology, state and trends in a new way. Extrapolation of cluster theory to criminological science enriches its methodological tools. The cluster approach to the examination of organized crime avoids the gaps of static approaches that favour the study of certain groups as a form of organized crime, or certain types of organized criminal activity as a type of organized crime. It allows the tracking of the dynamics of criminal communities’ formation, their life cycle, and activities inherent in groups not only in terms of core, serious crime but also in terms of the entire criminal and support activities, and the surrounding criminal environment. The concept of organized crime as an institutional cluster enables the observation of the systemic effect caused by synergism—the emergence45 of organized crime as a system—in other words, the presence of special properties not inherent in its subsystems and blocks, as well as in the sum of elements not connected by systemic links. Hence, the essential characterization of the phenomenon of organized crime is 42

Tsilmak et al. (2017), p. 130. Strukov et al. (2021). 44 Strukov et al. (2022). 45 Heseleva and Zaritska (2013). 43

References

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difficult to achieve without highlighting the specifics of the interaction of its internal and external links. At the same time, different types of interactions may be guided by very simple but deeply rooted behavioural practices. In the next chapter, the models of transformation of organized crime as a cluster in a specific empirical reality will be examined.

References Albul S (2014) Zlochynne seredovyshche ta yoho infrastruktura yak obiekty realizatsii rozviduvalnoi funktsii operatyvno-rozshukovoi diialnosti orhaniv vnutrishnikh sprav (Criminal environment and its infrastructure as objects of implementation of the intelligence function of operational and investigative activities of internal affairs agencies. Zloqinne cepedoviwe ta Nogo infpactpyktypa Rk ob’pkti pealizaci| pozvidyvalbno| fynkci| opepativnopozxykovo| diRlbnocti opganiv vnytpixnix cppav). Paper presented at the Vseukrainska naukovo-praktychna konferentsiia ‘Protsesualni, kryminalistychni ta psykholohichni aspekty dosudovoho rozsliduvannia’, Odesa State University of Internal Affairs, Odesa, 7 Nov 2014. Materials, pp 29–30 Andersson T, Schwaag-Serger S, Sörvik J, Wise E (2004) Cluster policies whitebook. International Organisation for Knowledge Economy and Enterprise Development Arkusha L (2002) Osnovy metodyky vyiavlennia i rozsliduvannia orhanizovanoi zlochynnoi diialnosti pry naiavnosti korumpovanykh zviazkiv (Methodological fundamentals of detection and investigation of organized criminal activity aggravated by corrupt connections. Ocnovi metodiki viRvlennR i pozclidyvannR opganizovano| zloqinno| diRlbnocti ppi naRvnocti kopympovanix zv’Rzkiv). Dissertation abstract, Yaroslav Mudryi National Law Academy of Ukraine Armao F (2014) Criminal clusters: state and organized crime in a globalized world. Eur Rev Organ Crime 1(1):122–136 Boschma R (2005) Proximity and innovation: a critical assessment. Reg Stud 39(1):61–74 Bouchard M, Malm A (2016) Social network analysis and its contribution to research on crime and criminal justice. Oxford Handbooks Online. https://doi.org/10.1093/oxfordhb/9780199935383. 013.21 Bruinsma G, Bernasco W (2004) Criminal groups and transnational illegal markets. Crime Law Soc Chang 41:79–94 Calderoni F, Piccardi C (2014) Uncovering the structure of criminal organizations by community analysis: the infinito network. Paper presented at the tenth international conference on signalimage technology and internet-based systems, Marrakech, Morocco, 23–27 November 2014. https://doi.org/10.1109/SITIS.2014.20 Chaplyk M (2013) Rol sportsmeniv u kryminalnykh praktykakh: porivnialna kharakterystyka 1990-kh ta 2010-kh rr (The role of sportsmen in criminal practices: comparative analysis of the 1990s and 2010s. Polb cpoptcmeniv y kpiminalbnix ppaktikax: popivnRlbna xapaktepictika 1990-x ta 2010-x pp). Suchasni suspilni problemy u vymiri sotsiolohii upravlinnia.14 (276):276–277 Danshyn I (2002) Ustaleni formy zlochynnosti: kryminolohichnyi narys (Persistent forms of crime: a criminological essay. Uctaleni fopmi zloqinnocti: kpiminologiqniN napic). Akta, Kharkiv Dolzhenkov O (2002) Teoretychni problemy stanovlennia polityky protydii stvorenniu infrastruktury zlochynnoho svitu zasobamy operatyvno-rozshukovoi diialnosti orhaniv vnutrishnikh prav (Theoretical problems of formation of the policy of counteracting the creation of the underworld infrastructure by means of operational and investigative activities of internal affairs bodies. Teopetiqni ppoblemi ctanovlennR politiki ppotidi| ctvopenno infpactpyktypi

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zloqinnogo cvity zacobami opepativno-pozxykovo| diRlbnocti opganiv vnytpixnix ppav). Dissertation abstract, National Academy of Internal Affairs of Ukraine Dryomin V (2005) Korrupcionnaya praktika: aktual’nye voprosy ugolovno-pravovogo vozdejstviya (Corruption practice: current issues of criminal law enforcement. KoppypcionnaR ppaktika: aktyalbnye voppocy ygolovno-ppavovogo vozdeNctviR). In: Pravovye problemy protivodejstviya organizovannoj prestupnosti, Feniks, Odesa, p 99–109 Dryomin V (2009) Zlochynnist yak sotsialna praktyka: instytutsionalna teoriia kryminalizatsii suspilstva (Crime as a social practice: institutional theory of the criminalization of society. Zloqinnictb Rk cocialbna ppaktika: inctitycionalbna teopiR kpiminalizaci| cycpilbctva). Yurydychna literatura, Odesa Feser E, Bergman E (2000) National industry cluster templates: a framework for regional cluster analysis. Reg Stud 34(1):1–20 Gilinskij Y (2008) Globalizaciya i prestupnost’ (Globalization and crime. GlobalizaciR i ppectypnoctb). Kriminologiya: vchera, segodnya, zavtra 2(15):23–33 Herasymchuk Z, Smolych D (2014) Formuvannia innovatsiinykh klasteriv prykordonnykh rehioniv v umovakh transkordonnoho spivrobitnytstva (Formation of innovation clusters of border regions in the context of cross-border cooperation. FopmyvannR innovaciNnix klactepiv ppikopdonnix pegioniv v ymovax tpanckopdonnogo cpivpobitnictva). Lutsk Heseleva N, Zaritska N (2013) Emerdzhentni vlastyvosti systemy (Emergent properties of a system. EmepdKentni vlactivocti cictemi). Biznes Inform 7:93–96 Holik I (2015) Synerhetychnyi efekt diialnosti klasternykh formuvan (Synergistic effect of cluster activities. CinepgetiqniN efekt diRlbnocti klactepnix fopmyvanb) Efektyvna ekonomika. http://nbuv.gov.ua/UJRN/efek_2015_5_21. Accessed 09 June 2023 Komirchyi P (2017) Doslidzhennia orhanizovanoi zlochynnosti: systemnofunktsionalnyi pidkhid (Research on organized crime: a system-functional approach. DoclidKennR opganizovano| zloqinnocti: cictemnofynkcionalbniN pidxid). Pravo i Suspilstvo 5:201–205 Maliarenko T, Oliinyk A (2010) Klastery nehatyvnoho sotsialnoho rozvytku ta konflikty v Ukraini (Clusters of negative social development and conflicts in Ukraine. Klactepi negativnogo cocialbnogo pozvitky ta konflikti v Ukpa|ni). Derzhavne upravlinnia: udoskonalennia ta rozvytok. http://www.irbis-nbuv.gov.ua/cgi-bin/irbis_nbuv/cgiirbis_64.exe?C21COM=2&I21 DBN=UJRN&P21DBN=UJRN&IMAGE_FILE_DOWNLOAD=1&Image_file_name=PDF/ Duur_2010_8_10.pdf. Accessed 08 Jan 2023 Malm A, Bichler G, Van De Walle S (2010) Comparing the ties that bind criminal networks: is blood thicker than water? Secur J 23:52–74 Markusen A (1996) Sticky places in slippery space: a typology of industrial districts. Econ Geogr 72(3):293–313 Martin R, Sunley P (2003) Deconstructing clusters: chaotic concepts or policy panacea? J Econ Geogr 3(1):5–35 Nekrasov V (2013) Poniattia i skladnyky infrastruktury orhanizovanoi zlochynnosti u sferi hospodarskoi diialnosti (Concept and components of the infrastructure of organized crime in the field of economic activity. PonRttR i ckladniki infpactpyktypi opganizovano| zloqinnocti y cfepi gocpodapcbko| diRlbnocti). Probl Leg 123:162–173 North D (1991) Institutions. J Econ Perspect 5(1):97–112 Nureev R, Dement’ev V (eds) (2005b) Postsovetskyi ynstytutsyonalyzm (Post-Soviet institutionalism. PoctcovetckiN inctitycionalizm). Kashtan, Donetsk Okseniuk S (2018) Klasteryzatsiia promyslovosti v zabezpechenni ekonomichnoi bezpeky derzhavy (Clustering of industry in ensuring the economic security of the state. KlactepizaciR ppomiclovocti v zabezpeqenni ekonomiqno| bezpeki depKavi). Dissertation abstract, University of Economics and Law ‘Krok’ Palyvoda O, Plavan V (2016a) Otsiniuvannia synerhetychnoho efektu formuvannia klasternykh orhanizatsiinykh struktur (Evaluation of the synergistic effect of forming cluster organizational structures. OcinovannR cinepgetiqnogo efekty fopmyvannR klactepnix opganizaciNnix ctpyktyp). Ekonomichnyi chasopys –XXI 158:48–52

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Porter M (1998) Clusters and the new economics of competition. Harv Bus Rev 76(6):77–90 Porter M (2003) The economic performance of regions. Reg Stud 37(6–7):549–578 Potter G (1994) Criminal organizations: vice, racketeering and politics in an American city. Prospect Heights, Waveland Press Pushkar T, Fedorova V (2011) Svitovyi dosvid formuvannia y rozvytku merezhevykh i klasternykh obiednan (Global experience in the formation and development of network and cluster associations. CvitoviN docvid fopmyvannR N pozvitky mepeKevix i klactepnix ob’pdnanb). Ekonomichnyi chasopys–XXI 11–12:68–71 Rushchenko I (2010) ‘Kriminal’naya revolyuciya’ kak societal’nyj faktor (‘Criminal revolution’ as a societal factor. ‘KpiminalbnaR pevolociR’ kak cocietalbnyN faktop). Kriminologiya: vchera, segodnya, zavtra.18:84–103 Rushchenko I (2014) Ot ‘kriminal’noj revolyucii’ k ‘kriminal’nomu obshchestvu’ (From ‘criminal revolution’ to ‘criminal society’, Ot ‘kpiminalbnoN pevolocii’ k ‘kpiminalbnomy obwectvy’). Sociologiya: teoriya, metody, marketing 2:3–22 Samiilenko H (2020) Instytutsionalnyi aspekt doslidzhennia klastera (Institutional aspect of cluster research. InctitycionalbniN acpekt doclidKennR klactepa). Problemy i perspektyvy ekonomiky ta upravlinnia 1(21):75–76 Soboliev V, Yarmysh O (2001) Orhanizovani zlochynni hrupy yak obiekt sotsiolohichnoho analizu (Organized criminal groups as an object of sociological analysis. Opganizovani zloqinni gpypi Rk ob’pkt cociologiqnogo analizy). Ukrainskyi Sotsium 1:33–40 Sokolenko S (2002) Proizvodstvennye sistemy globalizacii: Seti. Al’yansy. Partnerstvo. Klastery: Ukrainskij kontekst (Manufacturing systems of globalization: networks. Alliances. Partnerships. Clusters: The Ukrainian context. Ppoizvodctvennye cictemy globalizacii: Ceti. AlbRncy. Paptnepctvo. Klactepy: UkpainckiN kontekct). Lohos, Kyiv Sokolenko S (2004) Klastery v hlobalnii ekonomitsi (Clusters in the global economy. Klactepi v globalbniN ekonomici). Lohos, Kyiv Sonis M, Hewings J, Guo D (2008) Industrial clusters in the input-output economic system. In: Karlsson Ch, Elgar E (eds) Handbook of research on cluster theory, pp 153–168 Strukov V, Uzlov D, Hnusov Y (2021) Instrumentalni intelektualni platformy dlia kryminalnoho analizu (Instrumental intelligence platforms for criminal analysis. Inctpymentalbni intelektyalbni platfopmi dlR kpiminalbnogo analizy). Pravo i bezpeka 83(4):64–79 Strukov V, Uzlov D, Hnusov Y (2022) Stan ta perspektyvy realizatsii predykatyvnoi modeli u diialnosti Natsionalnoi politsii Ukrainy (The state and perspectives of implementing the predicative model in activities of the national police of Ukraine. Ctan ta pepcpektivi pealizaci| ppedikativno| modeli y diRlbnocti Hacionalbno| polici| Ukpa|ni). Paper presented at the round-table talk ‘Zastosuvannia informatsiinykh tekhnolohii u pravookhoronnii diialnosti’, KhNUVS, Kharkiv, 14 Dec 2022. Materials, pp 75–77 Titze M, Brachert M, Kubis A (2011) The identification of regional industrial clusters using qualitative input-output analysis (QIOA). Reg Stud 45(1):89–102 Tsilmak O, Korystin O, Zaiets O et al (2017) Suchasni metody dosudovoho rozsliduvannia kryminalnykh pravoporushen (Modern methods of pre-trial investigation of criminal offences. Cyqacni metodi docydovogo pozclidyvannR kpiminalbnix ppavopopyxenb). Feniks, Odesa Tuliakov V (2000) Viktymolohiia (sotsialni ta kryminolohichni problemy) (Victimology (social and criminological problems). BiktimologiR (cocialbni ta kpiminologiqni ppoblemi)). Yurydychna literatura, Odesa United Nations Economic Commission for Europe (2008) Enhancing the innovative performance of firms: policy options and practical instruments. ECE/CECI, Geneva Voinarenko M, Dubnytskyi V (2019) Teoriia i praktyka klasteryzatsii ekonomiky (Theory and practice of clustering the economy. TeopiR i ppaktika klactepizaci| ekonomiki). Aksioma, Kamianets-Podilskyi Volkov V (2016b) Violent entrepreneurs: the use of force in the making of Russian capitalism. Cornell University Press

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Yefremov S (2002) Poniattia orhanizovanoi zlochynnosti. (The concept of organized crime. PonRttR opganizovano| zloqinnocti). Pravo Ukrainy 9:89–91 Zharovska H (2015) Strukturno-orhanizatsiini osoblyvosti transnatsionalnykh zlochynnykh orhanizatsii v Ukraini (Structural and organizational features of transnational criminal organizations in Ukraine. Ctpyktypno-opganizaciNni ocoblivocti tpancnacionalbnix zloqinnix opganizaciN v Ukpa|ni). Pravo i Suspilstvo 1:209–214

Chapter 4

Organized Crime in Ukraine and Its Models in Transition

Abstract The chapter provides a conceptual map of the evolution of organized crime models in Ukraine in the context of historical changes in the state and society. Organized crime in Ukraine has gone through numerous transitions, encompassing professionally or traditionally organized criminal groups (the so-called community of ‘thieves in law’), functional racketeering groups, businessmen who accumulated their initial capital through the shadow economy, bureaucratically constructed groups from former official vertically powerful ruling circles, networks of personal or professional connections of the Soviet special services, oligarchic-clan pyramidal structures and amorphous delocalized cyber entities. Each of these transitions is addressed in one or another level of detail in the following pages. The chapter also includes quantitative observations of organized crime in transition from 1991–2022, based on official statistical data on the dynamics, structure and geographical distribution of organized crime considering exclusions and incomplete data from the illegitimately annexed or occupied regions of the country.

4.1 The Origins of Organized Crime in Ukraine The concept of organized crime as an institutional cluster is universal in terms of its phenomenology. However, organized crime cannot be studied without taking into account the socio-political, historical, legal and ideological context informing it. Organized crime is a peculiar mirror of social relations. Its development reflects its integration into the institutional fabric of society. Transformation as a phase of the life cycle of a criminal cluster is inevitably associated with modifications of the models of the structuring and functioning of organized crime in the process of it adapting to social changes. The shift of organized crime models is a kind of rejection of outdated or ineffective criminal practices. Therefore, a criminological assessment of current patterns and threats of organized crime in Ukraine is impossible without understanding the evolutionary nature of organized crime in relation to the background of historical societal and state transitions. The origins of organized crime in Ukraine go back to the Soviet totalitarian statepolitical system with its command-administrative management, planned economy, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_4

41

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4 Organized Crime in Ukraine and Its Models in Transition

gigantic bureaucratic apparatus and the establishment of the principles of patronage and clientelism as conditions for the development of enormous corruption.1 Under such circumstances, the criminal activity of underworld actors had a symbiotic relationship with corrupt elements within the ruling party elite, government officials and businessmen. This connection, which at first glance may seem strange, is actually quite natural and logical, and is based on a common approach to governance where violence, suppression, deception and fear are key factors. As the new capitalists accumulated wealth, they realized the need to protect and increase their property acquired through crime. They tried to infiltrate the private sector and the government in order to secure political impact, and to influence decision-making at the highest level. At the same time, they were interested in expanding their illegal business, which would allow them to maximize their profits in the shortest possible time. Since it was a dangerous occupation, they had to think about their personal security as well. For this purpose, they began to create criminal organizations similar to the gangster groups of some Western countries. Thus, not surprisingly, Communist ideology was easily replaced by a criminal one, and the former Party leaders, not surprisingly, willingly cooperated with the criminal world.2 Post-Soviet organized crime is a logical continuation of the Soviet system and has been significantly shaped by the Soviet past.3 However, despite their common past, it would be a mistake to equate organized crime in different post-Soviet countries. As evidenced by criminal proceedings and scientific research, contemporary Ukrainian organized crime has connections with groups in other post-Soviet countries (in particular, Russia and Georgia),4 but its development trajectory and contemporary features are unique. Organized crime in Ukraine was never a single united organization with common goals and ideas of criminal behaviour. Numerous criminal groups were usually named after their location or the name of their leader. The formula ‘dominance of a certain organization in a certain territory in a certain period of time’ applies to Ukrainian organized crime. Table 4.1 provides a consolidated conceptual map of the evolution of organized crime in Ukraine in the context of historical changes in the state and society, the details of which will be examined in the following sections of this chapter. The absence of a single centralized criminal organization within Ukraine, the pyramidal, verticalized structures of groups and the horizontal regional connections between them, as well as the diversification of criminal business has led to the approbation of different models of groups operating, informing resulting in complications over time.

1

Melnyk (2019). See Dryomin (2002), Dryomin (2004). 3 Kupatadze (2010), p. 47. 4 See Zharovska (2015), Lyzohub (2004), Busol (2019). 2

5

T B

Racketeering and underground dealing Establishing corruption bonds with Soviet nomenclature (ruling elite)

Second (1980–1990)

Gorbachov’s ‘perestroika’ (reconstruction), attempts at democratization and economic transformation by administrative methods, the anti-alcohol campaign, political confrontation between supporters of socialism and capitalism

(continued)

Dominant models5

Stratification of professional criminal community T The establishment of sustainable groups with signs of hierarchy Enhanced influence of ‘thieves in law’ Domination of ordinary mercenary and violent crimes The emergence of ‘tsehovyky’ and the underground economy

Key points of organized crime landscape

Khrushchov’s thaw, replaced by First Brezhniev’s stagnation, the (1960–1980) authoritarian system of government, planned economy and deficit

Periods

T—traditional model, B—bureaucratic model, E—economic model, N—social network model, I—informational model.

Soviet

Context

Table 4.1 The context of organized crime in Ukraine and its models in transition

4.1 The Origins of Organized Crime in Ukraine 43

Periods Third (1991–2013)

The collapse of the Soviet Union Socio-economic disorganization Transitive period of institutional reforms. Orange Revolution, 2004 Impact of globalization

Revolution of Dignity, 2014 Fourth Temporarily occupied territories of (2014–2023) Luhansk and Donetsk regions, and Autonomous Republic of Crimea European integration aspirations. Reforms of law enforcement, anticorruption and judicial branches The rapid development of information technologies and the IT industry. COVID-19 Russian invasion and war of 2022

Context

Transitive independence

Post-transition

Table 4.1 (continued)

Multi-level structures of criminal organizations and flexibility in operation Diversification of criminal business. Money laundering and flows to legal economy Digitalization of organized crime Terrorist threats from self-proclaimed Donetsk and Luhansk People’s Republics Connections between Ukrainian organized criminal groups and criminal groups from the grey zone of temporarily occupied territories. The emergence of new criminal opportunities and changes in criminal markets caused by the war

Combination of ordinary and white-collar crime, based on the merger with former Soviet apparatus working in government Criminal terror as a method of coercion merged with economic activity. Pervasive corruption. Active counteraction to law enforcement The peak of registered organized crime in 1999 and the following extinction Active penetration into political power, impact on legislative, executive power and courts The establishment of inter-regional and transnational connections

Key points of organized crime landscape

Multi-pyramidal hybrid with explicit cluster features

T E N I

Dominant models

44 4 Organized Crime in Ukraine and Its Models in Transition

4.2 The Matrix of Organized Crime Models

45

4.2 The Matrix of Organized Crime Models In contrast to a taxonomy based on the criteria of types of groups, spheres of activity or territories of dominance, the cluster approach makes it possible to identify constructive models of organized crime functioning in conditions of uncertainty and to comprehensively consider organized crime regularities. For the purposes of this study, a model of organized crime is defined as a paradigm or construction of organized crime functioning that embodies its various manifestations, depending on a range of variables. Traditional, bureaucratic, economic, social network and informational models of organized crime became the most typical for the Ukrainian criminogenic situation in different time periods. The traditional model of organized crime6 reflects cooperation rather than a complicated organization. It is characterized by a simple hierarchical structure that provides the distribution of functions of participants and elements of management but without definitively fixed authority-subordination relations. Violence is usually used to maintain internal and external discipline in the process of committing crimes. Common crimes related to the so-called primitive forms of property seizure (theft, robbery, extortion) or profit-making outside the economic sphere (contract killings) dominate. Members of criminal groups are agents of a criminal subculture, reproducing and promoting criminal romanticism and criminal sentiments in society. Criminal communication is based on personal contacts and relationships. Leadership is driven by authority and fear, and is subject to change. Traditionally formed criminal groups tend to accrue their profits from criminal assets, but there are usually no signs of large-scale money laundering. The bureaucratic model of organized crime7 defines organized crime as a group of interdependent persons with a clear ranking of participants based on a complex, branched hierarchy that distinguishes leaders from other members of a criminal organization. Within this model, organized crime is compared to a government or military structure, where illegal activity is organized and approved by top management and carried out by lower-level operatives. The model envisages vertical, mostly authoritarian management, strict power-subordination relations within the group, and the exercise of large-scale influence on local institutions—media, business, governmental and non-governmental organizations. It is characterized by a combination of coercion and corruption to achieve a certain goal. Typically, there is an identified and unchanging leader providing overall coordination, but he/she is usually not directly involved in the commission of crimes. Participants are informed about the details of a criminal plan in a limited manner, depending on their hierarchical proximity to the management level. Such groups practice intimidation and have the resources to counteract official investigations.

6 7

See Abadinsky (1981), Albini (1971), Yarmysh (ed) (2002), Kalynovskyi and Remskyi (2010). See Cressey (1969), Shakun (1997).

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4 Organized Crime in Ukraine and Its Models in Transition

The economic (business) model of organized crime8 is based on the fact that economic motivation and a focus on demand for goods and services, including those prohibited by law, are the driving force behind the formation of criminal groups to a greater extent than hierarchical or ethnic grounds. In terms of external features, criminal activity is similar to legitimate business activities. The only difference between organized criminal groups and legitimate businesses is that organized criminals deal in illegal products and services, whereas legitimate businesses normally do not. In addition to purely criminal business, this model is typical for organized criminal groups that carry out criminal activities in classical economic spheres related to the distribution of the state budget, including illegally obtaining tenders for public procurement, large-scale theft of company property, illegal takeover schemes (raiding), tax evasion, illegal foreign economic operations, financial fraud and so on. From this perspective, the model has similarities with white-collar crime, in which participants do not identify themselves as a part of the criminal environment but consider themselves adapters to conditions unfavourable to legitimate economic success. These organized crime groups have the desire to launder criminal assets and infiltrate legal businesses. The unlawful seizure of property is carried out under the guise of civil law agreements. Therefore, crime is perceived as a failure to fulfil civil law obligations assumed under contract. A key role in these criminal mechanisms is played by fictitious and ‘buffer’ companies, as well as professionals specialized in economic and financial sectors who provide consulting services to organized crime given their experience and abilities in cross-border money transactions and diversified investments. The social network model of organized crime9 assumes that criminal organizations do not have a rigid structure and do not provide precise regulation of criminal behaviour. However, as a rule, participants in these organizations adhere to a certain criminal ideology associated with the ultimate goal of obtaining material benefits from illegal markets. Participants within these criminal networks have full or relative autonomy and are limited only by the need to ensure the overall result of criminal activity. The management style of these organizations provides coordination and is more democratic and decentralized, as opposed to the authoritarian one inherent in the bureaucratic model. The relationships within the network are usually horizontal. They do not exclude certain internecine contradictions but are mostly aimed at mutually beneficial cooperation and the search for valuable persons with the necessary contacts for the stability of the network. The informational model of organized crime10 evolves from digital technologies and high-tech society. It is partly a replica of other models that have found a continuation in the cyber world. However, this model of organized crime is able to move away from long-term traditional ties and structures to more fluid, less formal and temporary associations, taking advantage of the information society and cyberspace. Nonetheless, illegal acts committed by organized criminal groups in this model remain fairly 8

See Smith (1975), Moore (1987), Haller (1990), Block (1991). See Ianni (1972), Ianni (1974), Coles (2001). 10 See Choo and Smith (2008), Broadhurst et al. (2014). 9

4.2 The Matrix of Organized Crime Models

47

stable, reflecting changes in the ability to provide illicit goods and services. These changes in capabilities have been driven by the globalization of trade and technological advances, such as widespread access to the internet and remote banking. Cyberspace opens up opportunities for the sale of illicit goods and services without physical contact between the supplier and the customer, as well as for remote access to private information, and bank or virtual accounts. Thanks to cyberspace, permanent criminal organizations may become less necessary. Instead, convenient networks are emerging in which criminals come together, perhaps temporarily and only when necessary. These circumstances may be related to the need for members with specific skills or for access to suppliers, customers or competitors. A clear example is the ‘uberization’ of crime, which is focused not only on the delivery of ‘criminal orders’ per se, but also on improving the ‘criminal service’ for customers through quick, easy and—most importantly—remote access to the location and receipt of orders. International criminal networks have embraced social media and the gig economy, in part because it allows network members to be isolated from each other and coordinate their actions without knowing many other network members. Messages about where to pick up a parcel and where to leave it are sent using encrypted services, such as Viber and WhatsApp. The selection by criminal groups of ‘freelance workers’ or service providers for customers on a digital platform or marketplace suggests a shift to so-called disorganized crime.11 Disorganization in this regard means an amorphous and hybrid structure of groups. Table 4.2 provides a matrix illustrating the similarities and differences among the different models of organized criminal groups. The matrix, like the models themselves, is an illustrative conceptual construct that enables scientific hypotheses of the evolution of organized crime. It identifies the most typical structural and institutional features for a particular stage of development but does not claim to be exhaustive. The determinism that has characterized the study of organized crime for a long time should be avoided. From this point of view, further research should be based on the analysis of one specific cluster in the territory of its origin, as is the case in empirical studies of industrial clusters. Further, cluster organizations can be observed both between clans of the same criminal group and between clans of different groups.12 Thus, changing and combining models reflect shifts in the empirical landscape of organized crime. None of the proposed models should be considered the most or least effective. They should be evaluated only in a specific spatial and temporal dimension and social context. The transition in the structuring and functioning of organized crime in Ukraine has shown examples of the success of different models in the process of their evolution, rejection and layering. At the same time, institutional clustering is more appropriate for developed models that have evolved into hybrid models given contemporary conditions.

11 12

Hanlon (2018). Armao (2014), p. 134.

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4 Organized Crime in Ukraine and Its Models in Transition

Table 4.2 Morphological matrix of organized crime models Traditional Bureaucratic

Economical

Social network

Informational

Association

Stable

Stable

Strong and weak links

On-demand, but consistently available

Temporarily, as necessary

Structuring

Simple hierarchy

Complex branched hierarchy

Concentration Arbitrariness Amorphous around the with relative core/centre autonomy

Partially open, limited

Partially open, may be limited to white-collar

Membership Close, exclusive

Open, may be limited for ethnic groups

Partially open

Internal interaction

Casteism, Power-subordination, Cooperation, assessment assessment of status assessment of of criminal opportunities professional skills skills or opportunities

Fragmented, trust and social ties assessment

Virtualized assessment of special skills and knowledge

Dominant methods of influence

Coercion

Coercion, corruption

Corruption

Coercion, corruption

Corruption, indirect violence through remote access and influence

Money laundering

–

*

*

*

*

4.3 Quantitative Observations of the Transition of Organized Crime in Ukraine (1991–2022) Although statistical observations of the state of organized crime do not reflect the crime situation in full, taking into account latency, they provide guidelines for assessing the effectiveness of law enforcement agencies concerning identified organized criminal groups, their members and crimes committed. This data reflects the official position of the state on the dynamics, structure and geographical distribution of organized crime and are taken into account in comparative studies and reports. Most decision-makers still rely on official statistics on the overall level of organized crime in Ukraine. The Ministry of Internal Affairs (1991–2012) and the Prosecutor General’s Office of Ukraine (2013–2022) are responsible for collecting and reporting statistical information on the state of registered crime in Ukraine.13 Since Ukraine gained independence in 1991, there has been a rapid increase in the number of crimes committed by organized groups and criminal organizations, as 13

General Prosecutor’s Office of Ukraine (2023a).

4.3 Quantitative Observations of the Transition of Organized Crime …

49

Fig. 4.1 The rate of criminal offences in Ukraine (dynamic of 1991–2022)

well as in the total number of crimes. The trend lines of organized crime in Ukraine coincide with trends in the total number of detected crimes until the mid- to late 1990s (Figs. 4.1 and 4.2), indicating a generally difficult crime situation in the country in the first decades of its formation as an independent state. The year 1995 marked the peak of crime in Ukraine during the entire period of independence. The total crime rate amounted to almost 642,000 crimes (1,246 per 100,000 population) or an increase of 158% compared to 1991. Since then, the overall crime rate has been quite high, with minor fluctuations, and since 2016 there has been a relatively steady downward trend. The year 2022 was an extraordinary one, with the factors of war inevitably leading to a deterioration in the crime situation in the country. There was a 13% increase in the overall crime rate in 2022 compared to 2021. This is quite a high indicator in

Fig. 4.2 The rate of organized crime in Ukraine (dynamic of 1991–2022)

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4 Organized Crime in Ukraine and Its Models in Transition

light of the lack of complete data from the occupied territories, the introduction of curfews, enhanced patrolling and almost a third of the population fleeing Ukraine for asylum or temporary protection.14 The number of crimes committed by organized criminal groups and criminal organizations peaked in 1999 at 9,307 crimes (or 18 per 100,000 population). Compared to 1991, the growth of organized crimes was 341% in 1999 (Fig. 4.2, Appendix A). The number of organized criminal groups and criminal organizations reached 1,166 in the peak year of 1999 (except for a slight decrease in 1995 compared to 1994). Compared to 1991, the growth of the number of organized criminal groups and criminal organizations was 424% in 1999 (Fig. 4.2, Appendix A). The long period of growth in the number of organized criminal groups is driven by two main factors. Firstly, there is reason to believe that the number of criminal groups, including those with signs of organization, was indeed growing in Ukraine during this period—i.e. there was an objective basis for identifying a greater number of these. Second, in 1991, on the basis of existing specialized organizational structures within the criminal investigation units of the USSR Ministry of Internal Affairs, a special service of the internal affairs bodies to combat organized crime was founded in Ukraine. It was orientated to be as active as possible, but it can be assumed that, in seeking to identify more organized criminal groups and not having clear regulatory definitions of their characteristics, practitioners classified a significant part of situational groups as organized criminal groups.15 Since 2000, there has been a statistical downward trend in the level of detected organized criminal groups in Ukraine. Quantitative analysis of official data demonstrates the extinction of widespread ordinary organized criminal activity and criminal terrorism inherent to the mid-1990s. Thus, compared to 1999, their number decreased by 18% in 2000 and continued to fall further. This trend is related to a change in the approach to understanding a criminal group as an organized group following the joint recommendations of the Prosecutor General’s Office and the Ministry of Internal Affairs of Ukraine ‘On the practice of identifying signs of organized criminal groups’ (March 2000), and the legislative consolidation of the concept of an organized group and criminal organization with the adoption of the new Criminal Code of Ukraine in 2001, which enabled the regulatory and statistical separation of situational groups from stable ones. In 2002, the number of identified groups was 722, in 2006—466 groups, and in 2013—185 groups. Notably, the rate of decline in the number of organized criminal groups and their members was significantly lower than the rate of decline in crimes committed, i.e. an increasing number of crimes falls on one average organized criminal group (Appendix A). The downward trend in the level of organized crime after 2000 is not only related to the normative separation of organized groups from situational ones. Regarding traditional general crimes, the criminogenic situation has indeed improved, but this is only the tip of the iceberg and low-level organized crime. At this time in Ukraine (2000s), the focus of combatting organized crime (and, accordingly, the focus of its 14 15

Please see the detailed analysis in Sect. 6.2. See Kulik (2000), Kulyk (2002).

4.3 Quantitative Observations of the Transition of Organized Crime …

51

registration) appeared not to be in the areas where organized crime manifests itself as criminal activity (economic and non-economic), but in other areas where crimes of a common criminal nature are committed.16 The main efforts of law enforcement agencies were aimed mainly at dismantling groups that were simple in structure and small in number.17 The overwhelming number of organized criminal groups operating in the economy, in drug trafficking, trade in stolen cars, weapons, antiques, etc., remained beyond the attention of the authorized state bodies for combatting organized crime.18 The ‘big fish’ began to actively infiltrate politics and business, veiling criminal activities, moving away from the massive use of external violence in favour of stable corrupt relations. The reduction in the number of detected organized criminal groups and the withdrawal of criminal terror has significantly reduced the level of fear of organized crime among the general population. Nevertheless, in view of the penetration of organized crime into the government and the economy, estimates of the impact of organized crime on society at the level of mass consciousness remain high (Appendix E). Between 1995 and 2001, the percentage of people who attributed a significant role to organized crime and the underworld in Ukrainian society as a whole increased, reaching its highest observed point in 2001, at 49%—at the height of the ‘cassette scandal’.19 At the same time, the survey of Institute of Sociology of the National Academy of Sciences of Ukraine demonstrates a lack of trust in law enforcement agencies, as they also had connections with organized crime. The role of the police and Security Service in 2001 was estimated at 12.7%. From 2001 to 2019, the dominant trend showed a decrease in the percentage of attribution of a significant role of organized crime and the criminal world in the life of Ukrainian society, but on average it was 35%, which is much more than for the assessment of attribution to the role of officials, the intelligentsia or law enforcement.20 The most significant decrease in the percentage of people who attributed a significant role to the mafia and the underworld in Ukrainian society was recorded after 2014 when President V. Yanukovych was removed from power. It is assumed that, in the perceptions of at least a part of the civil society of Ukraine, this politician was the personification of the ‘criminal world and the mafia’, based, in particular, on the fact of his two previous criminal convictions, tirelessly emphasized and mentioned in the media by

16

Zakaliuk (2007), p. 284. Odyntsova (2012), p. 59. 18 Dryomin (2009), p. 429. 19 Conventional title of the political scandal in Ukraine, erupted after the release of secret audio recordings allegedly from the office of the President of Ukraine L. Kuchma, which indicate his possible involvement in the kidnapping and murder of the opposition journalist G. Gongadze. The ‘cassette scandal’ initiated several centres of qualitatively new uncompromising opposition, showing convincing ‘lessons of the revolution that did not take place’. See Bodnarenko (2002). 20 The research is conducted by the Institute of Sociology of the National Academy of Sciences of Ukraine. Respondents are invited to note in the given list those social groups that, in their opinion, play a significant role in the life of Ukrainian society. See Vorona and Shulha (eds) (2021), pp. 40–43. 17

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4 Organized Crime in Ukraine and Its Models in Transition

his political opponents. His deprivation of state power was associated with its considerable decriminalization. At the same time, since 2014, the percentage of people who attribute a significant role to the social groups of the military and representatives of other security and law enforcement agencies—police, security services, judiciary and prosecutors—has increased significantly.21 Thus, the period since 2000, according to official data, has been marked by a steady downward trend in registered crimes associated with organized crime—apart from a small single spike in 2005. In 2015, the most significant decline was registered—135 organized groups (or minus 88% compared to 1999). Substantial and stable negative dynamics for a decade and a half testify to certain successes of the system of combatting organized crime, even taking into account individual accuracies/inaccuracies of statistical observations, transformations of crime and crisis periods in Ukrainian society. The stabilization of the criminogenic situation in Ukraine gave rise to the liquidation in 2015 of the specialized division of the Office for Combating Organized Crime within the structure of the Ministry of Internal Affairs of Ukraine. The initiators of the liquidation pointed to radical changes in organized crime, which in the form it was at the end of the twentieth century ‘… practically ceased to exist, transforming into new forms of criminal activity that cover all socially important spheres, and signs of organization in the activities of criminal groups today are revealed when many criminal offences are revealed’.22 Functions related to organized crime prevention have been delegated to general units of the Department of Criminal Investigation, the Department of Economic Protection, the Department of Cyber Police and the Department for Combating Narcotic Crime. Despite the urgent need to reform institutions for combatting organized crime, experts state that the employees of the listed units, led by the leadership of the Ministry of Internal Affairs, did not adequately cope with their task.23 A negative consequence of this shift in accountability was also manifest in the loss of experience gained over decades in the field concerning operative work, confidential sources and other important information that contributed to the endeavours of many of those involved.24 Obviously, the events caused by the separatist movement in the Donetsk and Luhansk regions, supported by the Russian Federation, the annexation of the Autonomous Republic of Crimea and the country’s internal political struggles diverted significant forces of law enforcement agencies to combatting terrorism, separatism, organized armed criminal activity, illegal migration and smuggling. Eventually under the Resolution of the Cabinet of Ministers of Ukraine, dated 9 October 2019, Number 867, ‘On the formation of a territorial body of the National Police’, the Department of Strategic Investigations of the National Police of Ukraine was established as an inter-regional territorial body within the Criminal

21

Ibid. Ministry of Internal Affairs of Ukraine (2014). 23 Shostko (2021). 24 Pavlenko (2016), p. 77. 22

4.3 Quantitative Observations of the Transition of Organized Crime …

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Police of the National Police of Ukraine. This body participates in the implementation of state policy in the fight against organized crime and carries out operational and investigative activities. The period from 2016–2021 was marked by a gradual increase in the level of organized crime in Ukraine. The number of identified organized criminal groups grew from 136 groups committing 1,043 crimes in 2016 to 499 groups committing 4,318 crimes in 2021. The annual increase averaged 5.5% (Appendix A). In the meantime, it should be noted that the overall crime rate in Ukraine experienced a declining trend over the same period, with an annual fall of 9% on average. The proportion of criminal organizations among all identified organized criminal groups has also increased. In 2016, it was only 2%; in 2021 it was 9%. The number of organized criminal groups detected in Ukraine in 2022 was 395, corresponding to a decrease of 21% compared to the previous year (2021). Taking into account the negative dynamics, in 2022 certain unstable groups will probably cease to exist, having been forced to break their networks due to the war.25 The structural characteristics of the groups analyzed for the period 2013–2021 provide an informative picture of the essence of organized crime (Appendix C). Thus, in 2021, 14% of the identified organized criminal groups had inter-regional ties, 11.4% used corrupt ties, 7.6% were formed on an ethnic basis and 2.2% established transnational ties. Poly-criminal activities were carried out by 45% of the identified groups, confirming the tendency of organized crime to diversify. The ranking of the duration of existence shows that the largest share of identified communities is made up of those that have been functioning for up to one year, i.e. a relatively short period of time—73.7% in 2021. Another 18% belong to groups that existed for up to two years. The trend of about 90% of registered groups operating for short periods of time is also typical for statistical observations of the last decade. In terms of the number of participants, criminal groups are usually small in number, mostly having three persons in their composition. So, in 2021, 49.5% of detected organized groups had three members, 48.5% had from four to 10 members, 1.8% had from 11–20 members and only one group united more than 20 persons. Among the types of organized criminal activity in the period 2016–2021, drug trafficking crimes traditionally occupied the largest share (29.5% in 2021), followed by common criminal offences of a mercenary (theft) and mercenary-violent nature (robbery, assault, extortion—a total of 8% in 2021). All other crimes represented less than 5% of the proportion of crime committed. In recent years, mercenary crimes that fall into the category of white-collar crime, such as misappropriation, embezzlement or seizure of property by malversation (4%), as well as criminal activities related to illegal arms trafficking (1.3%), have become more pronounced. The number of substantive crimes, such as the creation of a criminal organization, was also significantly higher. Banditry and intentional killings had a relative downward trend. Of the 3,142 crimes committed by criminal groups in 2022, the largest share also was in the field of drug trafficking—1,291, or 41% (or +10% to the same 25

Please see the detailed analysis in Sect. 6.3.

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4 Organized Crime in Ukraine and Its Models in Transition

share in 2021); 210 crimes, or 7%, were detected in relation with misappropriation, embezzlement or seizure of property; 189 crimes, or 6%, were detected in the facts of theft, robbery, plunder and extortion; other types were less than 2%. The statistical observations of organized crime in 2022 fixed a considerable increase of 270% in the illegal movement of persons across the state border of Ukraine, which is typical for the conditions of war and martial law (Appendix C). The regional distribution of the number of criminal groups and crimes committed by them is not homogeneous. The stabilization of the overall dynamics of organized crime may be compensatory and have a statistical explanation—a decline in indicators in a particular region, while, in another region, criminal practices continue to occur systematically, acquiring signs of becoming entrenched. Such a region can become a donor of crime to other territories. A certain gap in this context can be filled by studying the geography of organized crime with the administrative-territorial division into regions, called ‘oblasts’ in Ukraine26 (Appendix D). The study of the time periods of the distribution of organized crime by region in five-year series, from 2001–2021,27 allows us to divide the regions of Ukraine into three categories according to the average rate of organized crime converted into the share of identified groups for the examined period (Fig. 4.3): (1) regions with a low level of organized crime, the share of all identified groups is less than 3%, (2) regions with an average level of organized crime, the share of all identified groups is between 3 and 6%, (3) regions with a high level of organized crime, the share of all identified groups is more than 6%. Geographically, on average, over the period 2001–2021, the highest concentration of criminal groups was observed in Dnipro, Donetsk and Kharkiv regions, which are also the most urbanized, densely populated and industrially developed. More than 80% of their populations is urban, compared to the national average of 70% (Appendix D). In certain mid periods, Luhansk, Zaporizhia, Odesa regions and the Autonomous Republic of Crimea were also among the most saturated with organized crime. It is noteworthy that the occupation of certain regions of Donetsk and Luhansk oblasts in 2014, and the absence of full criminal statistical data since then, reduced the overall percentage of detection of criminal groups in these areas, but did not remove them from the top. Potentially, the eastern region of Ukraine, covered by these oblasts, could constitute a geographic cluster for a separate study. It is assumed that the link between politics, crime and business, which remained from pre-revolutionary times,

26

Information by regions of the state on the number of organized groups and criminal organizations in relation to which criminal proceedings were investigated in accordance with the reporting form No. 1–03. General Prosecutor’s Office of Ukraine (2023b). 27 Data for the Autonomous Republic of Crimea were estimated for the period 2001–2011 due to the occupation of the region in 2014. Data for Donetsk and Luhansk regions since 2014 have been estimated only for parts of the territories controlled by Ukraine.

4.3 Quantitative Observations of the Transition of Organized Crime …

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Fig. 4.3 The geographical distribution of organized crime in Ukraine (1991–2021)

was the strongest in Eastern Ukraine,28 the so-called Donbas region.29 This cannot be ignored in analyzing the formation of the self-proclaimed Donetsk People’s Republic (DPR) and Luhansk People’s Republic (LPR)—pseudo-republics with the support of pro-Russian local criminals and Russian influence. Since 2011, a significant concentration of organized crime has been observed in the city of Kyiv, where almost twice as many organized crime groups are usually detected as in the entire Kyiv region. This is a consistent trend regarding the concentration of organized crime in megalopolises, including capital cities. The assessment of regional crime peculiarities allows us to identify not only the territorial specificity of crime in relatively homogeneous territorial and spatial systems, but also to reveal its individual characteristics in comparison with other regions, and to demonstrate its regularities and the specific features of certain types of crime. This, in turn, makes it possible to avoid templates in the activities of law enforcement agencies, to take a more balanced and differentiated approach to

28

Zharovska (2014). Donbas is a region whose title and location are derived from the Donetsk coal basin, the deposits of which began to be explored in the early eighteenth century and industrial development began in the nineteenth century. Donbas in a broad sense includes all coal mining areas: the northern part of Donetsk, southern part of Luhansk, eastern part of Dnepropetrovsk region of Ukraine (Western Donbas), as well as the western part of Rostov region of the Russian Federation.

29

56

4 Organized Crime in Ukraine and Its Models in Transition Members of organized criminal groups and criminal organizations sentenced to imprisonment, including life imprisonment Members of organized criminal groups and criminal organizations convicted by the courts

2500 2000 1500 1000 500 0 2019

2020

2021

2022

Persons who committed criminal offences as a part of organized group or criminal organization, for which the pre-trial investigation was completed

Fig. 4.4 The ratio between identified and convicted members of organized criminal groups and criminal organizations in Ukraine (2019–2022)

programming, planning and organizing crime prevention, taking into account the conditions of specific regions.30 Statistical reports in Ukraine are generated automatically on the basis of information entered into the unified register of pre-trial investigations.31 The facts revealed during the pre-trial proceedings must be confirmed during the trial and reflected in the court’s guilty verdict. According to the state of administration of justice in Ukraine, 157 members of organized criminal groups and nine members of criminal organizations were convicted in 2021, which is 0.26% of all those convicted of criminal offences and 9% of the identified persons who committed crimes as a member of criminal groups and criminal organizations in the same year. A similar ratio is observed in previous years and in 2022, the year of war32 (Fig. 4.4). Criminologists call the difference between the number of detected and registered crimes, the number of persons who committed them and the number of persons actually brought to criminal responsibility (convicted) ‘the scissors of criminal justice’, indicating the entropy of criminal justice and forming the latent part of crime. Differences in such indicators are quite natural, but in Ukraine the gap is hypertrophied. It is caused not by the humanization of the criminal process, as it might seem at first glance, but by the collapse of the system of registration and investigation of criminal offences, including those referring to organized crime. Numerous criminal proceedings are being closed at the pre-trial stage because of ineffective investigations or the direct influence of organized crime on investigative bodies through bribery, threats or violence. Criminal proceedings are being closed on the following grounds, but not exclusively: failure to prove the event or corpus delicti; failure to establish sufficient evidence to prove guilt; and the expiry of the pre-trial investigation without notifying any person of suspicion. It is possible to reclassify the offence as a less serious one, 30

Babenko (2014), p. 335. Prosecutor General of Ukraine (2020). 32 Judicial Power in Ukraine (2023b). 31

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etc. Further, some of the proceedings forwarded to the court are also being closed by the court. In 2021, two members of criminal groups were acquitted by Ukrainian courts and criminal proceedings against another 72 persons were closed (one due to effective repentance, one due to the prosecutor’s withdrawal of charges, 10 due to death, 60 due to other grounds). 51 members of criminal groups and organizations were sentenced to imprisonment (most frequently from five–10 years, 27%), and 65 were released from punishment with probation. Additional punishments were imposed: deprivation of the right to hold certain positions or engage in certain activities on 25 persons, confiscation of property on 51 persons and special confiscation on eight persons.33 A summary of the above criminological indicators shows that organized crime accounts for a relatively small share of all crimes committed. In 2021, crimes related to organized crime totalled 1.3%, in 2022—0.87%. A threshold of less than 2% has been a trend over the past six years. The identified groups are mostly small and operate for a short period of time. The findings give rise to doubts that such groups are truly stable and that organized crime can have a significant impact on the crime situation in Ukraine. However, this conclusion is based solely on official statistical surveys and reflects a certain deficiency in formalized approaches to assessing the threat of organized crime. Statistical data for recent years reflects, foremost, the inefficiency of law enforcement agencies in detecting clandestine, disguised criminal activity carried out by members of organized groups and criminal organizations.34 Proponents of the statistical approach deny (or rather, suppress or ignore) the fact that a number of criminal communities have grown to the scale of financial and industrial groups with actual state and political support through an extensive system of corruption ties. Despite a certain stabilization of the situation concerning organized crime in Ukraine after the Revolution of Dignity in 2014, its influence is still quite notable. Of great theoretical and methodological importance for determining current patterns of organized crime in Ukraine is the study of not only a static set of criminal groups within the organized crime phenomena, but also dynamic external and internal relationships between them and between the non-criminal environment based on the qualitative research methodology and the suggested cluster approach.

33 34

Judicial Power in Ukraine (2023a). Shostko (2021), p. 18.

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4 Organized Crime in Ukraine and Its Models in Transition

4.4 Soviet Era Models of Organized Crime Traditional organized crime originates from criminal recidivism and professional crime. At the beginning of the twentieth century, certain criminal groups emerged on the territory of Ukraine, which at that time was a part of the Russian Empire. This situation came about as a result of the stratification of the criminal and professional community. One of these groups was the ‘criminal association’, a specific community of individuals who united because of their criminal qualifications in carrying out criminal activities.35 Typically, these spontaneous, situational formations were mercenarily motivated and engaged in theft, exploitation of beggary, robbery and burglary as a trade. The transformation of spontaneous criminal groups into stable and organized ones was hindered by the strong autocratic military and political power of the Empire, which could not allow ‘competition’. Despite the widespread embezzlement and bribery among officials, which has always been a problem and difficult to address even with the threat of severe punishment, such officials had no ties to professional criminal communities. The absence of the market and market relations was also a powerful restraining factor. The Revolution of 1917, the formation of the USSR in 1922, the incorporation of Ukrainian territories and subsequent events not only changed the course of history but also gave impetus to the cohesion of the criminal community and the spread of criminal ideology and criminal romanticism. By the late 1920s and early 30s, a thieves’ community, and a unified thieves’ ‘law’ had emerged on the basis of the traditions and customs of criminal professionalism. At that point, some of the criminals imprisoned in Soviet prisons and labour camps, who mostly ‘specialized’ in crimes against property, proclaimed themselves an authoritative caste of the criminal world. The ‘virtues’ of that time were based on strict adherence to an unspoken code of so-called ‘concepts’. Among the main ones: refusal to have any job or occupation other than committing crimes, refusal to cooperate with law enforcement agencies, prison administrators and official authorities in general, prohibition to serve in the army or engage in political activities, prohibition to have a family, promotion of the thieves’ idea and support of the thieves’ law, and regular contributions to the ‘common fund’—a mutual aid fund for imprisoned criminals. The thieves had their own prison subculture, spoke prison jargon and wore tattoos. Their ideas contradicted the Communist ideology of compulsory work and service to the state and intensified the confrontation between the criminal community and the Communist authorities.36 The top or elite of the thieves’ community became well-known as ‘thieves in law’, a kind of branded phenomenon of Soviet and post-Soviet organized crime. The status of a ‘thief in law’ was usually granted to those who had a long track record of criminal activity and respect earned in prison. However, their power was largely 35 36

Momotenko (2015). Volkov (2014).

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based on personal charisma and a fanatical devotion to their own idea of freedom or the thieves’ idea. In addition to general management, the ‘thieves in law’ were also empowered to enforce the thieves’ law, distribute crime funds, resolve conflicts in the criminal community and administer a kind of justice and punishment, retaliating for violations of the thieves’ customs and traditions.37 The Great Patriotic War (1941–1945) caused a split in the criminal community. According to ‘thieves’ concepts’, a fight for the state with arms was prohibited and thus impossible. But many criminals went ahead and violated this rule on the condition of subsequent release and expungement of their criminal record. At the beginning of the war, various categories of prisoners were released from prison to go to the front (about 25% of the total); during 1942–1943, this amounted to about 10% of convicts.38 Therefore, many criminals were among the ‘special contingent’ mobilized into the army. But in the end, most of them returned to prison after committing new crimes, and could no longer be accepted into the communities of ‘thieves in law’. This is how a caste of criminal associations emerged that despised the laws of the state and society and did not obey the law of thieves. It should be noted that manifestations of organized crime were not widespread until the 1960s. Even the emergence of ‘thieves in law’ in the 1930s, with their ideology, unwritten ethics and collective governing bodies did not significantly affect the level of organized crime. Its development in the USSR was constrained by the country’s poverty, harsh criminal policy and command-and-control system of governance, as well as the planned economy, which actually meant that the economy was closed and resources were concentrated in the hands of the state. The established restrictions made it impossible to accumulate significant property—the size and quantity of individual property (houses, cars, etc.) was limited by the state, travelling abroad was problematic and a disorderly lifestyle attracted the attention of the public, state and ruling party authorities, and law enforcement agencies, which at that time reacted quite harshly to such manifestations. Organized crime of that time can be more accurately described as ‘organization in crime’ than organized crime in its modern sense. Still, the traditional modus operandi prevailed, based on cohesion, stratification and specialization in committing common crimes. Along with the Khrushchev Thaw of 1953–1964, which was marked by the weakening of totalitarianism, a certain liberalization of criminal law and the first attempts at economic reforms in the command economy, the preconditions for the emergence of the underground market were established.39 In fact, the 1960s were the starting point of the final separation of organized crime from professional crime and its acquisition of hierarchical and sustainable features in Ukraine and other countries within the USSR.40 Opportunities for corruption and illegal appropriation of significant material resources also appeared soon thereafter.

37

Toma (2020). Hula (2009), p. 6. 39 Servetskyi et al. (2002), p. 241. 40 Boyarov (1997). 38

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4 Organized Crime in Ukraine and Its Models in Transition

Despite attempts at economic reforms, when the union republics were granted some economic autonomy, the economy was still planned and thus inefficient. Corporate executives had no economic interest, working to meet plans and targets, often attributing non-existent production indicators for the sake of the prospect of promotion according to the party line. At the same time, the ordinary population experienced a constant acute need for basic necessities. During these years, significant funds were illegally accumulated in the hands of private individuals—individual business leaders, officials and other businesspeople. They were obtained through a system of abuses in the sphere of trade, catering and consumer services. At the outset, the goods were manufactured at completely legal official state factories (artels), only the production volumes were hidden and the funds from the overproduced products, which remained after the execution of the production plan, were appropriated. For example, in 1961, as a result of an investigation by the Lviv regional prosecutor’s office, 19 employees of the Trudivnyk artel were arrested. The artel was officially registered, produced clothing and accessories and officially purchased raw materials from a warehouse. The activity was not entirely illegal; the artel hid from the state only the volume of its successful overproduction. The business quickly became not only cost-effective but also very profitable and lucrative. At the trial, the ‘artel members’ were accused of embezzling public funds on a considerably large scale. As a result, eight of them were sentenced to death by firing squad. The artel’s activities fell into the category of ideologically harmful phenomena; the very possibility of private enrichment fundamentally contradicted the Socialist economy.41 Later, during the period of Brezhnev’s stagnation (1964–1985), the main way to accumulate funds was to create underground workshops and factories on the basis of officially existing ones. Through these significant amounts of state commodity resources were channelled and scarce goods produced. The persons who initiated and ensured the activities of the underground enterprise (workshop or ‘tsech’) were called ‘tsekhovyky’.42 In contrast to artel workers, the tsekhovyky did not use surplus products; they obtained raw materials by stealing state property, as there was no permit base for private production in the USSR at that time. Nevertheless, an awareness of the illegality of their actions did not stop them. In contrast to foreign countries, where illegal economic activity developed through the production of goods and services mainly prohibited by law—drugs, prostitution, pornography, arms trafficking, gambling, etc.—in the USSR, shadow economy operators filled gaps created by the shortage of ordinary consumer goods. Soviet organized crime met people’s demands for products (food, clothes) and services (e.g. currency exchange) that are legal in a normal society with a normal, functioning economy. The peculiarities of shadow and organized criminal practices at that time underscores, firstly, that organized groups in the Soviet (and later—in the post-Soviet)

41 42

Busol and Romaniuk (2021). Cherniavskyi (2015).

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61

period received their main capital as a result of theft of state property; second, organized crime used mainly state economic structures, originating in the depths of the Socialist planned economic system, which was subordinated to bureaucracy; third, the actors of organized criminal activity in the economic sphere were officials and financially responsible persons of the state.43 In addition, as a result of the Anti-Alcohol Campaign of 1985–1987 (a kind of ‘dry law’), administrative measures were introduced that led to kilometre-long queues, demand for alcohol and an increase in illegal production and consumption of alcoholic drinks. Moonshine brewing took place at an unprecedented scale, resulting in a sugar shortage. The deficit and high cost of alcohol led to the fact that the population began to use alcohol-containing substances. Drug and substance abuse was spreading rapidly.44 Thanks to artificial shortages, organized crime found another niche for profit and capital accumulation. With the emergence of the shadow economy and the underground market, traditional organized crime, including ‘thieves in law’, became more active. In the early 1970s, a Thieves Congress was held in Kyiv. During the congress, the young, emerging criminal leaders proposed a new policy for the purposes of maintaining their own status. Instead of the usual system of ‘money fraud’, they offered a revolutionary option—do not go to jail at all, and rob those who won’t report to the police, the shadow dealers. Persons who had illegally obtained their property were not interested in official investigations or justice, much less in making it public or attracting the attention of law enforcement agencies. Of the other ‘landmark’ decisions at the congress, a proposal for resolution on cooperation with the government and with the police was adopted—an unheard of innovation in the criminal world at the time. Cooperation, of course, meant ensuring the involvement of corrupt officials and law enforcement officers. This ‘representative forum’ opened another chapter in the development of the ‘thieves’ movement’—the birth of ‘new thieves’, with new principles and methods of governance. Leaders of underground businesses, managers of individual enterprises and officials who have amassed their wealth through abuse of power, bribery or criminal enterprise had themselves become targets of extortion and other criminal activities. Arson attacks on cars, houses and summer cottages, kidnapping, blackmail and torture became common tools in the arsenal of organized criminal groups to force ‘sharing’ and impose protection services (a ‘roof’) from other groups, fraudulent business counterparties and ‘raids’ by the regulatory authorities. The concentration of significant financial resources in the hands of criminal authorities allowed them to reach a new level—to form and maintain a relatively permanent staff within their groups (bodyguards, intelligence officers, militants) and to establish corrupt ties with individual officials in government and law enforcement agencies. In fact, the shadow economy financed two levels of the criminal pyramid—organized criminal groups and corrupt government, law enforcement and judicial officials. 43 44

Ibid., p. 11. Latysh (2016).

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4 Organized Crime in Ukraine and Its Models in Transition

Equally important for understanding the development of organized crime in Soviet Ukraine was the criminogenicity of the bureaucratic authorities of the USSR. Having won a monopoly on political power with the opposition parties, the Communist Party took over the organization and functioning of the Soviet state by forming a corporation of managers based on the nomenclature principle. The Soviet bureaucracy, in general, was characterized by the merger of legislative and executive, military and civilian, administrative and judicial branches, and the merger of the Party and state apparatus. However, the main role in the life of the nomenclature workers was played not by money or ownership of the means of production, but by privileges. Having concentrated the distribution and redistribution of all available resources in the state into their own hands, they placed themselves above and beyond the law, and realized the function of control over all spheres of public life.45 The share of income in this distribution depended entirely on status, rank and position in the nomenclature system. Accordingly, the main confrontations in the system of power relations were not about satisfying selfish interests in terms of enrichment, but about access to key levers of distribution of surplus products, and control over the channels of this distribution. The schemes that were built in the course of this confrontation were both internally and externally corrupt. Positions were sold and bought. Power and authority became a commodity like food or property, but a much more important one that opened up further exclusive opportunities. In addition, the economy of scarcity and the nomenclature of the government gave rise to a system of so-called ‘blat’—the use of personal, informal connections to obtain scarce goods and services. In the planned economy, thanks to contacts and acquaintances with the ‘right people’, everything from food to a tombstone was available through the blat. Blat not only ensured survival and career advancement but also confirmed social status. To ‘get by blat’ meant not just getting the goods, but also fixing the social status of a person who was able to solve such a task.46 Blat became an important social norm of everyday life for Soviet people, as it allowed them to solve everyday problems by bypassing administrative and other barriers. It also later influenced the formation of informal, corrupt practices in post-Soviet society. The power of the nomenclature’s influence on society was also ensured by the so-called ‘telephone law’, which was placed above the written law both in terms of content and binding force. It allowed officials to use the administrative levers of pressure available to them to solve certain problems or make decisions in their own interests through the use of personal authority or the opportunities provided by their position. As a rule, orders were given over the phone to organizations or individuals both controlled and formally not controlled by an official under the threat of dismissal. Echoes of telephone law were observed even after Ukraine gained independence, in particular when influencing the judiciary and the making of ‘necessary’ decisions by a particular judge. Thus, the main social and legal consequence of the authoritarian and bureaucratic rule of the nomenclature is the deprivation of the legal content of official public 45 46

Voslenskij (1990). Ledeneva (1996), p. 35–36.

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institutions and their replacement by corrupt patron-client ties. Having acquired the features of a collective subject of organized criminal activity, it became one of the determinants of crime. Its governance directly contributed to the criminalization of society47 and the formation of a bureaucratic modus operandi model for organized crime. With the weakening of the central government in the M. Gorbachev era, the bureaucracy had a logical desire to add to the power it possessed. This was manifest in the form of exercising the levers of an exclusive right to appropriate state property with maximum preservation of the hierarchically distributed system of privileges and guarantees of a monopoly of power in the state. Laws were lobbied for and passed that, instead of revitalizing and opening up the economy, opened the door to so-called ‘small nomenclature privatization’ and capital flight abroad. These laws were, among others: The USSR Law, ‘On Individual Labor Activity’ (1986), the USSR Law, ‘On Cooperation’ (1988), the USSR Law, ‘On Property in the USSR’ (1990). A certain liberalization of foreign economic activity in the absence of a well-established state mechanism for controlling this area has enabled organized crime to take control of the receipt and distribution of high-quality imported goods, and has led to significant infiltration of organized crime into the entire sphere of the foreign economy, along with the weakening of control over the regime of entry and exit from the country. It has also facilitated the establishment of international ties between criminal groups. Inter-ethnic conflicts in various regions have significantly expanded the opportunities for organized criminal groups in arms trafficking, providing both excessive profits from this trafficking and the emergence of a wide variety of weapons in the arsenals of organized criminal groups. For organized crime, the Soviet era was a time of searching for possible vectors of development and types of criminal activity, characterized by the non-demonstrative behaviour of organized crime leaders, the dominance of traditional ‘thieves in law’ in their midst, with the creation of primary criminal cells according to the traditional model, and with a gradual transition to a two-level bureaucratic structure, and parity coexistence with shadow economy dealers and the corrupt part of the governing elite.

4.5 Organized Crime Models in Independent Ukraine The political and socio-economic reforms launched in the late 1980s as part of Gorbachev’s perestroika deepened social contradictions and triggered the crisis that later led to the collapse of the Soviet Union. The complexity and problematic nature of the transition was caused by significant fundamental changes at both the macro and micro levels and affected almost all spheres of social life.

47

Melnyk (2019), p. 99.

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Ukraine emerged from totalitarianism as an administrative unit without selfsufficient elites, state apparatus, market economy, rule of law, civil society, coherent culture and the perception of itself as a nation.48 Ukraine in the early 1990s had to confront four different kinds of transition: from a command economy to a social-market economy; from a totalitarian political system to a democracy with a civil society; from the subject of an empire to an independent state; and from ‘a country possessing an uneven national identity to one with a civic, unified nation and political culture’.49 Anomie and complete disorganization became the basis and springboard for organized crime—which seemed to be completely prepared for the situation. After Ukraine gained its independence in 1991, the main efforts of the newly formed government were directed primarily at eliminating the remnants of the Communist regime, moving away from the planned economy and introducing a market economy, and rapidly denationalizing and privatizing economic enterprises. It was expected that, with freedom of enterprise and the abolition of strict price regulation, the market would emerge. There was a kind of legal idealism in the absence of law and order against the backdrop of the diffusion of power between the nomenclature and the reformers. At the same time, the government did not have the political will nor financial capacity to create strong state and legal institutions that would provide protection for market participants and social support for the population, which was both vulnerable and sensitive to such radical changes. The implementation of new rules and norms and the withering away of old ones, as well as considerable legal uncertainty, influenced the behaviour of different groups in society in various ways. The law-abiding and passive members of society became even more passive in these conditions, because every step had the risk of going beyond the legal field, while those who had experience and readiness to act in conditions of legal uncertainty took full advantage of this. Due to the normative irregularity of socio-economic relations, it was possible to act according to the principle ‘everything that is not forbidden is allowed’. At the breakdown of the Socialist system and the dysfunctions of the transition to a market economy, a significant normative, economic and values vacuum appeared, which started to be filled with shadow processes and criminalized elements. Back in Soviet times, a significant part of the population gained prison experience; millions of people went through camps and prisons, convicted of both common crimes and so-called ‘counter-revolutionary’ crimes. The rates of prisoners per 100,000 population were: in 1927, 1,112 persons and, in 1947, 813 persons. In 1986, the number of prisoners in various types of correctional and labour institutions per 100,000 population was 846.5, which was 18.4 times higher than in Japan, 11 times higher than in Sweden, and 9.1 times higher than in England and Wales. In 1990, the number of prisoners per capita in the USSR decreased by almost half (433.8)

48 49

Ofitsynskyi (2005), p. 80, 99. Kuzio (1998), p. 165.

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but remained 11 times higher than in Japan, 5.6 times higher than in France and 4.8 times higher than in England and Wales.50 By the end of the 1980s, 20–30 million people were involved in the ‘shadow economy’ sector, including 3 million on a permanent basis. That part of the population with prison experience or underground dealings turned out to be the most prepared to perceive market transformations and served as one of the conductors of criminal stereotypes of behaviour in the legitimate areas of the economic and social life of the country. Informal rules, laws, infrastructure, shadow prices for goods, rates and tariffs for bureaucratic, judicial and other services gradually emerged. The new laws recognized the formerly criminalized economic activity as socially useful. But individuals who had no respect for the Soviet laws could not at once be imbued with respect for the new state regulations and became one of the sources of the shadow economy, as well as organized crime, which adapted to the new economic conditions. Furthermore, free access to the market was accompanied by inflation of legislation, with regulations being adopted in an unsystematic manner and often contradicting each other. Inevitably, this situation led to attempts by even law-abiding business entities to solve problems outside the legal framework, and often with the help of semi-criminal and criminal structures—the so-called ‘shadow justice’, etc.—in the circumstances of the low efficiency of state and legal mechanisms. States in transition, almost invariably, are weak and, as such, provide a propitious environment for the emergence of criminal organizations. Weak states have unique vulnerabilities that criminal organizations exploit ruthlessly in order to ensure that such states remain safe havens within which and from which the organizations can engage in illegal enterprises with a high degree of impunity.51 The background phenomena of the transition from a planned to a market economy were a drop in GDP, sharp polarization of incomes, hyperinflation and unemployment, an ideological vacuum and a decline in public morale. After the breakup of the Soviet Union, Ukraine had the most favourable starting position among the former Soviet countries but, as the famous Ukrainian historian Y. Hrytsak notes, it became a rich country of poor people.52 During the years of the economic crisis (1990–1999), the country suffered significant losses: GDP fell by 59.2%, industrial output by 48.9% and agricultural output by 51.1%. At the same time, incomes declined at a faster rate: real wages decreased by 3.2 times.53 The fall in GDP and the incomes of employees led to a significant reduction in budget income. For Ukraine, this situation was further complicated by the fact that, after gaining independence, significant budget transfers from the centre of the USSR stopped, which led to a lack of revenue to finance social transfers.54 The effects of hyperinflation, which reached 10,256% in 1993, were no less tangible. The economic decline resulted in a sharp drop in demand for labour and 50

Luneev (2005). Williams and Picarelli (2001), p.109. 52 See Hrytsak (2014). 53 Cherenko (ed) (2006), p. 78. 54 Ibid., pp. 80–81. 51

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a decline in employment and wages. Between 1990 and 1996, food expenditures almost doubled to nearly 70% of a household’s total expenditure.55 In 1999, the unemployment rate according to the International Labour Organization methodology was 11.9%. In 2000, 63.5% of all unemployed people of economically active age had not been able to find a job for more than a year. There was also hidden unemployment—people were actually on long, unpaid vacations and had part-time jobs. The sharp decline in real incomes led to a shift from a shortage of goods to a shortage of money. For the majority of people, having a good education did not guarantee a good job. Having a job did not guarantee a good salary. Having a salary did not mean high purchasing power. The incomes of even those who were employed were critically low and did not provide a living wage, and the lack of social support for the poor forced many to choose between legal and illegal livelihoods. There was a stratification of the population. A whole class of the excluded was formed, constituting a potential reserve for the expanded production of crime and the criminalization of society. Lawbreaking turned into a forced, adaptive way of life and, due to its massive scale, it was perceived as a norm rather than a deviation. Crime had become a profitable and fairly safe form of activity for individuals, with benefits that outweighed the risks. The low risks were caused, in particular, by the lack of an institutional and legal system to combat crime and its organized forms at the beginning of independence. The state was left without the institutional capacity to address organized crime. Most of the expertise and the institutions to deal with the problem remained in Russia, which inherited the centralized institutions of the Soviet state. Ukraine had to create its own legal norms and institutions while addressing this unfortunate legacy of the Soviet era. In the early years of the newly independent Ukraine, organized crime and corruption grew unimpeded by laws or personnel capable of addressing them.56 At first glance, there appeared to be a gap between traditional gangs and the new generation of white-collar criminals with a good education, business acumen and intellectual skills—as if they were polar opposites. In addition, in the new changed socio-economic conditions and in connection with the emergence of new models of organized crime operation, traditional groups of ‘thieves in law’ were expected to become outsiders in the criminal landscape. However, practice has shown that criminal groups of different formations needed each other, so they tended to coexist. Thus, former employees of the Soviet police or the KGB (secret police) joined the ranks of criminal groups, often becoming their leaders. New business owners used the services of traditional criminal groups to carry out contract killings as a way to eliminate competitors or other persons dangerous to them. Criminal gangs were also used to destabilize the socio-political situation in certain regions. In turn, the gangs needed protection for their activities from corrupted politicians in the highest echelons of power.

55 56

Ibid., p. 82. Shelley (1998), p. 648.

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Thus, organized crime received a powerful impetus for further development, when organized criminal groups began to arise on the basis of a kind of alliance between employees of the former administrative and economic nomenclature and special security services, newly established entrepreneurs that frequently earned their initial capital through illicit means and traditional organized groups with prison or sports backgrounds.57 This period was the golden era for the flourishing of organized crime. The early and mid-1990s witnessed a new surge in racketeering activity. Unlike the preceding Soviet period, when shadow businessmen seized funds mainly in the form of extortion under the threat of reprisals, criminal groups began to impose protection services on the basis of a partnership that was impossible to refuse. Because the number of racketeering groups grew rapidly in the early 1990s, they had to protect their clients from one another, even if they did not initially intend to. So they discovered a new method of entrepreneurship—selling protection.58 The organized crime community realized that entrepreneurs should not only be robbed but also protected, as a source of income. And interest in obtaining the ‘tribute’, i.e. commercial benefits, automatically meant interest in the profitability of the controlled business— and, in this regard, organized criminal groups used their existing connections to the regulatory authorities to facilitate business development. The racketeering of the 1990s brought criminals closer to legal business. In a number of cases, criminal groups consisting of former law enforcement officers and former military personnel registered as private security firms in order to provide a legal framework for their activities.59 Infiltration into business also served as a ‘cover’ for organized criminal groups under the guise of sports clubs, and entertainment and recreational facilities. Gradually, the partnership of protection was supplemented by the imposition of partnership. Certain businessmen were forced to ‘transfer’ or gift their business or part of it to organized crime group members. Nevertheless, only a few victims of these crimes reported them to law enforcement agencies, not believing in their ability to change the situation and aware of their ties to the criminal world. The psychological and factual readiness of businessmen to break the law contributed to their victimization. As a rule, businessmen simultaneously acted as victims of and participants in criminal activity. This specified dualism is explained by a set of social and psychological factors, including an aspiration to uncontrollable enrichment from businessmen, and an aspiration within criminal structures and the state to enrich themselves at the expense of businessmen.60 There was an important pattern: the less illegal capital in the authorized capital of an enterprise, the less involved the entrepreneur was in shadow processes, and the less probability that the management would ‘cooperate’ with the criminal world. V. Kulivar (‘Karabas’), one of the most ‘respected’ leaders of the organized criminal community in Odesa in the 1990s, established clear and understandable ‘rules of cooperation’—he collected 10% of entrepreneurs’ incomes, unlike other groups, 57

Kupatadze (2010), p. 47, Dryomin (2010). Volkov (2016). 59 Strelkovska (2008). 60 Tuliakov (2002). 58

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whose demands were sometimes unpredictable and extortionate. At the same time, his patronage was considered a guarantee of security. The period of his dominance in Odesa was one of the most predictable in criminal terms, as he had unquestioned authority in controlling the city’s organized crime. In the meantime, business owners were being raided by controlling and law enforcement agencies. According to an Odesa restaurateur, ‘a bigger evil than organized crime for us was the ‘raids’ of the local police. They were not above taking their cut. It was difficult to negotiate with them.’61 According to the Security Service of Ukraine, 90% of companies were under the influence of criminal groups. The mafia exercised total control over the commercial and, to a large extent, the state trade networks. As a result, consumers were forced to pay 20–30% more for goods and services…. The people were actually maintaining two parallel authorities—legitimate and criminal—at their own expense.62 Subsequently, tax evasion became a sort of national competition and was perceived as a socially useful rather than a socially dangerous activity. To undertake security, racketeering and ‘combat’ functions, the ranks of organized criminal groups were actively replenished with athletes who had completed their official careers or, after the collapse of the Soviet Union, were left without state support and without worthy alternatives to continue their careers. One notable example of this, was the honoured weightlifting coach of Ukraine, V. Avdyshev, who created a criminal group in Kyiv, which included more than 40 former boxers, weightlifters and wrestlers.63 Similarly, former military personnel, especially those with combat experience in Afghanistan, Chechnya or Transnistria, were actively involved in organized crime.64 These individuals were psychologically prepared to use intimidation and coercive methods of influence, also having the skills and experience in handling weapons. As a result of the Transnistrian conflict of the mid-1990s, the smuggling of weapons on a massive scale took place. Weapons from Transnistria were transported to other regions through the port city of Odesa, with gangs throughout Ukraine being armed with them.65 The use of violence and intimidation has been one of the most widespread and effective ways to ensure the existence of organized crime. The struggle for the development of the new criminal market that unfolded between criminal groups in the former Soviet Union after its collapse became extremely violent and, in many ways, resembled the corresponding transitional periods of many other countries that also faced an escalation of criminal violence. Violent crimes are typical for such periods. This extremely dangerous and audacious form of criminal activity is referred to as

61

Segodnya (2008). Busol and Romaniuk (2021). 63 Medvediev (2012), p. 115. 64 Strelkovska (2008), p. 78–92. 65 Sibircev (2015). 62

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‘criminal terrorism’. However, in Ukraine, criminal terrorism was mainly driven by economic interests and the redistribution of property.66 The peak of murders, including contract killings carried out with the help of gangs, professional killers and specialized ‘killers’ groups, occurred in the mid1990s. During this period more than 100 criminal leaders, authorities, heads of state bodies and businesses were killed.67 There were contract killings of the president of the Shakhtar football club and well-known businessman A. Bragin (using explosives in 1995), the former head of the National Bank of Ukraine, V. Hetman (using a Tokarev handgun in 1998), wellknown businessman M. Kurochkin (using a sniper rifle in 2007 on the territory of one of the district courts in Kyiv) and numerous others. The 1996 murder of parliament member and governor V. Shcherban and his wife with a Kalashnikov assault rifle—killings linked to the redistribution of the Ukrainian gas market—is another notable case. This case reflected the complexity of the situation evidenced by the accumulation of initial capital in Ukraine through shadow or criminal means. It characterized a stage in the country when relations in a society reaping the consequences of the collapse of the totalitarian system of governance were non-transparent, and conflicts between the newly formed elites were resolved by violence and often outside a legal framework. At the same time, a sense of impunity provided ample opportunities for criminal groups to commit criminal offences. This situation shaped the psychology of fear, defencelessness and disbelief in legal methods of dispute resolution and the lawful punishment of offenders rather than the fostering of a democratic outlook among ordinary citizens.68 An equally resonant case that extended well beyond Ukraine was the disappearance and murder of political opposition journalist G. Gongadze in 2000.69 In his reports, G. Gongadze highlighted such topics as the alleged anti-democratic activities of the Ukrainian authorities and corruption among senior civil servants. Despite numerous alarms from the journalist about his being stalked, receiving threats and the possibility of being subject to kidnapping and torture, no action was taken by law enforcement agencies.70 In the same year, the ‘cassette scandal’ broke in the media. Audio recordings were made publicly available in which the name of G. Gongadze, with hints at his murder, was discussed by voices very similar to those of the country’s top officials—then-President L. Kuchma, the chief of his administration, the head of the Ministry of Internal Affairs, and the head of the Security Service of Ukraine. Despite a huge wave of public protests in Ukraine, as well as abroad, these recordings never played a legal role in the subsequent investigation into G. Gongadze’s killing. Furthermore, several potential defendants in the case died under strange circumstances, although they could have been ‘connecting links’ in the investigation. Only 13 years later, the court recognized the head of the Main Department 66

Dryomin (1997). Medvediev (2012), p. 115. 68 Lukianchykov et al. (2021). 69 New Voice (2022). 70 European Court of Human Rights (2005). 67

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of Criminal Investigation of the Ministry of Internal Affairs of Ukraine, O. Pukach71 (who received a life sentence), and three of his subordinates as the perpetrators of the crime. The instigators of the crime, however, have not yet been identified. The trend of the alliance of the former Communist Party elite, members of the law enforcement and security apparatuses and the gangs of organized criminals who together penetrate the licit and illicit sectors, that started in the 1990s, became most pronounced in the 2000s. For example, the leaders of the ‘Saylem’ group (Crimea), S. Voronkov, S. Kryukov and O. Kovalenko, were deputies of the city councils of Simferopol and Yalta at the time of their prosecution in 1998. And one of the leaders of the ‘Korobchenko’ group (Kerch), M. Oksymenko, was the general director of the ‘Stalker’ private company. The activities of a well-known criminal authority, V. Kysil, nicknamed ‘Grandfather’, as a deputy of the Holosiivskyi District Council of Kyiv in 2004 were also widely reported.72 In turn, the government was inseparable from business. At a meeting of the Presidential Coordination Committee on Combating Corruption and Organized Crime in 2000, the first announcement of members of parliament’s business activities was made. According to the State Tax Administration, 364 out of 450 members of parliament then headed 202 private firms and were founders of 473. Further, they were directly or indirectly involved in the economic and financial activities of 3,105 enterprises,73 businesses that were responsible for 23.5% of the country’s exports and 10% of imports. Taken together, these businesses had a UAH4.1 billion debt to the state budget.74 In such a way, private and public interests were mixed with the interests of the criminal world. It is believed that routine corruption practices were the basis of such a strong alliance. The inter-relationship between organized crime and corruption had become a cliche.75 Political corruption and the criminal-political nexus in Ukraine had a major impact on the electoral and legislative process by sponsoring candidates for parliament and pressuring individuals in the legislatures to develop policies that serve the interests of organized criminal groups, in particular in banking and the oil and gas industries.76 The legacy of the Soviet telephone law and powerful corruptive influences allowed organized criminal groups to have so-called ‘pocket’—domesticated—judges, ready to make illegal decisions at the behest of representatives of organized crime for their benefit or the benefit of third parties. According to research conducted in Odesa in 2003, 68% of the 400 respondents knew of cases of corruption in the local courts, 63% in the administrative courts and 56% in the Court of Appeal. 47% of respondents were certain that the judges of the Supreme Court were also corrupt.77 71

Position at the moment of committing the crime. Medvediev (2012), p. 113. 73 Busol and Romaniuk (2021). 74 Kalman (2001). 75 Dryomin (2004), p. 55. 76 Shelley (1998). 77 Dryomin (2004), p. 52–54. 72

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As the fish rots from the head, corruption in Ukraine reached the highest political institutions and positions. P. Lazarenko, a former Soviet nomenclature, stole more than US$200 million from the state treasury during his one-year tenure as Prime Minister of Ukraine in 1996–1997. At first glance, this amount seems insignificant today but, at a time when the average monthly nominal salary in Ukraine was about UAH80 (US$4) and the amount of stolen public funds was 0.2–0.4% of the country’s GDP, these figures are distressing.78 Even though US$250 million was frozen in transnational accounts, P. Lazarenko was convicted for only eight out of 53 counts of money laundering charges because the US government was unable to prove his criminal intent beyond reasonable doubt.79 The phenomenology of the P. Lazarenko case as systemic embezzlement concerns not only its transnational aspects.80 It is testimony to the symbiosis of the criminal, business and political worlds in Ukraine. It is no coincidence that the term ‘oligarchy’ has become firmly entrenched in the Ukrainian political lexicon as a political system dominated by a social minority of the wealthy. However, unlike the Western oligarchy, which has always established its position on the basis of already accumulated and formed industrial and financial capital, its concentration and centralization, homegrown oligarchic structures in Ukraine have a different constitution. Their social base (as confirmed by the example of P. Lazarenko) is the former Soviet nomenclature, which already, under the Soviet system, had access to substantial financial resource, as well as exercising actual control over key areas of economic activity through shadow mechanisms.81 Instead of the formation of a new elite, which was supposed to take over the power in the newly created country, power was obtained by individuals close to the resources, who actually led organized crime at the highest political level. Against the background of the passivity of civil society, the oligarchization of power took place with an impact not only on the economy and politics using its own security structures, mass media and TV channels, pseudo-charitable foundations and so forth. Given the Ukrainian reality of the formation of the business environment, the state lost the ability to effectively and purposefully regulate economic processes. Market regulatory mechanisms worked faster in favour of the so-called ‘interested groups’, united in clans based on interests, which took the form of financial and industrial groups. These machinations, in turn, were facilitated by abuses of economic power and massive illegal privatization processes. Under such conditions, it is difficult, with hindsight, to discuss competition as being the main factor of economic dynamics, although this postulate of the market economy served as the most powerful argument for economic reforms in the territory of the former USSR.82 The Ukrainian political and socio-economic system was constructed in such a way that it allowed clans to develop their patronage networks and pyramids while 78

Soloviov (2011). Timco (2018). 80 Nichols (2012). 81 Busol (2011). 82 Yokhna (2011), p. 97. 79

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controlling vast public and private industries, and yet limited possibilities for one clan monopoly.83 Around 2000–2002, the situation more-or-less stabilized, with the space of criminal activity divided between different clans. Vertical criminal structures were formed, which provided criminality with a state-political ‘roof’. Criminalization of the banking sector and the exploitation of the privatization process have been major impediments to the development of a free market and the equitable distribution of property. The extent of these problems distinguishes organized crime and corruption in the successor states from those of other countries with serious crime problems. Organized crime associated with banking and financial markets is more destabilizing than the more conventional elements of organized crime activity such as extortion, prostitution and gambling rackets.84 Although the privatization process was conceived as a redistribution of state property among citizens on the basis of their equal rights, in fact, it resulted in ‘false bankruptcies’ of enterprises, underestimation of the balance value of a property, falsification of the results of real estate auctions, etc. As a result of the redistribution of state property, not only enterprises, but entire industries turned out to be in the hands of criminals. The industries most affected by privatization were the fuel and energy complex, and metallurgy. One of the most resonant privatization cases in Ukraine is the takeover of Kryvorizhstal, the largest enterprise in the Ukrainian mining and metallurgical complex, with a 20% share of the steel market. Kryvorizhstal employed 56,000 people. The enterprise produced 20% of all metallurgical products in Ukraine, including 7 million tonnes of steel. Despite its capacity and importance for the industrial sector of the country’s economy, the State Property Fund of Ukraine estimated its value at UAH4.26 billion (about US$800 million). At the same time, experts estimated the market price of the enterprise to range from US$1.3 billion to US$5–6 billion. The terms of the sale were set up so that, in 2004, the winner of the tender was the Investment and Metallurgical Union, founded by Ukrainian oligarch R. Akhmetov and President L. Kuchma’s son-in-law, V. Pinchuk. Almost immediately, the sale of Kryvorizhstal was appealed in the courts as being conducted in violation of the law, on a non-competitive basis and at a reduced price. However, at the time the courts recognized the deal as legal. It was only after a change in political power that the Supreme Court of Ukraine cancelled the court decisions and, in 2005, the Cabinet of Ministers of Ukraine invalidated the contract for the sale of the shares of Kryvorizhstal. Following the results of a new privatization tender, Mittal Steel Germany GmbH, a member of the international holding company Arcelor Mittal, was recognized as the winner of a renewed bid for the company. Mittal Steel agreed to pay UAH24.2 billion (US$4.8

83 84

Minakov (2019), p. 241. Shelley (1998), p. 652.

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billion) for 93% of the shares in Kryvorizhstal, which was twice the starting price and 5.7 times the amount received by the state for the sale of the enterprise in 2004.85 In November 2004, the Orange Revolution erupted in Ukraine. Due to massive fraud in the presidential election, which affected its outcome, protests and civil disobedience by supporters of the opposition candidate, V. Yushchenko, took place on the main square of Kyiv, Maidan Nezalezhnosti. After the Supreme Court of Ukraine annulled the official run-off results and ordered a repeat of the second round of elections, V. Yushchenko was declared the winner and took office as President of Ukraine. This revolution was supposed to have a title of ‘chestnut revolution’ as a lot of these trees bloom every spring in the Ukrainian capital, but the main events eventually took place in autumn and the revolution became ‘orange’. Nevertheless it was immediately placed in floristic row as the revolutions—of ‘carnations’ in Lisbon (1974), ‘velvet’ in Prague (1989), ‘roses’ in Tbilisi (2003), ‘tulips’ in Bishkek and ‘cedars’ in Beirut (2005)—and called an uprising against the post-Socialist model, abruptly stopping the rapid re-Sovietization.86 Electoral fraud was more of a pretext for than a cause of the revolution. The main reasons for the revolution were dissatisfaction with the command and administrative methods of governance and their inconsistency with the needs of the population; bureaucracy and corruption during the presidency of L. Kuchma,87 and the maturation of the national identity of the Ukrainian people.88 V. Yushchenko received 52% of the vote, mostly from residents of the western and central regions of Ukraine, and declared his intention to intensify the democratic and European integration processes. He was limited by strong opposition and was forced to negotiate with his main rival, V. Yanukovych, who had support in the eastern and southern regions of Ukraine, and embodied pro-Russian sentiments and a neo-patrimonial idea of governance with its origins in the Soviet command and control system. Thus, the division of the country into east and west played into the hands of organized crime and corruption, and exploited rivalries between political elites. Political rivalries and infighting have stalled important legislative changes and increased gaps in state capacity, creating space for organized crime to prosper. Despite the democratic progress made by Ukraine, it has not achieved success in its fight against crime and corruption, nor has it managed to form a strong middle class—underrepresented in Ukrainian society at that time. In fact, there was a change of political elites. The concept of overcoming corruption in Ukraine, ‘On the way to integrity’, proposed by the president in 2006 remained mostly declarative. The government’s programme against smuggling, ‘Kontabandi STOP’, in 2005–2006, did not achieve results either. The replacement of heads of district state administrations and 18,000 civil servants did not have the expected effect. The cancellation of the

85

UNIAN (2013). Ofitsynskyi (2005), p. 293. 87 Horak (2016). 88 Symonchuk (2005). 86

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illegal privatization of Kryvorizhstal and a number of other individual industrial enterprises were isolated cases. During the presidency of V. Yushchenko, a further stage of the oligarchization of Ukraine by his entourage and affiliated oligarchic clans was taking place, as well as the process of devaluation of the national currency and the collapse of the army. Since the privatization process was almost over, the oligarchic clans started a new stage of property redistribution by absorbing small- and medium-sized enterprises. Illegal privatization and re-privatization, with the help of court decisions and private security structures (the so-called ‘raiding’), of industrial facilities have become particularly widespread. The most resonant raiding seizures are related to the Kremenchug plant for the production of trucks, the Nikopol ferroalloy plant, the Dnipropetrovsk trading market ‘Ozerka’, OJSC ‘Oleyna’ and others. Organized crime was increasingly merging with white-collar crime, taking on the features of quasi-entrepreneurship and business model modus operandi. The most typical in the economic sphere during the second half of the 2000s was financial fraud in the construction of the residential real estate, embezzlement of credit resources of banking institutions, illegal transactions on the land market, tax evasion and fictitious entrepreneurship. The accumulation of illicit capital gave impetus to the active ‘laundering’ of criminal funds through the use of ‘conversion centres’.89 In terms of content, conversion centres do not differ from fictitious enterprises, but they have a more ‘advanced’ structure of criminal business management and distribution of criminal roles (‘manager’, ‘dispatcher’, ‘dealer’, ‘lawyer’, etc.).90 Each fictitious enterprise may have separate structural units in different parts of not only a city but also a region.91 Criminal groups were trying to take control of banking systems and financial institutions, to convert funds and then transfer them abroad. A huge outflow of capital merged with its laundering in offshore territories was observed in the same period. According to IMF and World Bank experts, illegal capital outflows in Ukraine in 2000–2008 amounted to US$82 billion (17th place in the ranking of world countries, with China, Russia and Mexico at the top). A similar study of the period 2000–2009 gives a figure of US$92 billion and 16th place in the ranking.92 One of the leading slogans of the Orange Revolution, ‘Prison for Bandits’, failed to live up to its promise and became one of the sources of general discontent and further social tension.93 This period ended with the victory of V. Yanukovych in the 2010 presidential election and the return of corruption schemes in power, authoritarian methods of government and the entrenchment of organized crime in state authorities and governance.

89

Ionin and Lavryk (2018), p. 62. Arkusha (2011). 91 Kokariev et al. (2019), p. 17. 92 Melnychuk (2013). 93 Kuzio (2005). 90

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V. Yanukovych built a clear vertical pro-government power structure, with it leading in being corrupt and continuing to raid enterprises but, this time, exclusively by members of the ‘family’—his sons and those immediately surrounding the family. During his presidency, numerous Ukrainian companies were attacked by the ‘family’. This includes both cases of the so-called family’s entry into the corporate rights of companies using illegal methods and ‘raids’ in order to get ‘tributes’, i.e. commercial benefits.94 Furthermore, V. Yanukovych carried out large-scale personnel changes at all levels of government agencies to fill positions mainly with people from the eastern Donbas region, trying to transfer the model of state-criminal partnership that had developed in the region to the state as a whole, turning it into a de facto mafia state. One of the most profitable ‘businesses’ in Ukraine at that time was political power, as well as the active, almost market-based trade in ‘influential’ positions with a corresponding stable price list. Holding such positions was considered a profitable investment, as a position opened up a wide range of opportunities for quick enrichment in the short-term without having to take account of any risks and calculating for the long term. The desire to secure high positions, including in parliament, is also conditioned by the prerogative to have immunity from prosecution. Politicians are very reluctant to lift immunity from their colleagues, even when faced with irrefutable evidence of their criminality. It is known that, in their time, the mafia in the US relied on the working class, actively penetrating the trade unions. Mafia leaders are well aware that billions of looted dollars are not yet a guarantee of a peaceful and secure existence. The working class, despite all its weaknesses, splits, widespread apoliticality and ideological disarmament, is still a huge economic, political and social force. Not only law-enforcement agencies, congress-legislators, ministers and presidents stand in the way of the mafia in its attempts at achieving real political power. As practice shows, the mafia knows how to find a common language with them. As for the working class, due to their social nature, they are irreconcilable enemies of such organizations as the mafia. This could be a probable explanation for the collapse of the V. Yanukovych clan in Ukraine. Trying to keep one-clan supremacy and create ‘vertical power’, the regime made a huge number of critical mistakes, consolidating the dissatisfaction of citizens and failing to fully subjugate other clans.95 The desire to enrich the Yanukovych clan, to fill all important government positions and to take over the main resources or commodity flows, led to the stoppage of legal social elevators and the marginalization of a large part of Ukrainian society and, in the end, resulted in a new revolution in 2014. Thus, assessments of the organized crime clusters since independence should emphasize that the main threat was not so much organized crime on its own, but its active penetration of legal institutions, symbiotic forms of fusion with business, politics and government. There has been an actual institutionalization of organized crime and the rooting of criminal practices in everyday life. 94 95

Holovko (2015), Kovtun (2014). Minakov (2019), p. 241.

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4.6 Revolution of Dignity and Post-Transition Models of Organized Crime The Revolution of Dignity in 2014 in Ukraine (also known as Euromaidan) was an active reaction to the criminalization of society and corruption at the everyday and highest political levels. It was also a reflection of people’s demand for social justice. In 2012–2013, authoritarianism rapidly escalated: the executive and judicial branches of power were effectively subordinated to President V Yanukovych, the parliament was controlled by him, the role of law enforcement agencies and the prosecutor’s office was absolutized and business and opposition representatives were oppressed. All this could not but destroy the credibility of the government, which had become a symbol of corruption and abuse. A number of state institutions worked not so much for the benefit of society but for the interests of the ruling clan. According to sociological surveys, in 2012, the official ratio of the total income of the richest and poorest 10% of the population (decile ratio) was 5.3 points, but experts estimate that the actual situation with income differentiation was much worse, with a ratio of more than 40 points. Poor people in the country paid 50 times more taxes than rich people. At the same time, the vast majority of the poor were employable members of society who received low incomes, i.e. ‘economic’ poverty prevailed in the country.96 The desire for equality was combined with the possibility of a shadow economy: the wealthy concealed income to avoid paying taxes and the poor concealed income to be eligible for state aid.97 Due to the unequal distribution of income and wealth, certain groups of the population with high incomes were able to allocate part of their wealth to bribe highranking officials and use these opportunities to their advantage. This meant their direct interference in politics and public administration.98 According to a survey conducted by the Democratic Initiatives Foundation and the Razumkov Centre in 2012, only 3% of Ukrainians believed that the law is equal for everyone and that everyone is equal before the law. Money rules the law, and the law is on the side of those who have money, according to 82% of respondents. In addition to money, the power factor also has an advantage over the law. According to Ukrainian citizens, the power of the government outweighed the power of the law.99 In addition to the pressing socio-economic problems, even before 2014 and the start of the Euromaidan events, there arose a demand for justice in society, generated by the arbitrariness of officials, inaction in the combat against crime and the lack of legal protection against offences. Impunity of criminals and connivance of law enforcement agencies with crime, including those resulting from corrupt ties between criminal groups and the police

96

Federation of Trade Unions of Ukraine (2012). Makarova (2015), p. 22. 98 Libanova (ed) (2015), p. 36. 99 Ukrainian Helsinki Human Rights Union (2012). 97

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or direct cover-up/organization of certain types of criminal business by the latter, led to numerous acts of vigilantism. For example, during 2009–2010, six young men in the small town of Nizhyn in northern Ukraine took local drug dealers to the forest and forced them to confess to drug trafficking, and to provide the names of the main dealers and the police officers who protected them. The confessions were filmed on mobile phones, and the videos were posted on the internet. Drugs were seized and destroyed.100 Vigilantism has a dual nature. On the one hand, vigilantes act as one of the agents of crime counteraction through self-revenge and punishment of crime in cases where the existing authorities are unable to ensure the realization of their protective function. On the other hand, acting as self-proclaimed ‘punishers’, these individuals and their groups go beyond the legal procedures established by law, applying non-legal punitive measures justified by the need for social justice and the inaction of official justice— in actuality a form of lynching. In this case, the risk is that ‘alternative justice’ will reach a critical level, which will have the opposite effect in the form of an aggravation of the crime situation. Despite the destruction of the local drug distribution network in Nizhyn and the support of the local community, as evidenced by media reports, the young men were recognized as members of an organized criminal group and sentenced to seven– 11 years in prison, as well as their property being confiscated. However, not a single police officer named in the video nor drug dealer was brought to justice.101 The degree of social tension and dissatisfaction with a weak justice system that allowed evasion of responsibility through elite status or corrupt connections reflected the massive public reaction to resonant common crimes. Social media and the rapid spread of information triggered massive informational engagement, a broad public reaction to crime. Actions and protests were held in 2012 in Mykolaiv in connection with the rape and murder of O. Makar, committed by so-called ‘majors’—children of high-ranking local officials.102 Protests also took place in 2013 in Vradiyivka, related to the group rape and attempted murder of I. Krashkova by police officers.103 Soon, Ukrainian society moved from ‘silent non-interference’ to an active reaction to previously ‘untouchable’ economic, white-collar and elite crimes. According to the results of the Global Corruption Barometer survey conducted by Transparency International in 2013, 36% of Ukrainians were ready to go out to protest against corruption.104 Before the events of Euromaidan, society was, in effect, a sort of coiled spring, ready to explode at any moment. The catalyst for the public outcry was V. Yanukovych’s refusal to sign the UkraineEU Association Agreement in the fall of 2013. Throughout most of its independence, Ukraine has been trying to ‘sit on two chairs’, integrating (or imitating integration) in two directions—with Russia and the Commonwealth of Independent 100

See Chymyrys (2012), Vesnych (2011). Unified State Register of Court Decisions of Ukraine (2012). 102 See Petyuh (2012), Kyivpost (2012). 103 Ukrainska pravda (2013a). 104 Verkhovna Rada of Ukraine (2014b). 101

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States, on the one hand, and with the EU on the other, with significant parts of the population of different regions supporting these different directions of integration simultaneously.105 At the same time, the abrupt change in foreign policy at the end of 2013, which was not explained to the population, became the immediate impetus for the subsequent confrontation. Undoubtedly, the political crisis is a consequence of the general irreconcilability of views as to the further development of Ukrainian statehood. This concerned not only the confrontation between the authorities and opposition parties but also the split between the current government and the most active segments of the population. However, the first student protests were peaceful. Nonetheless, the compressed spring exploded. The actions of the authorities, in particular the violent and excessively brutal suppression of peaceful public protests, directly caused the upheaval in society, which resulted in the revolution in the winter of 2013–2014 and, later, in undeclared war relating to the annexation of the Autonomous Republic of Crimea, and hostilities in the east of the country. The peculiarity of organized crime in Ukraine and its qualitatively new characteristic is that it has become one of the resources of the hybrid war since 2014 as a new type of war, including the information war. When considering the role of criminals in hybrid warfare, Ukrainian sociologist I. Ruschenko refers to criminals, members of organized criminal groups, as ‘unstable social segments’ used by the enemy and involved in the technology of creating criminal crowds and the technology of rebellion and seizure of power in cities. Emphasizing the role of criminal mobs in hybrid warfare, the author notes that ‘a new subject is the artificial creation of criminal mobs as a tool or ‘soft’ weapon in the arsenal of hybrid warfare’.106 During the Revolution of Dignity, the use of street criminal groups for provocative attacks on opposition protests, forcible dispersal of peaceful rallies, protection of administrative institutions from protesters, influence on the voting process in elections, etc., was documented, including the use of these groups by law enforcement to provoke confrontation under the guise of protesters.107 On 20 February 2014, V. Yanukovych’s government handed over more than 400 automatic rifles and 90,000 rounds of ammunition to members of such groups.108 These groups consisted of young men of an athletic constitution, often with a criminal background. They received the collective name ‘titushky’, which came from the name of a sportsman V. Titushko, who was convicted of attacking journalists in 2013 during a demonstration in Kyiv. Despite the active participation of ‘titushky’ in political actions, they are characterized by apolitical attitudes and a purely financial interest. The cost of using ‘titushky’ during Euromaidan was e100 per person or e10,000 for a group of ‘titushky’ (equipment, transportation, including the services of one ‘titushky’ equivalent to e20–50 per day).109 They also did not shy away from 105

Libanova (ed) (2015), p. 36. Rushchenko (2015), p. 210–232. 107 Ukrainski natsionalni novyny (2014). 108 Ukrainska pravda (2015). 109 Ekonomichna pravda (2013). 106

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business disputes, participation in raider attacks and the provision of various ‘security services’. The movement of racketeer sportsmen of the 1990s emerged from the bottom up, and was spontaneous and unexpected for society, but for a certain period became a stable model of organized crime. The movement of provocative athletes in the 2000s was organized from above. The ‘titushky’ in the 2010s worked on a contract basis. They did not have a clear structure and hierarchy like criminal gangs. Their actions were not constant and structured. However, we can clearly see the coordination of their actions from above, and their use by the higher levels of organized crime as a tool for destabilization. The shifts in the post-revolutionary landscape of organized crime in Ukraine are also related to the annexation of the Autonomous Republic of Crimea and the armed conflict in eastern Ukraine that emerged in 2014 against the backdrop of separatist movements and the self-proclaimed Donetsk and Luhansk People’s Republics. Ukrainian authorities claim that the two organizations, the Donetsk and Luhansk People’s Republics (DLPR), are made up of a rigid hierarchy, financing channels and supply of weapons with the purpose of deliberately propagating violence, seizing hostages, carrying out subversive activity, assassinations and the intimidation of citizens.110 In Ukraine, they are designated as terrorist organizations. In 2014, the temporarily occupied regions of Donetsk and Luhansk oblasts became a zone of the Anti-Terrorist Operation (ATO), that in 2018 was transformed into the Joint Forces Operation. Unlike the criminal terror of the 1990s, which was mainly driven by economic interests and the redistribution of property, the motivation of criminal groups in eastern Ukraine has become increasingly politically coloured. An analysis of the causes, forms and methods of committing politically motivated acts of criminal terrorism shows that terrorists have largely adopted the methods of influence inherent to the state: coercion, violence and ‘punishment’.111 The problem of localization trends of organized crime is exacerbated when ‘insurgents’ (‘militias’) gain total, exclusive control over a part of the country, thereby limiting the authority of official actors in enforcing the rule of law in that territory. The pre-states thus formed are not recognized by the world community, do not adhere to international law and are obviously not sensitive to measures of international responsibility. At the same time, they continue to pose a threat to national and international security, concentrating the flow of weapons or other illicit goods, providing a safe haven and harbouring offenders on their territory. A factor of the expanded reproduction of terrorist actions is the provision of ideological, material and financial resources to groups. It is assumed that the donors of such resources for criminal groups in Ukraine were the Russian Federation and Russian special services in the interests of anti-Ukrainian policy. Russia perceived the ousting of V. Yanukovych not as an internal uprising against a corrupt government, but as an illegal coup d’état and a sign of growing Western influence, and decided to 110 111

Verkhovna Rada of Ukraine (2015). Dryomin (2020).

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use pro-Russian criminals and corrupt officials in the regions of Ukraine where it had the greatest influence—Donbas and the Autonomous Republic of Crimea—putting them in the front and centre of its efforts to gain power. It is believed that the Kremlin used these groups in Crimea, where local criminals quickly became the pro-Russian ‘self-defence of Crimea’ and took an active part in blocking Ukrainian military units. Later, they were joined by Russian special forces in camouflage uniforms, but without insignia—the so-called ‘little green men’. Donbas criminals were active during the seizure of administrative buildings in Donetsk, Luhansk and other cities in the region.112 Since the beginning of the conflict in eastern Ukraine, regular reports and statements by Ukrainian and foreign officials—in particular the ICC Report, 2016—have claimed that Russia was militarily involved in the conflict and provided assistance to the local forces, including weapons supplies.113 On 17 July 2014, Malaysia Airlines flight MH17 crashed in eastern Ukraine as a result of being struck by a Buk missile launched from a field near Pervomaiskyi, the territory under control of pro-Russian fighters of the DPR, killing all 298 people on board. The District Court of the Hague delivered the judgment in the MH17 criminal case in November 2022 and identified that a Buk TELAR was transported from the Russian Federation. After it became clear that this crash had been caused by the deployment of the Buk TELAR, the missile launcher was swiftly returned to the Russian Federation, in the expectation of averting an international outcry. The court also concluded that, from mid-May 2014 onwards, and also on 17 July 2014, an international armed conflict was taking place on the territory of Ukraine between Ukraine and the DPR, in which the DPR was controlled by the Russian Federation. The Russian Federation gave the DPR financial assistance, provided and trained troops, and supplied arms and other goods. From mid-May 2014 onwards, the Russian Federation furthermore had a decisive influence on appointments in senior positions within the DPR and was involved in coordinating military actions as well as in performing military actions on Ukrainian territory.114 Terrorist groups often engage in drug and firearms trafficking, migrant smuggling and other forms of exploitation of illegal markets to provide funds for terrorist activities. In some cases, mergers occur and hybrid organizations are formed. Their members, in addition to pursuing purely political or ideological goals, seek profit through illegal activities and are willing to resort to mass violence, both deliberate and indiscriminate, in order to achieve these goals.115 In the Ukrainian Donbas, such hybrid organizations have emerged, including classical organized criminal groups, terrorist branches and mercenaries. One of the most effective ways for such organizations to achieve financial self-sufficiency has been to establish closer ties with the criminal underworld and to use criminal opportunities more widely than before. On the one hand, the armed conflict in eastern Ukraine has confused all the cards for Ukrainian organized crime. A new reality 112

Losiev (2016). International Criminal Court (2016). 114 District Court of the Hague (2022). 115 Dryomin and Zelinskaya (2011). 113

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has emerged: in Donbas, local gangs, under the strict guidance of Russian special services, took part in the seizure of power and the almost open looting of property, both public and private, which led to the abolition of many pre-war ‘conventions’ of the criminal world. On the other hand, amidst the reduction of Russian financial and military aid, armed groups of LNR and DNR not only intensified their participation in various spheres of the shadow economy but also established profitable criminal business through disunity, involving both Ukrainian and Russian criminal groups in this activity. Moreover, populations not directly involved in the conflict, but fully experiencing its consequences, were also forced to seek ways to adapt economically to the conditions of the conflict, including through their participation in shadow economic or criminal activities. Since the beginning of the armed conflict in 2014, and before February 2022, illegal trade in various commodities across the contact-line in the Luhansk and Donetsk regions was prevalent. Thus, new, at first non-systemic, players appeared in the smuggling ‘segment’ on the improvised border between Ukraine and the occupied areas of the Donetsk and Luhansk regions. Then, systemic groups represented by the leadership of the so-called DPR and LPR took up these illegal activities. They not only carried out ‘confiscations’ of people’s property, money and resources on pseudo-legal grounds, but also conducted criminal trade on behalf of the selfproclaimed republics.116 The trade was led by a network of security services and government customs officials, protected by the military, who facilitated or directly participated in the trade.117 In 2014, illegal channels were set up to sell counterfeit excisable goods from the Hamadeus tobacco factory located in the occupied territory. The criminals delivered tobacco products from the DPR to one of the settlements on the territory controlled by Ukraine. Then they sent the cigarettes by postal carriers to the western regions of Ukraine. From there, other members of the illegal group moved the goods to EU countries. According to the operative data, part of the proceeds from the sale of counterfeit products was used to finance the DPR terrorist organization.118 Thus, with the outbreak of the armed conflict, it became clear that, in the eastern region of Ukraine, along with the self-proclaimed republics, a criminal enclave and source of organized crime had been formed that would corrode the entire Ukrainian society. The level of terrorist threats and manifestations of banditry in the regions outside the conflict zone has increased significantly. The huge scale of internal displacement (almost 1.5 million people as of 2020), the flow of weapons from the conflict zone, numerous waves of demobilization, disbandment and restructuring of volunteer battalions, Russia’s subversive activities and the disorientation of state security forces inevitably caused a sharp increase in the level of crime. Numerous cases of criminal offences committed by fighters of volunteer battalions and ATO participants were recorded—in particular, the illegal handling of weapons, military supplies or 116

See Furmaniuk (2021), Polukhyna (2016). Transparency International (2017). 118 Novynarnia (2016). 117

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explosives. 334 units of various weapons, 172 grenades and 15 kg of explosives were seized from illegal circulation in Kyiv in 2015.119 Officials estimate that at least 300,000 small arms and light weapons were looted or lost between 2013 and 2015, of which 200,000 were lost mainly in the ATO zone, and another 100,000 in the Autonomous Republic of Crimea. It is reported that only 4,000 of these weapons have been found. Weapons from eastern Ukraine have become an important source of supplies for the black market in other parts of the country, where prices are reportedly higher than in the ATO zone.120 The Revolution of Dignity gave Ukraine a second chance, after the Orange Revolution, to break the symbiotic phenomenon of the intertwining of government, business and crime organized around one dominant patronage clan network. After the destruction of the power vertical, bold steps were taken towards democratic renewal. However, the slow pace of reforms, the rise of both old and new clans, and the impact of the war in Donbas often suggested the possibility of a new mafia state, with the dominant patronage network trying to force its competitors to surrender. The contradictory consequences of the Revolution of Dignity were that, against the backdrop of the overthrow of the V. Yanukovych regime and the destruction of the influence of the so-called Donetsk criminal clan, many other business and governmental structures around the oligarchs sought to strengthen and expand their influence.121 Amidst the post-Maidan rhetoric of deoligarchization, the Ukrainian oligarchy as an institution has proven to be resilient to episodes of serious political turbulence.122 After V. Yanukovych fled the country, business-owner P. Poroshenko was elected as president promising to sell his assets. However, he failed to fulfil his commitment, thus retaining a conflict of interest. Despite the presence in power of representatives of the former Soviet nomenclature, their removal from positions was carried out only in 2014123 along with the lustration of officials of the V. Yanukovych regime.124 It is believed that at that time, the destructive consequences of the presence of compromised officials in power and their connections with organized crime had already occurred, and could not be compensated for by their being removed from their positions. The untimely implementation of lustration in Ukraine did not achieve its set goal and was recognized by international institutions as not complying with the principle of individualized responsibility.125 119

Libanova (ed) (2015), p.117. Martyniuk (2017). 121 Minakov (2019). 122 VoxUkraine (2021). 123 Verkhovna Rada of Ukraine (2014a). 124 The aim of lustration ‘is to exclude persons from exercising governmental power if they cannot be trusted to exercise it in compliance with democratic principles, as they have shown no commitment to or belief in them in the past and have no interest or motivation to make the transition to them now’. Council of Europe (1996). 125 Venice Commission (2014). 120

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Lustration also met resistance among officials, who either administratively hindered the process at all levels or massively appealed against the decisions of their removal from the occupied state positions in courts. The inability of the authorities to effectively dismiss dishonest officials was accompanied by an outraged public reaction, sometimes escalating into anti-criminal radicalism.126 In Ukraine, the so-called ‘garbage lustration’ has become widespread, an echo of the experience of vigilantism. The phenomenon consists of throwing compromised officials into garbage bins, accompanied by calls to ‘free’ their jobs.127 In 2015, there were several resonant arrests of top officials. During a meeting of the Cabinet of Ministers (government), the Head of the State Emergency Service of Ukraine was detained on suspicion of organizing a corrupt tender for the purchase of fuel and lubricants at excessive prices, as well as of extorting money from the heads of territorial units, threatening them with dismissal.128 During a session of the Verkhovna Rada (parliament), a member of parliament was detained on suspicion of taking bribes for ‘assisting’ entrepreneurs in promoting their businesses and providing cover from the police, as well as using his parliamentary powers for private gain and selling his parliamentary opportunities. A deputy inquiry was estimated at about US$15,000 and an appeal at US$3,000–$5,000. The funds were allegedly received to finance the party and enrich personal wealth.129 Obviously, this was a strategy to catch ‘big fish’, but unfortunately, it turned out to be too selective and, worse, ineffective. These and other ‘exemplary’ corruption cases have not resulted in real punishment. The above mentioned officials avoided responsibility and got reinstatement. In 2015, representatives of Transparency International Ukraine, PrivatBank, PwC Ukraine and GfK Ukraine presented the results of a study of the perception of corruption by Ukrainian businesses over a six-month period. Despite all of the significant arrests and sensational disclosures, entrepreneurs believed that the situation had worsened overall. More than a quarter of the businessmen surveyed admitted having faced corrupt demands.130 The extremely slow pace of the implementation of anti-corruption reforms during the presidency of P. Poroshenko (2014–2019) played an important role in the attitude of voters against him and his party in 2019. At the same time, it is worth noting the creation of a system of anti-corruption bodies in Ukraine as part of reforms— namely the National Agency for the Prevention of Corruption (NAPC), the National Anti-Corruption Bureau of Ukraine (NABU), specialized anti-corruption prosecutors and the National Agency of Ukraine for the finding, tracing and management of assets derived from corruption and other crimes (Asset Recovery and Management Agency or ARMA) and bringing the anti-corruption system up to international

126

Maslova (2020). Livyi bereh (2015). 128 Pekhno (2018). 129 Zhartovska (2015). 130 Ekonomichna pravda (2015). 127

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standards.131 Anti-corruption institutions began to function, including an electronic declaration system for high-ranking officials and politicians to report their assets. The electronic public procurement platform ProZorro was created. In 2019, the High Anti-Corruption Court became functional as a specialized court with nationwide jurisdiction. These novelties are examples of concrete progress and shifts in the fight against corruption in Ukraine. The steps provided some hope not only for improvements in governance and the prevention of fraud and embezzlement but also for a loosening of the systemic ties between politics, business and organized crime that have characterized the Ukrainian reality of the last 20 years. With the development of the information society and the penetration of digital technologies into almost all spheres of social life, organized crime has acquired new facets, inevitably being affected by general digitalization. The criminalization of society has led to the spread of organized crime in the environment of global information networks, which have long since become an electronic analogue of public life. The informational model of organized crime is not yet well-established and fully formed but, as a result of rapid development, it is in the process of institutionalization, actively exploring cyberspace. Cybercrime is an evolution, not a revolution.132 However, there are factors and events that are accelerating this evolution. The COVID-19 pandemic has contributed to digitalization, and this process is irreversible. The digital ecosystem is vulnerable in some ways, in particular in terms of potential anonymity, while the digital criminal ecosystem is much more closed and inaccessible to preventive action and law enforcement agencies. Most ‘virtual’ crimes are transnational in nature. The internet creates virtual connections between potential victims and offenders of cybercrime, physically located at any location in the world, which significantly complicates, and sometimes makes impossible, the process of identification, thereby paralyzing investigations. The mechanism of this type of crime sometimes excludes the possibility of understanding its true prevalence, especially in view of the victimization process, which is not obvious to many victims and is unrecognizable up to a certain point. In addition, remote access to individual computers and their networks makes it difficult to establish the ‘actual location’ of the crimes and thus determine the jurisdiction of the investigation and justice. According to the European Union Agency for Law Enforcement Cooperation (Europol), compromised personal, medical and financial data are a key commodity on Darknet markets and play a crucial role in activities such as fraud, phishing, identity theft and the takeover of accounts. However, while Darknet marketplaces offer a range of counterfeit and pirated goods for sale, most illicit trade still occurs on the surface web.133 Virtual currencies, in the hands of organized crime, terrorist financiers and other criminals trying to circumvent sanctions, are becoming a powerful new

131

Dudorov et al. (2019). Europol (2021), pp. 8, 13. 133 Europol (2018), p. 49. 132

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tool for moving and storing money in ways that put them beyond the reach of law enforcement and other competent authorities.134 The environment for committing crimes in the field of information technology is global information networks, which are used by organized criminal groups not only for committing purely computer crimes (illegal penetration into corporate and private databases, network fraud, distribution of virus programmes, etc.), but are also actively used as a propaganda and communication tool by terrorist organizations, to incite crimes based on racism, extremism and xenophobia, to create illegal markets for weapons, explosives, drugs, human organs, the distribution of pornographic products involving children, as well as a means of stalking for blackmail, etc. The use of electronic payment systems via the internet for fraud and money laundering and terrorist financing is becoming increasingly common.135 The information influence can become a powerful weapon, the use of which, concerning energy, transportation, finances and other critical technologies, can be catastrophic. The power of such influence can be compared to a means of mass destruction, considering that the costs required to carry out such influence are minimal and the source of the attack is difficult to identify.136 The informational model of organized crime is often an online replica of criminal offline schemes and transactions used in different countries around the world. The universalism of information technology negates the potential uniqueness of the model for a particular country. However, states with a sufficient level of development of the information technology sector and a low ability to counteract crimes in this area become safe havens for organized crime of the information modus operandi. The Ukrainian electronic (information) society is being built at the state and territorial community levels, which combine the interaction of citizens, enterprises, organizations, local governments and state bodies using grid and blockchain information technologies.137 As of 2019, the share of regular internet users was 71%.138 The Ministry of Digital Transformation plans to digitize all public services and document flows, saving money through electronic services. The economic effect of digitalization is estimated at UAH3.64 billion per year (about e100 million), with the anti-corruption effect of UAH2.05 billion per year (about e57 million).139 Criminal groups are building similar digital interactions. The increase in the number of digital services implies an increase in the level of cyber threats. The biggest priority in Ukraine today is the protection of the personal data of Ukrainians and state registers. In 2013, Ukraine became one of the leading countries in terms of the number of cyber-attacks—it ranked fourth in the world (after Russia, Taiwan and Germany).140 134

FATF (2014). Havlovskyi and Butuzov (2010). 136 Butuzov (2009). 137 Bilenchuk et al. (2022). 138 Ukrainian Internet Association (2019). 139 Ministry of Digital Information of Ukraine (2021). 140 Ukrainska pravda (2013b). 135

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The overall number of cybercrimes spiked in 2017. The Petya virus was largely to blame in this regard. However, the number of information crimes has not decreased since then. But the number of prosecutions against cybercriminals is growing not only because of the increase in the number of crimes themselves, but because the number of specialists capable of detecting these crimes has also increased.141 Cybercrimes target private individuals, businesses and public sector organizations. According to a 2020 study, 31% of economic crimes suffered by organizations in Ukraine are cybercrime.142 The emerging infrastructure of the information model of organized crime is evidenced by the development in recent years of the phenomenon of ‘cybercrimeservice’—an online marketplace for the exchange of stolen data, hacking tools and vulnerabilities of information systems, as well as other criminal services, such as the rental of botnets and spam servers.143 One of the trends in the Ukrainian information model is the increasing involvement of Ukrainians in the activities of international groups that hack information services.144 At the same time, it is more difficult to investigate such cases because, if the offender and the victim are located in different countries, an international investigation must be organized to detect such a scheme, which increases the response time and allows the concealment and destruction of digital evidence. For example, in April 2014, the US Department of Justice indicted a nine-member group of hackers for intentionally using the ZeuS Trojan programme to collect information about users’ bank accounts and money embezzlement. Ukrainians Y. Konovalenko, 31, and Y. Kulibaba, 36, who were extradited from the UK after being found guilty in August 2012, were brought to trial. According to the indictment, Y. Kulibaba ran an agent network for laundering stolen money in the UK. Y. Konovalenko was involved in the recruitment of ‘drops’ and trafficking in data stolen from victims of infection. Four other suspects reside in Ukraine and Russia, and currently remain at large. V. Penchukov allegedly coordinated the actions of drops based in the US and the UK, and received reports of compromised bank accounts. I. Klepikov acted as a system administrator and provided general technical support. A. Bron managed WebMoney money transfers as a financial manager and A. Tikhonov created additional plugins for ZeuS. Other members of the international cybercrime group have not been identified.145 In some cases, cybercrime is merged with traditional organized crime: this happens during operations to hack remote banking systems. For cybercriminals, the main difficulty is not in hacking the client-bank system, but in taking the cash—for this purpose, experienced underworld figures are involved in the scheme.146

141

Opendatabot (2019). PWC (2020). 143 Hutsaliuk (2020). 144 See New Voice (2018), Minfin (2013), Cyberpolice of Ukraine (2019). 145 United States Department of Justice (2014). 146 Dorosh (2013). 142

References

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Today the means of cybercrime are being modified: there is a complete rejection of personal communication between criminals that used to be a condition for the distribution of roles and planning of operations. Recording such contacts used to prove the guilt of accomplices, but now it is more difficult to prove their connections. Will the information model of organized crime replace the more traditional ones? It is doubtful. But the general digitalization of society will inevitably digitalize crime.

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diRlbnictb Rk zagpoza nacionalbniN bezpeci Ukpa|ni). Naukovyi visnyk Lvivskoho derzhavnoho universytetu vnutrishnikh sprav 2(1):109–117 Melnychuk T (2013) Tsina ekonomichnoi zlochynnosti: problemni aspekty vyznachennia ta zastosuvannia (The cost of economic crime: problematic aspects of determination and application. Cina ekonomiqno| zloqinnocti: ppoblemni acpekti viznaqennR ta zactocyvannR). Naukovyi Visnyk Mizhnarodnoho Humanitarnoho Universytetu 5:189–193 Melnyk P (2019) Kryminalno-pravove zabezpechennia protydii orhanizovanii zlochynnosti v URSR (1960–1991 rr) (Criminal law enforcement of combating organized crime in the Ukrainian SSR (1960–1991). Kpiminalbno-ppavove zabezpeqennR ppotidi| opganizovaniN zloqinnocti v UPCP (1960–1991 pp)). Dissertation, Taras Shevchenko National University of Kyiv Minakov M (2019) Republic of clans: the evolution of the Ukrainian political system. In: Magyar B (ed) Stubborn structures: reconceptualizing post-communist regimes. CEU Press, Budapest, pp 238–241 Minfin (2013) V SSHA ob"yavleny okonchatel’nye prigovory ‘kiberprestupnoj gruppirovke Western Express’ (Final sentences announced for ‘Western Express cybercrime group’ in US. B CXA obbRvleny okonqatelbnye ppigovopy «kibepppectypnoN gpyppipovke Western Express»), 03 August 2013. https://minfin.com.ua/2013/08/13/795964/. Accessed 14 Jan 2023 Ministry of Digital Information of Ukraine (2021) Zaoshchadzhennia zavdiaky tsyfrovizatsii (Savings through digitalization. ZaowadkennR zavdRki cifpovizaci|). https://thedigital.gov. ua/saving. Accessed 26 Apr 2023 Ministry of Internal Affairs of Ukraine (2014) Explanatory note to the draft law of Ukraine ‘On amendments to certain legislative acts of Ukraine on reforming the internal affairs agencies’ of 11 November 2014. http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=52353&pf3 5401=315611. Accessed 25 Feb 2023 Momotenko T (2015) Vynyknennia, stanovlennia ta poshyrennia orhanizovanoi zlochynnosti v Ukraini: istorychnyi ohliad (The emergence, development and expansion of organized crime in Ukraine: a historical overview. BiniknennR, ctanovlennR ta poxipennR opganizovano| zloqinnocti v Ukpa|ni: ictopiqniN oglRd). Forum Prava 1:182–189 Moore M (1987) Organized crime as business enterprise. In: Edelhertz H (ed) Major issues in organized crime control. Government Printing Office, Washington, pp 51–64 New Voice (2018) In Fraud We Trust. Kak dejstvovala osnovannaya ukraincem hakerskaya gruppirovka, nanesshaya $530 mln ushcherba (How a Ukrainian-backed hacker group that caused $530 million in damage operated. Kak deNctvovala ocnovannaR ykpaincem xakepckaR gpyppipovka, nanecxaR $530 mln ywepba), 08 February 2018. https://nv.ua/world/countr ies/in-fraud-we-trust-kak-dejstvovala-osnovannaja-ukraintsem-khakerskaja-hruppirovka-nan esshaja-530-mln-ushcherba-2450818.html. Accessed 27 Jan 2023 New Voice (2022) 22 roky tomu bulo vbyto Georgiia Gongadze. Yak zminyv Ukrainu naihuchnishyi zlochyn pershykh desiatylit nezalezhnosti (22 years ago, Georgiy Gongadze was murdered. How the most notorious crime of the first decades of independence changed Ukraine. 22 poki tomy bylo vbito GeopgiR Gongadze. Rk zminiv Ukpa|ny naNgyqnixiN zloqin pepxix decRtilitb nezaleknocti), 16 September 2022. https://nv.ua/ukr/ukraine/events/21-rik-z-dnya-vbivstva-zhurnalista-georgiya-gongadzepodrobici-video-novini-ukrajini-50112394.html. Accessed 9 June 2023 Nichols P (2012) United States Lazarenko: the trial and conviction of two former prime ministers of Ukraine. Univ Chic Leg Forum 1(6):4–90 Novynarnia (2016) Skhema eksportu ‘chornykh’ tsyharok iz ‘DNR’ v YeS zalyshaietsia diievoiu (Scheme to export ‘Black’ Cigarettes from the ‘DPR’ to the EU remains effective. Cxema ekcpopty ‘qopnix’ cigapok iz ‘DHP’ v mC zalixaptbcR dipvoO), 28 January 2016. https://novynarnia.com/2016/01/28/shema-eksportu-chornih-tsigarok-iz-dnr-vyes-zalishayetsya-diyevoyu/. Accessed 9 June 2023 Odyntsova O (2012) Dzherela kryminolohichnoi informatsii pro orhanizovanu zlochynnist ta yikh vykorystannia v kryminolohichnii nautsi ta praktytsi (Sources of criminological information on organized crime and their application in criminological science and practice. Dkepela

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Chapter 5

The Contemporary Hybrid Model and Organized Crime Clusters

Abstract Based on the findings of previous chapters concerning a cluster modelling approach to organized crime and its evolution in the Ukrainian context, the chapter evaluates contemporary organized crime clusters in Ukraine as a predominantly multi-pyramidal flexible system with developed inter-regional and transnational ties and a hybrid model of operation. A case study of a particular cluster of illegal amber mining aims to strengthen the chosen methodological approach. As a result of the unsettled legal status of amber mining in Ukraine, more than 90% of its volume is mined illegally. The amber industry gradually evolved from individual illegal miners to a stable criminal market with a specific infrastructure, institutional criminal practices, interconnected actors and excess profits. Instead of a legal one, a powerful criminal cluster ruled by organized criminal groups emerged. In the chapter, the uniqueness of the amber cluster, in view of its spatial distribution is specified; based on the typical criminal cluster model, its structure and the principal stakeholders involved in mining and distribution are determined; synergistic impacts and consequences for the environment, local economy and social capital are identified.

5.1 Criminal Clusters in Contemporary Ukraine: Actors, Links and Criminal Investment In contrast to official cluster formations that are purposefully formed in order to achieve greater efficiency, rationality and competitiveness, the cluster structure of organized crime is mostly the result of the adaptability of organized criminal activity. Ukraine’s inherent rule of institutions and positions, as opposed to the rule of law, has played a constitutive role in the institutionalization of organized crime. From the point of view of system analysis and the concept of organized crime as an institutional cluster, a criminal cluster is a complex system of social ties and economic relations concerning the obtaining of illegal profit. In turn, a criminal cluster is an element of a local socio-economic system as a system of a higher level and interacts with other actors of socio-economic relations (the state, civil society, etc.) based on corrupt relations, serving as the binding agent for this criminal activity. Inductively, criminal clusters, like other local production systems, consist of many independent © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_5

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quasi-agents linked by relationships, forming groups and coalitions, various hybrid forms of criminal coordination, or sub-clusters. Members of such ‘criminal units’ of the cluster are bonded by a form of solidarity based on the recognition of common ties. The panorama of past organized crime in Ukraine reveals the mutations that organized criminal activity has undergone in the context of transition. The paradox of these changes is that, despite the fierce struggle to establish a criminal monopoly over a particular segment of the criminal market, or a certain territory—which sometimes leads to internecine criminal wars—organized crime thus rejects inefficient models of functioning, ensuring a stable life cycle and focuses on finding and establishing relevant criminal ties that maximize benefits. Strengthening criminal ties between groups ensures the formation of the social capital of organized crime, eliminating most of the status motives of criminal activity in favour of financial and material motivation and criminal competitiveness through the institutionalization of criminal practices. Organized crime in Ukraine has gone through a transition of professionally or traditionally organized criminal groups (‘thieves in law’), functional racketeering groups, modern businesspeople who accumulated their initial capital through the shadow economy, bureaucratically constructed groups from former official, vertically powerful ruling circles, networks of personal or professional connections of the Soviet special services, oligarchic-clan pyramidal structures and amorphous delocalized cyber entities. After the flourishing of the second half of the 1990s, traditional forms of organized crime in Ukraine have faded and organized crime has shifted to a hybrid model that combines elements of evolutionarily rejected models. The data obtained in the course of this research does not confirm the existence of large-scale, strictly centralized hierarchical criminal structures in today’s Ukraine. There is no group that dominates the entire country. Similarly, there is no full organizational subordination of all criminal structures throughout the state or a kind of think tank for the entire system of organized crime. The criminal activity is carried out by a number of stable local and regional criminal organizations, each of which controls a certain region, city or part of it, but mostly has verticalized corrupt connections, both upward and downward. Some groups are dense and operate at the local or interregional level, while others are more flexible and operate at the transnational level. The leaders of criminal networks often know each other. Organized crime in different regions will always have its own modifications, and be in various stages of development and regression, depending on the socio-economic and political situation, and the effectiveness of social controls. Trendsetting organized groups in Ukraine are becoming increasingly heterogeneous and dynamic, moving toward freer networks rather than a monolithic pyramid.1 The most dangerous criminal groups do not have a stable, clear organizational structure—they change it frequently, as well as their areas of activity, for the purpose

1

Shostko (2011), p. 37.

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of making a profit.2 Although the system of criminal associations represented by their leaders does not have sufficiently rigid centralized management, coordination between them undoubtedly exists. In addition, they use and implement stereotypical criminal practices, which become formalized and together create a synergetic effect that is inherent to a cluster. At the same time, previous studies have noted the existence of ‘wild’ organized criminal groups, gangs that do not belong to a criminal community, ‘thieves’ law’, etc., but profess to a kind of criminal norms and standards of behaviour.3 Such groups also operate in today’s Ukraine, but they are mostly unstable or are at the early stages of their life cycle. They do not find their own independent development and quickly go into decline or join more stable clusters. The ‘infection’ with organized crime in different regions of the country is uneven (see Sect. 4.3 and Appendix D). The activities of criminal groups in Ukraine are based on a mixed principle: territorial and sectoral. This means that each criminal group operates within certain territorial boundaries and is engaged in a certain type or types of criminal activity. Organized criminal groups in the south-western region, in particular the Chernivtsi region, which borders Moldova and Romania, are more prone to smuggling activities, while groups in the eastern industrial region, in particular Dnipropetrovsk region, are more rationally focused on financial and economic illegal transactions. Organized crime in Ukraine is mostly an urban phenomenon, concentrated around highly urbanized cities and regions, turning them into criminal hubs. In Ukraine, metropolitan areas are significant logistical centres for criminal networks. Geographically, over the period 2001–2021, the largest concentration of identified criminal groups was observed in eastern Ukraine (Dnipro, Donetsk, Luhansk and Kharkiv regions), which is also the most densely populated. After the loss of control over parts of the Luhansk and Donetsk regions in 2014, the official organized crime rate in these regions decreased. As of 2021, Dnipro and Kharkiv regions and the city of Kyiv are the leaders. Despite the official data, it is very likely that the legacy of high crime rates in eastern Ukraine, the formation of the self-proclaimed DLPR, de facto criminal organizations with criminal methods of operation and the emergence of a quasi-border and a demarcation line have increased criminogenic risks and threats in the region. Territorial and sectoral centralization is mainly observed in relation to the location of large industrial complexes or economic spheres. The distribution of organized crime in Ukraine is also influenced by regional development, the presence of ethnic minorities, the intensity of tourism, the activity of social control, land borders and their length, seaports and the availability of port or business infrastructure, the localization of minerals (amber, coal) or natural resources (forests), the violent conflict in Donbas and the quasi-border with the self-proclaimed DLPR formed in 2014, and the large-scale war since 2022. 2

Anonymous interview with an active employee of the Prosecutor General’s Office of Ukraine, conducted in February 2023. 3 Soboliev and Yarmysh (2001).

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Further, uneven regional development, confrontation between Eastern and Western political views, language preferences and cultural traditions contributed to fragmentation rather than pluralism and cohesion, which consequently influenced the support of conflicting groups, interests or political forces by certain organized criminal groups. In addition to Donbas, Crimea—an autonomous republic within independent Ukraine, which was occupied and then annexed by the Russian Federation in 2014 against the backdrop of the Revolution of Dignity—is very vulnerable in this context. This was supported by the actions of local organized criminal groups, which have generally migrated to business and politics in Crimea since the 1990s and have close ties to Russian organized crime. For example, excerpts from the operational and investigative case of the special department to combat organized crime in the Autonomous Republic of Crimea were published in mass media. According to them the current head of occupied Crimea, S. Aksionov, nicknamed ‘Goblin’, was involved in the organized criminal group ‘Saylem’ in the 1990s. Between 2007 and 2010, approximately 20 people from the most powerful Crimean gangs, the warring ‘Bashmaki’ and Saylem gangs, were detained. At that time, S. Aksionov was again in the focus of law enforcement agencies.4 After the annexation, Crimea became even more attractive for Russian criminal groups that have a business interest in stealing state property, extending their influence by sending their controllers (‘lookouts’) to local groups. The trend of a diffusion of organized crime with the socio-economic environment and its ability to lobby for criminal interests still continues in Ukraine. Inner structural links. Despite the relative decentralization of organized crime in Ukraine, a structured core with signs of vertical management can function within a particular region, organically combined with a flexible network structure of peripheral links. A cluster network consists of a large number of organizations of different sizes that operate autonomously from each other. However, they are connected through personal contacts and representatives, and coordinate their activities at this level. At the same time, a single contact person is sometimes enough to facilitate criminal interaction. A criminal cluster may include several levels: from strictly criminal associations headed by ‘thieves in law’ to white-collar criminal groups with a corresponding respectable status of their members, combining professional and illegal activities, as well as persons close to the authorities who cover or organize criminal markets on their own. There are cases of persons who are called to fight against this negative phenomenon—law enforcement officers—becoming members of organized criminal groups or leading them. The cohesion of the members of organized criminal groups is determined to a greater extent by political and economic, interpersonal ties, acquaintances due to joint professional activity, exchange of services or joint leisure activities. Unlike other countries (in particular, Georgia), where criminal networks are built on mixed ties, ranging from blood ties, such as tribal and family loyalty, and loyalty of friendship, to business exchanges of services and money, the main factor of cohesion in the cluster 4

UNIAN (2021).

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of Ukrainian criminal groups is pragmatism, cold calculation, material interest and common interests in obtaining financial gain or power. Elements of cohesion based on blood ties are sometimes present in rural areas of Ukraine or small towns and therefore are less typical of Ukrainian organized crime in general, which is concentrated in cities. It is noteworthy that criminal organizations and their members are not only involved in direct criminal activity. There is evidence of their shadow management of official institutions, which reflects their influence on society. For example, according to information provided in a 2017 journalistic interview with a former high-ranking official of the National Police of Ukraine, the ‘thief in law’ (‘Nedielia’, ‘Lvivskyi’) was hosting members of parliament and heads of enterprises in a hotel in the centre of Kyiv acting as an arbitrator. It is also believed that A. Nedzelskyi was involved in a substantial business—electricity supplies to specific power plants in the Donetsk region.5 He was put on an international wanted list in May 2020 for the alleged murder of his business partner, detained in Bulgaria in the summer of 2021, and disappeared after being granted bail. On 14 May 2021, the National Security and Defense Council imposed sanctions on 557 ‘thieves in law’ and 111 foreigners who are understood to be ‘criminal authorities’ around the world. Law enforcement officials estimate that there are 15– 25 ‘thieves in law’ in Ukraine on a permanent basis. Furthermore, ‘thieves in law’ very often manage criminal organizations remotely from abroad.6 Members of criminal groups are well-informed about the methods of law enforcement agencies and constantly counteract them, using various means of concealing criminal activities. In particular, they avoid direct personal contact with each other, constantly change SIM cards, use different messengers and SIM cards of cellular operators of other countries, and make non-cash payments, including cryptocurrency.7 Modern digital facilities are actively used by criminal organizations in the drug trafficking sector. Such organizations operate based on assigning functional missions and territorial areas of responsibility to the heads of individual structural units, in particular, in certain cities where the criminal organization operates in the sale of narcotic drugs, in order to avoid possible internal competition, as well as to maximize the coverage of the market for narcotic drugs, psychotropic substances and their analogues by a virtual network of online stores. The operators of criminal drug organizations post contact details of a chatbot messenger with manual or automatic sales on pre-created web resources on the internet. The operator, having checked the receipt of funds from the buyer to the relevant crypto accounts or electronic wallets, informs the latter of the address of the so-called ‘bookmark’ received in advance from the ‘courier’. This plan eliminates the need for a personal meeting between the seller and the buyer, which in turn helps to optimize activities and makes it impossible to 5

Yuzhnaya pravda (2020). Ukrinform (2020). 7 Anonymous interview with an active employee of the Prosecutor General’s Office of Ukraine, conducted in February 2023. 6

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identify the seller. One of the rules of operation of such criminal organizations is also the use of special slang and speech patterns in communication that deform the true meaning of the content of electronic messages in order to prevent law enforcement officers from understanding it during operational and search activities.8 Furthermore, members of criminal entities may exert unlawful influence on witnesses and victims, including through bribery and intimidation, in order to avoid criminal liability. In this regard, the most common security measures used in the practice of Ukrainian law enforcement agencies are ensuring the confidentiality of information about a person, and personal protection.9 In the Ukrainian reality concerning organized crime, there are certain ethnic or ethnocultural inclusions, although they are not predominant. The main factors of the danger of ethnic organized crime are its closed form and, as a result, the impossibility for outsiders (for example, undercover law enforcement officers) to penetrate its structure, internationalization, the position of the group in the illegal and legal markets and the level of penetration into the legal economy. In Ukraine, the activities of groups with foreign Russian, Georgian, Chechen, Azerbaijani and Roma elements are mostly documented. In particular, Roma organized criminal groups are built on a network model, are engaged in the sale of drugs (heroin, opium), fraud and theft and are interested in prohibited commercial activities. In most Roma organized criminal groups, there is unity and monolithicity among their members, which makes it impossible to use contradictions between different group members to counteract them.10 The cluster-based functioning of organized crime creates negative social capital. In organized crime groups, trust and informal norms are still based on criminal concepts and the inevitability of criminal ‘justice’, but there are also cases of trust being reinforced by quasi-formal written agreements that veil criminal activity and attempt to give it a guise of legality. External links and spheres of influence. There is a kind of dualism in the activities of the criminal cluster—on the one hand, concentration around economically developed, densely populated centres with great potential, on the other hand, both direct and indirect negative impact on local and national economic activity, management and political spheres. Organized crime is a risk to society, but also a resource for meeting needs. According to the results of the 2021 survey, the importance and role of organized crime were assessed by Ukrainian citizens at 28.3%, which is significantly lower than during the heyday of organized crime in the country in the 1990s. However,

8

Unified State Register of Court Decisions of Ukraine (2020b, c). The interview with Maryna Onufriienko, former employee of the Prosecutor General’s Office of Ukraine (2012–2016), conducted in December 2022. 10 Kalynovskyi and Remskyi (2010). 9

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even at this level, it is higher than the assessment of the role of the intelligentsia or the courts11 (Appendix E). The presence of organized crime weakens the rule of law and security in the regions of its concentration and reproduction. This situation makes the business environment less safe and dynamic, increases the uncertainty and risks associated with new investment opportunities, and reduces trust and reciprocity between economic agents. Under such conditions, the formation and development of economic networks are threatened, as firms are less willing to establish strong and long-term production ties. This negative effect is more detrimental for small firms than for large ones. Moreover, by protecting their illegal businesses, organized crime curtails free competition in the market, shortens access to enterprise and fuels the shadow economy. A distinctive feature of the Ukrainian economy since the early days of independence is the spatial non-distinction between official and shadow activities. Structures that are engaged only in shadow activities constitute an insignificant part of the shadow sphere. For the vast majority, firms are engaged in both official and unofficial activities. They are served by banks, police, courts and other institutions that have the same structure.12 The typically non-criminal ties of kinship and legitimate business networks appear to be the ‘glue’ that holds the larger criminal enterprise network together.13 According to the Ministry of Economy of Ukraine, the level of the shadow economy in 2020 was about 31% of the official GDP,14 with experts estimating this at from 40 to 60% of GDP.15 The scale of criminal activity can be evidenced by the World Economic Forum’s annual Global Competitiveness Index, which assesses, among other things, the impact of organized crime on the cost of doing business. Thus, in 2015–2016, Ukraine ranked 128th out of 140 countries in this ranking. In 2019, the ranking improved slightly, and Ukraine moved to 110th place out of 141 countries, but the impact of organized crime on business is still significant. The overall high level of corruption reinforces the potential for organized crime to exploit it. Experts of the Corruption Perceptions Index 2021 ranking assessed the level of corruption in Ukraine at 32 points, which is 1 point less than in the 2020 ranking (on a scale from 0 to 100, where 0 means the highest level of corruption according to respondents’ perceptions, and 100 means the lowest). This corresponds to 122nd place among 180 countries included in the ranking (117th place among 180 countries in the 2020 ranking). According to the rating’s experts, the pressure on the anti-corruption ecosystem in Ukraine has increased (including due to the prolonged absence of permanent heads of institutions); the changes introduced to the anti-monopoly legislation could harm business in protecting its rights in challenging 11

The research is conducted by the Institute of Sociology of the National Academy of Sciences of Ukraine. Respondents are invited to note in the given list those social groups that, in their opinion, play a significant role in the life of Ukrainian society. Vorona and Shulha (eds) (2021). 12 Nureev and Dement’ev (eds) (2005), pp. 69–70. 13 Malm et al. (2010). 14 Ministry of Economy of Ukraine (2022). 15 Rybalchenko et al. (2020), p. 32.

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public procurement; interference in the work of the High Anti-Corruption Court has increased; and the implementation of judicial reform is delayed. As a result, a number of these negative developments have offset anti-corruption achievements.16 The corruption capacity of the Ukrainian organized crime cluster is ensured by mutually beneficial relations with officials responsible for issuing permits or licenses and holding tenders. Using their powers, they create obstacles for reputable business organizations and thus exclude them from obtaining lucrative contracts, by bidding for their trusted firms for so-called kickbacks—interest deductions from the amount of the contract, which usually amounts to 10%.17 The situation is typical, in particular, for the construction sector in Ukraine, which is riddled with organized crime and corruption. For example, in October 2022, law enforcement officers documented a record amount of bribes offered in Ukraine. According to the investigation, a former member of the Ukrainian parliament (formerly also a top official of the state company ‘UkrBud’) offered the mayor of Dnipro a benefit for signing a contract with companies under his control for the construction of the Dnipro subway without a tender. The ex-MP estimated the mayor’s ‘loyalty’ at e22 million, which amounts to 10% of the project cost. The project is financed by a loan from the European Bank for Reconstruction and Development.18 Particular localized criminal schemes become cliches for their continuation on a sectoral or national scale, and criminal practices acquire signs of stability and formalization. Criminals, furthermore, still finance election campaigns for officials or buy positions for trusted, untainted individuals to gain power and influence, controlling officials like puppeteers. According to official sources, crimes related to drug trafficking are dominant among organized crime activities. Groups, though, usually combine several types of criminal activity and focus on several criminal markets, including, but not limited to, extortion, smuggling, illegal arms trafficking, human trafficking and so on. Over the past three years, an average of 40% of the identified groups have been involved in poly-criminal activities. In addition to criminal businesses, popular areas for criminal investment include industrial raiding,19 the land market,20 the real estate market,21 including construction,22 and other businesses related to the possibility of misappropriation of state funds, etc. The COVID-19 emergency provided new opportunities for organized crime.23 The available evidence suggests that infiltration occurred when conducting business 16

Transparency International Ukraine (2021). Anonymous interview with the owner of small business in Ukraine, conducted in September 2022. 18 National Anti-Corruption Bureau of Ukraine (2022). 19 Bakhurynskyi (2021). 20 Izovita (2014). 21 Dykyi (2015). 22 Chernyshov (2016). 23 Aziani et al. (2021). 17

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related to the sale of medical goods and the embezzlement of funds allocated for medical needs. In this case, organized crime groups were able to profit from the entire spectrum of possible activities, ranging from illegal activities, such as the production and sale of counterfeit products, to legal ones, such as the acquisition and establishment of fully legal firms (for example, engaged in the wholesale trade of medical devices, masks, pharmaceuticals) or their use as a cover for illicit trafficking. The trends of e-commerce and remote work, which were relevant even before the pandemic, have accelerated. More and more people spent extended periods of time online for work and leisure during the pandemic, which has expanded the scope of various types of cyber-attacks and fraud schemes.24 In the wave of the pandemic, stable groups emerged in Ukraine whose activities are related to the production of fake vaccination certificates and unauthorized changes to the information processed in the automated systems of the Ministry of Health of Ukraine on vaccination of the population against COVID-19. This meant that individuals could secure electronic vaccination certificates using the Diia app without having to be vaccinated.25 The cluster’s openness to cooperation and desire to develop new markets and increase profits also explain its powerful contacts and ties with international crime groups. Strategic logistics ports and long-standing trade routes are contributing to the rise of organized crime. Ukrainian criminals’ active contacts with their international partners contribute to the growth and increasing sophistication of their organized crime. This is true both of more conventional organized crime activities such as trafficking in women and the more sophisticated financial activities connected to large-scale overseas money laundering.26 The peculiarities of Ukraine’s geographical location in the centre of Europe contributes to the involvement of Ukrainian organized crime in transnational criminal flows, in which before February 2022 Ukraine served as: Transition state for drug trafficking, with some drugs accumulating in local markets. Although Ukraine is not a major drug source country, its location astride several important drug trafficking routes into Western Europe leaves it vulnerable as an important transit country. Ukraine’s numerous ports on the Black and Azov Seas, its extensive river routes and its porous northern and eastern borders made Ukraine an attractive route for drug traffickers into the EU’s illicit drug market. Heroin from Afghanistan is trafficked through Russia, the Caucasus and Turkey, before passing through Ukraine. Latin American cocaine is moved through Ukrainian sea and airports for both domestic use and further transit to EU countries.27 Supplier for human trafficking, whereby sexual exploitation trends are balanced with labour ones. Socially vulnerable categories of the population (children,

24

Filippov (2020). Unified State Register of Court Decisions of Ukraine (2023). 26 Shelley (1998), pp. 650–651. 27 Home Office (2019). 25

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including orphans, children deprived of parental care, homeless and neglected children; unemployed persons of working age; persons who illegally travel abroad or have illegally entered or are staying in Ukraine; persons using dating services, including abroad; persons working in the entertainment sector; persons engaged in prostitution) are at the highest risk. Cases of revictimization are recorded.28 Recipient or buffer zone of illegal migrants. More than 90% of illegal immigrants are being moved under the ‘patronage’ of transnational organized criminal groups.29 The local population readily joins this activity, which is a part of private capital in the border regions of Ukraine, generated through the illegal transfer of migrants abroad. Intermediary in smuggling. The state’s inability to relate the needs of the market to its capabilities, as well as a variety of customs and tax regimes between neighbouring jurisdictions, provoke the interest of criminal groups in smuggling. One of the most lucrative areas of smuggling is excisable goods. In 2012, on the border of Ukraine and Slovakia, a tunnel of about 700 m long and 90 cm in diameter was discovered. Equipped with electricity, rail and trolleys, it was intended to smuggle excisable goods (cigarettes) and groups of illegal migrants to the EU. The tunnel exit was in a private firm, enclosed by a high fence on Slovak territory and in a private home on the Ukrainian side of the border. According to Slovak officials, the tunnel inflicted a e50 million a year loss to the country.30 Smugglers are increasingly using drones to move cigarettes from Ukraine to Europe where they can be sold tax-free and at an attractive profit, according to Ukraine’s State Border Guard. The trade has been estimated at over US$2 billion annually.31 From 2022, the routes of transnational illegal markets are expected to shift due to the large-scale war in Ukraine. Summarizing contemporary patterns, the current organized crime clusters in Ukraine appear to be a predominantly multi-pyramidal flexible system with developed inter-regional and transnational ties and a hybrid model of operation.

5.2 Amber Fever and Amber Criminal Conflicts: A Cluster Case Study A specific criminal cluster and one of the profitable illegal markets for organized crime in Ukraine is the illegal mining of minerals, in particular amber. Ukraine ranks third in the world in terms of amber reserves, second only to Russia and Poland,32 and is distinguished by the highest percentage of jewelleryquality amber. The Ukrainian ‘amber brand’ has two main advantages compared to foreign ones. Its deposits are characterized by the world’s shallowest occurrence of 28

OSCE Project Co-ordinator in Ukraine (2011). Skulysh (2005), p. 197. 30 Bodnia (2021). 31 Down (2018). 32 State Service of Geology and Mineral Resources of Ukraine (2019). 29

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productive horizons—from two–10 m from the surface. In addition, up to a quarter of the raw amber is suitable for jewellery processing.33 Although some developments in the extraction of this useful mineral began in Ukraine with independence, at the legislative level, the extraction of amber in the country is still not regulated and therefore it is actually outlawed. The Criminal Code of Ukraine provides criminal liability for illegal extraction, sale, purchase, transfer, forwarding, transportation and the processing of amber.34 The legal and bureaucratic problems associated with running amber and other minerals businesses have long discouraged potential investors from investing in legal mining, but have not contradicted the interests of illegal miners. The industry has gradually grown from individual illegal miners into a sustainable criminal business with a specific infrastructure. A criminal cluster of amber trafficking is a group of interdependent collective and individual actors involved in illegal mining, processing, transportation and the sale of precious stones, concentrated in a certain territory. The peculiarity of this cluster of organized crime is its geographical localization around amber deposits. The ‘amber fever’, similar to a gold rush, has captured the Polissya region of Ukraine and subjugated the region’s economy and social sphere. It is located in the north-west of the country, where amber deposits have been discovered (mainly in Volyn, Zhytomyr, Rivne regions, which are popularly called the ‘Amber People’s Republic’). The cluster is also unique as, unlike the general trend of concentration of organized crime around large, industrialized cities, illegal amber mining is carried out in low-urbanized regions with relatively low quality of life and poor social well-being compared to megacities. For Ukraine’s economy, the existence of such zones leads to a negative synergistic effect—the spread and consolidation of illegal and criminal practices and their extension to the lifestyle of the local population. As a result, these territories actually remain outside the law. Illicit mining became a massive criminal practice in 2014–2015. With the new volume of extraction, chaos intensified. Competing groups fighting for territory filled the vacuum left by the consolidated protection racket that collapsed after the Revolution of Dignity. The prerequisites that led to the demand for Ukrainian amber and the significant scale of illegal mining were: Russia’s ban on the export of raw amber, which produces 60% of the world’s amber, and the growing popularity of ‘dragon tears’ products in China; low levels of employment and incomes of local residents; corruption in

33

Matsui et al. (2019), p. 45. The Law of Ukraine ‘On Amendments to Certain Legislative Acts of Ukraine on Improving the Legislation on the Extraction of Amber and Other Minerals’ of 19 December 2019 supplemented the Criminal Code of Ukraine with Article 2401, which singled out as a separate crime and provided for criminal punishment for ‘Illegal extraction, sale, purchase, transfer, shipment, transportation, processing of amber’. Verkhovna Rada of Ukraine (2020).

34

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law enforcement agencies; comparative cheapness and simplicity of artisanal amber mining technology due to its surface occurrence.35 In Ukraine, several companies develop amber deposits based on a special permit for the use of subsoil in the absence of legal regulation of the industry. Ukrainian companies that hold state licenses for amber mining annually produce about four tonnes of this mineral.36 Much more of it is mined by prospectors at illegal mines that are not controlled by the state. According to the most conservative estimates, the volume of illegal amber mining ranges from 120 to 300 tonnes,37 which is 98% of the legally mined volume. This means that an entire sector of the economy has gone into the shadows having a significant impact on the region. Further, the criminal cluster is a mixed territorial and branch one. Sporadic extraction of raw amber is carried out by individuals or small groups (two–three people) with the division of technical roles and the use of mechanical means. In 75% of cases, it is done by hydraulic dredging, and in 25% by simple digging. At the same time, 100% of the organized criminal and industrial extraction of raw amber is carried out by hydromechanical means.38 This method involves the erosion of the soil layer six–10 m deep with water under high pressure, using a hydraulic motor pump. Since amber is lighter than water, it floats to the surface and is then caught in nets. When the soil is washed down to the clay that lies beneath the amber deposits, the mine is left abandoned.39 The scale of this illegal activity is evidenced not only by the volume of illegal mining but also by the area of abandoned and damaged land. Deep round holes, about two metres in diameter, filled with liquid mud—a kind of ‘lunar’ landscape—remain in the places of illegal amber mining. As of 2019, more than 6,200 ha of forest land and more than 1,000 ha of agricultural land have been damaged as a result of illegal artisan mining.40 A significant number of plots where illegal amber mining is conducted are located in remote areas far from roads and settlements, hard-to-reach areas covered by forests. Such areas are usually guarded by armed men who prevent access to the disturbed land. Due to this localization of amber mines, it is very difficult to timely and accurately identify them using ground methods.41 Illegal mining is a well-established criminal business that forms the amber shadow market with various criminal logistics, marketing and other aspects to it. According to various assessments, the total annual revenue of the amber shadow market is estimated to be between US$300 million42 and US$50043 million per year. 35

Kovalevskyi et al. (2017). Popov (2021). 37 Rudko (2017), p. 21. 38 Maksimentsev (2019), p. 18. 39 Nadtochii and Myslyva (2015). 40 Matsui et al. (2019), p. 46. 41 Filipovych (2015). 42 Obozrevatel (2016). 43 Home office (2019). 36

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Illegally mined amber is smuggled abroad to European countries by land through the western border of Ukraine44 and to China and the Middle East by air.45 The participants of the illegal market are miners, customers, intermediaries for the resale of extracted raw materials, processors (both official and illegal), transporters and consumers. The diversity of sectors in the production and distribution mechanism contributes to the emergence of a whole network of connections between criminals and other cluster members. Although the majority of illegal amber mining in Ukraine has become more and more regular and formalized, the identified criminal offences committed by organized groups are exceptional.46 According to some estimates, the share of crime associated with organized crime is only 12% of all criminal proceedings regarding amber trafficking.47 Mostly local residents are brought to criminal responsibility for committing crimes from among low-level operatives. The sustainability of the illegal amber mining industry is explained by a significant number of interest groups that are directly or indirectly concerned with continuing the current state of affairs. They are parts of the cluster structure. Firstly, there are the so-called diggers or miners, persons who are directly involved in amber extraction. They and their families receive at least a minimal income in the absence of other opportunities for formal employment. According to various estimates, between 10,000 and 80,000 people are involved in illegal amber mining in Ukraine, mostly local residents and sometimes entire local communities. According to recent research, criminal activity was the main source of livelihood for 84% of those involved in the illegal extraction of raw amber, while another 16% referred to financial assistance from friends and relatives. Only a few said that their main source of livelihood was their labour activity. Therefore, criminal activity is a way of solving material problems for a certain category of persons.48 This is an irregular income from hard physical labour and without any social guarantees. Close to the miners, and therefore stakeholders, are local entrepreneurs who organize the processes of illegal mining. They provide equipment and transportation, recruit miners from the local community, do not pay taxes and do not spend money on the social protection of employees. Miners have strong social support from local residents who are not directly involved in illegal mining but in some way also benefit. The shadow infusion of funds from illegal mining into the local economy allows it to stay afloat and therefore has an indirect impact on the material well-being of the community. Second, central and local authorities facilitate the continuation of the illegal industry, having their own economic interests and receiving excessive profits through vertical corruption and their involvement in the industry’s schemes or direct leadership. Often, illegal extraction is carried out with the consent and under the cover of 44

Ukrinform (2019). See Voitiuk (2020), Tsenzor (2021). 46 The interview with Maryna Onufriienko, former employee of the Prosecutor General’s Office of Ukraine (2012–2016), conducted in December 2022. 47 Zdorovylo (2019). 48 Khmurovska (2011), p. 82. 45

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law enforcement officers, who, instead of protecting against illegal actions, protect the shadow market and its participants from the law and responsibility. An important group of stakeholders is organized criminal groups that serve as a link between the ‘roof’ and the miners, organize sales channels, resolve ongoing disputes related to payment and use of plots, and provide protection from encroachment by non-local ‘unauthorized’ miners and police, who try to expose and document cases of illegal mining. The groups also provide heavy equipment, including fire hydrants, which are used to draw water from natural reservoirs to operate the motorized pumps. Criminal industrial extraction of raw amber has an extensive functional structure. In addition to the ‘administrative core’ and illegal miners, the structure of the groups includes ‘physical support’ groups and network—‘controller-moderators’.49 At certain mining locations, support groups consist of scout-informant units and protection units. The former mentioned units inform about the approach of the police, forest guards or competitors to the area. Women and minors may be involved in such units for surveillance. Protection units actively prevent competitors or others from accessing a plot, including through the use of violence.50 Often, such units of criminal groups are cohesive and function in an army style. Their members wear camouflage clothing, cover their faces with balaclavas, use registered and unregistered weapons, as well as wooden bats, and block roads with fallen trees, preventing access to illegal mining plots. Numerous cases were documented where members of criminal groups, being on a plot of illegal raw amber mining, actively resisted police officers who tried to stop the mining and protect the crime scene to preserve physical evidence— in particular, vehicles and motorized pumps, as well as other traces of illegal raw amber mining.51 Police attempts to seize pumps and other equipment often end up with miners and protection groups forcibly taking them away or engaging local residents to create artificial crowds and provocations. The police are outnumbered and unable to withstand an armed crowd. The spread of illegal rules for acquiring land ownership, illegal use of subsoil and economic competition, including redistribution of property against the background of growing social inequality are factors that directly affect the development of social conflicts and the escalation of violence in areas of illegal resource extraction. The amber fever is inevitably accompanied by ‘amber wars’ and numerous armed conflicts related to the redistribution of zones of influence. Corrupt government officials fight for territory and control, and armed criminal groups fight for profit with rival criminal groups and non-corrupt law enforcement. The sale of raw amber by miners in criminal industries is carried out in an organized manner at filtration points. In the heyday of the illegal market, one kilogram of amber in the form of several pieces of large fraction, the size of a chicken egg, brought 49

Maksimentsev (2019), p. 18. Lebed (2016). 51 See Unified State Register of Court Decisions of Ukraine (2020a), Stratonova (2020). 50

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a miner about US$2,000. Afterward, the controllers-moderators resold the mineral to wholesale dealers. The average market price of amber was about US$10,000 per kilogram. Some of the raw amber was sent to clandestine grinding shops, where it was processed to increase its original value. Subsequently, 95% of the amber illegally mined in Ukraine is exported from the country in violation of customs regulations and is concealed from customs control. The final consumer, for example, in China, paid US$25,000–$30,000 for the same kilogram of amber.52 The transportation of illegally mined amber across the customs border of Ukraine, as a rule, is carried out by two types of local residents: persons, who periodically smuggle various items as part of their daily life, regardless of their recruitment by organized criminal groups, or persons specially hired to directly perform the function of amber transporting.53 Often they carry a combination of smuggled items, in particular amber and drugs.54 At present, the excitement about the illegal amber market has subsided due to a drop in demand for Ukrainian amber. Miners have now shifted their focus from the quantity of amber to its quality and the size of individual stone specimens. According to some estimates, only 30% of the income from the sale of illegal amber remains with the miners (this figure includes the cost of equipment and consumables, as well as the salaries of the employees involved); 60% of the value of the extracted amber goes ‘upstream’, i.e. to local authorities, and further along the chain to other high-ranking officials who ‘cover’ and control the illegal market in central government. Local criminal gangs and small-scale dealers who float around the business take 10%. The price of stones also contains the cost of legalizing the stone abroad, which includes bribes at customs and logistics costs.55 Ukraine’s law enforcement periodically conducts successful special operations related to the detection of criminal groups involved in the organization of illegal amber mining, the seizure of amber, funds from its sale, mobile terminals, including software, draft records of the volume of sales and customers, as well as the means for illegal mining. The nature of the seized items once again confirms the predominantly organized nature of illegal mining. However, such operations are fragmented and cannot solve the problem comprehensively. The National Guard was called to be deployed to illegal mining zones, but the idea of military involvement was not met with support.56 Corruption at the highest political level in the amber shadow market is evidenced by a particular case, which revealed facts outlining the receipt of illegal benefits totalling more than US$300,000 by people’s deputies of Ukraine in return for assisting a foreign company in the extraction of amber in the country.57 The deputy 52

See Maksimentsev (2019), p. 19, Khmurovska (2018), p. 92, Lymarenko-Polianskyi (2020). Zabyelina and Kalczynski (2020). 54 Unified State Register of Court Decisions of Ukraine (2021) The Verdict of the Horodok District Court … 55 Tutov (2015). 56 Lebed (2016). 57 National Anti-Corruption Bureau of Ukraine (2018). 53

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pledged to help the company in obtaining a license to use subsoil by influencing officials of the State Geocadastre, State Forestry Agency, State Geological Survey of Ukraine, local governments, courts and prosecutors. Further, together with another people’s deputy, he promised to prepare the necessary bills to amend the Customs and Tax Codes so that the company would pay less rent for amber mining. Since 2019, the case has been pending in the High Anti-Corruption Court, but due to the defendants’ delays, the case has not yet been resolved.58 Illegal amber mining leads to significant negative environmental impacts, including soil degradation, increased water and wind erosion, deforestation and soil damage, and is often associated with the accompanying shadow timber market. According to a study, which has investigated corruption in the timber sector in Ukraine, the country is the largest supplier of ‘black’ timber to the EU. Export volumes exceed all countries of Latin America, Africa and South Asia combined. It is noted that, in 2017, the volume of European timber imports from Ukraine exceeded the US$1 billion mark, and ‘at least 40% of this timber was harvested or sold illegally, through corruption’.59 In addition to the destruction of the ecosystem, the negative consequences of the illegal amber market include a shortfall in customs duties, national and local taxes and fees, which leads to the growth of the ‘shadow’ sector of the economy; a high level of injuries and deaths among miners due to non-compliance with safety rules, increased social tension due to armed conflicts and an aggravation of the crime situation in the region. According to certain beliefs, the problem of illegal mining, which resembles the fight against speculation in Soviet times, could be solved by the legalization of mining business activities giving opportunities to individual citizens, prospectors and other entrepreneurial structures to mine legally.60 The local residents are ready to start a legal amber business, even setting up artels. But without a national law that would regulate amber mining, it makes no sense. It appears that various government agencies cannot agree on control, consequently legalization is not beneficial to them. The topic has become a political PR tool, while all stakeholders in the amber cluster benefit from remaining in the shadows. Therefore, from the point of view of the formalist approach to the study of illegal amber mining, which relies on the data of official investigation and the administration of justice, the shadow amber market is represented mostly by individual miners and ‘unidentified persons’ in complicity with them, as well as a very small share of those involved in organized criminal groups. System cluster analysis allows following the network of relationships in different areas and at stages of illegal amber trafficking— from extraction to smuggling and sales networks. This analysis demonstrates the 58

According to Article 62 of the Constitution of Ukraine, there is a presumption of innocence. A person shall be presumed innocent of committing a crime and shall not be subjected to criminal punishment until his or her guilt is proved in accordance with the law and established by a court verdict of guilty. 59 Earthsight (2018). 60 Nadtochii (2015).

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stable and coordinated nature of stakeholder relations, based on common interests and established illegal practices that became regular and institutionalized. The cluster method of assessing organized crime in the field of illegal amber mining also reveals links with other types of criminal business and the consequences for the region.

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Chapter 6

Enemy at the Gate. The Impact of the Russian War in Ukraine

Abstract In 2022, Ukraine faced unprecedented security challenges caused by Russia’s invasion of its territory. Armed aggression and hostilities also provoked a turbulent situation for organized crime, resulting in the breaking of former criminal ties and the degradation of certain criminal and corrupt practices. At the same time, the war and the martial law regime created opportunities for organized crime in Ukraine to develop new illegal markets and relocate existing ones. New criminal practices include theft or illegal distribution of humanitarian aid; illegal grain transactions; trade in sanctioned goods; smuggling of conscripts from Ukraine trying to avoid mobilization to the army; organized propaganda and disinformation; fraud in the sphere of public procurement and so forth. Regular smuggling routes shifted to the western land border of Ukraine, due to the closed airspace and blockade of its southern seaports. Human trafficking, especially concerning women and children from the category of forced migrants and internally displaced persons, intensified. The risks of trafficking and criminal use of weapons are also high, as evidenced by the experiences of previous wars.

6.1 Challenges for Criminal Justice in Wartime Traditionally, it was believed that the main enemy of the sustainable development of the Ukrainian state was internal—that is, large-scale corruption and organized crime, which stretched from the everyday to the highest political levels. 2014 revealed and 2022 confirmed that an unprecedented threat was and is posed by an external enemy. The armed conflict in eastern Ukraine that began in 2014 as a result of separatist movements and the formation of the LDNR pseudo-republics posed an unprecedented threat. Russia’s audacious invasion of Ukraine on 24 February 2022 did not become a ‘black swan’, but shook the whole world, and became an issue of global significance in terms of the scale of its destructive consequences and its multidirectional impact. In contrast to certain localized military conflicts and their latent support by the governments of the states concerned, the events in Ukraine beginning in 2022 are the first large-scale war in the centre of geographical Europe in the twenty-first © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_6

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century with the open participation of European and non-European countries in the form of weapons supplies, humanitarian aid, sanctions decisions and global political pressure. Despite many disappointing predictions, Ukraine has proven to the world that it is capable of resisting the enemy and waging an effective fight. The situation is reminiscent of the well-known, though disproven in its time, ‘bumblebee paradox’, according to which a bumblebee cannot fly according to the laws of aerodynamics, but it does. At the time of writing, in 2023, the war is ongoing and the trajectory of its end is highly controversial and long-term. Despite the uncertainty of the timing and outcome of the war’s end, it is clear that preparations for the restoration of law and order after the war need to be made now, including assessing the criminogenic risks and criminal trends in the short- and long-term. The war has brought a complex cocktail of change in which old approaches to studying criminal manifestations and combatting offences do not work. Security challenges, to a certain extent, put the problem of crime in the margins, but do not eliminate it. Contradictory evidence is received about the situation and changes in crime, including organized crime, during the war, both from official and alternative sources of criminological information. This is due both to methodological gaps and a lack of information, especially from the areas of hostilities. The spread of disinformation at various levels is an instrument of hybrid warfare and often calls into question the reliability of sources and the accuracy of information. The methodology of wartime research is not well established and requires the development of reliable standards. Armed aggression and hostilities have significantly transformed the crime situation in Ukraine in terms of its qualitative and quantitative characteristics. COVID-19 has already demonstrated the dangers of the lack of a risk management strategy in combatting crime. Criminal justice in wartime has become total risk management. As a result of the occupation, Ukraine has lost control of a number of territories. As of November 2022, the list of territorial communities located in the areas of military (combat) operations or under temporary occupation or encirclement (blockade) includes 329 communities in nine regions of the country,1 which is 22% of the total number of communities across Ukraine. The loss of administrative control also means the absence of law and order. Occupation most likely leads to the criminalization of such regions. However, even if crimes are committed, it is not possible to properly detect, register, investigate and/or prevent them. A significant part of the crimes in the occupied territories are committed by both Ukrainian citizens and Russian military personnel. Documenting crimes becomes possible after the de-occupation of the regions, but unfortunately, the qualitative evidence base is often lost. In the de-occupied areas, as well as in areas of active hostilities and destroyed infrastructure, the work of law enforcement and judicial authorities is also hampered. Since the beginning of the invasion, all government agencies in the country have switched to functioning under martial law. In the police, this has resulted in the departure of some officers to the Armed Forces of Ukraine and a change in priorities 1

Ministry of Reintegration of Ukraine (2022).

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in order to ensure the functioning of checkpoints on the country’s roads, counteract the activities of sabotage groups, search for collaborators, help in demining the de-occupied territories or delivering humanitarian supplies, etc. The orders of the Supreme Court of Ukraine changed the territorial jurisdiction of certain courts because of their inability to administer justice due to the offensive of Russian troops. In functioning courts, the administration of justice is complicated by constant air alarms and the need to take cover in shelters, the impossibility of arriving at the court sessions of the participants of the process, and the lack of the technical possibility of holding sessions in video conference mode in conditions of long-term power outages due to shelling and damage to the power system.

6.2 The Overall Crime Situation in Wartime Predictably, with the outbreak of hostilities, the total level of registered crime in Ukraine decreased. An analysis of official crime statistics for 2022 revealed that, during the first two months of the war, there was a sharp decline in crime for almost all types of crimes, followed by an increase, but at a rather slow pace. The total crime rate in the country as a whole decreased by 25% in six months of 2022 compared to the previous period.2 The short-term decline in crime has a logical explanation. In addition to the factors directly related to the ongoing hostilities and disorientation of law enforcement agencies at the beginning of the war, one should take into account the priority, demographic component, humanitarian crisis and specifics of victimization. The investigation of criminal offences against peace, human security, and international law and order (the so-called crimes of war) has become a priority over general criminal offences. The activity of law enforcement agencies has shifted accordingly. As of end December 2022, more than 62,000 criminal proceedings have been initiated in light of facts of crimes committed on the territory of Ukraine by members of the Russian Federation’s armed forces and their accomplices. The vast majority of these fall under Article 438 of the Criminal Code of Ukraine (violation of the laws and customs of war). The war has also caused significant demographic change. According to the Ukrainian Parliament Commissioner for Human Rights, as of 1 December 2022, more than 14.5 million Ukrainians left the country after 24 February 2022; at least 11.7 million of them entered the EU. Thus, 35% of the registered population has left the country. In criminological terms, this also means a decrease in the number of potential agents of criminal activity. Furthermore, potential victims of, for example, property crimes (which typically account for the largest share of crime in Ukraine) may not be aware of their victimization because their property is left unattended, or they do not report it for various reasons. 2

Hereinafter, the source of official statistics on the crime situation is General Prosecutor’s Office of Ukraine (2023).

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Thus, population decline and displacement probably contributed to a decline in crime in short-term estimates. The curfews and increased patrolling also played a deterrent role. In the long term, the factors of the increase in the general level of crime, which was inevitably manifested by the end of 2022, cannot be ignored. Thus, while in 2021, 321,000 crimes were registered in Ukraine, at the end of 2022, their number totalled 362,000 or +13%. The factors driving the crime rate are located mainly in the socio-economic dimension. As of the end of 2022, the Ministry of Economy of Ukraine estimated the number of unemployed at 2.6 million people. This figure does not include people who are abroad or in temporarily occupied territories.3 According to surveys of small- and medium-sized businesses, as of May 2022, after three months of the war, 49% of enterprises had completely stopped or almost stopped their operations.4 There is a downward trend in expectations and assessments of the business climate and the overall economic environment. Interruptions in electricity, water and heat supply have become the number one problem since the end of 2022. The share of businesses facing this problem reached 78%. Missile attacks have not yet had a critical impact on production volumes, although they have hampered active recovery.5 A significant share of the population is in a vulnerable condition that provokes victimization. According to the International Organization for Migration, as of December 2022, the number of internally displaced persons (IDPs) in Ukraine amounted to 5.9 million. Most of them have moved from areas in the east (43%) and south (25%) of the country. The IDPs surveyed say that private resources are becoming insufficient for survival, as 43% of all households in Ukraine have completely exhausted their savings. Repeated displacement, i.e. moving from one place of displacement to another, can increase the vulnerability of displaced households. 37% of IDPs have been displaced more than once, and 14% of IDPs have been displaced three or more times.6 One of the criminogenic factors of the overall crime situation—probably the most important—is the high saturation of weapons in society. In the early days of the war, veterans and retired law enforcement officers were officially allowed to obtain weapons to defend the country. At the same time, during active hostilities, a large number of unaccounted trophies and lost weapons appear, which enter civilian areas in various ways, where they are further distributed, stored and used to commit various types of crimes. According to law enforcement estimates, since the outbreak of the war, citizens have had more than 10,000 unaccounted weapons in their possession.7 However, these are only rough estimates, as there are no precise methods for determining the circulation of illegal weapons. The increase in crimes committed with

3

Vinokurov (2022). Advanter (2022). 5 Institute for Economic Research and Policy Consulting (2002). 6 International Organization for Migration (2022). 7 National Police of Ukraine (2022). 4

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firearms is alarming. While in 2021, a total of 300 were recorded, in 2022 there were 1,929 cases, an increase of almost 6.5 times. Moreover, the crime risk is associated with the formation of a rather large group of people in society with combat experience and post-traumatic syndromes. An important area is the integration of persons who took part in hostilities in order to avoid the so-called combatant syndrome and neutralize domestic crimes. The general disorganization caused by the war and the criminogenic situation is the basis for the development of vectors of advanced forms of crime, including organized crime.

6.3 The Impact of the War on Organized Crime and Illicit Markets Organized crime is probably even more sensitive to extreme situations than traditional common crime. On the one hand, large-scale military operations can weaken the stability of institutionalized criminal groups, even break certain criminal ties or destroy criminal practices that have been established over years. On the other hand, the powerful adaptive capabilities of organized crime allow it to take advantage of general destabilization and anomie. The rise and empowerment of organized crime syndicates around the world have always been closely linked to some form of chaos—social, political or economic. For example, in the post-World War II era, the need to rebuild entire cities allowed La Cosa Nostra to dominate the reconstruction business in Sicily from the early 1950s to the late 1980s. In Albania, after the fall of Communism in 1990, criminal networks took advantage of widespread instability and without interference established a cannabis cultivation operation that later gave Albania the distinction of being the first producer of the drug in Europe. More recently, the power vacuum in Syria has made members of Islamic State and Hezbollah among the most prominent traffickers of Captagon pills, a strong amphetamine that reaches Europe and North America by way of shipments from Syrian, Lebanese and Turkish ports.8 The key task for scholars and practitioners is not only to assess the state and transformation of organized crime in the light of unprecedented social change but to also be able to reliably predict trends in organized crime during the war and especially in the post-war period. An equally important task is to identify the peculiarities of the Russian war in Ukraine and possible unique differences in organized crime compared to past conflicts. One of the peculiarities is the political motivation of certain criminal groups, which originates from the formation of the DLPR pseudo-republics. In wartime, the appearance of the committing of crimes against the foundations of national security, in particular, public information activities in cooperation with the

8

Scaturro (2022).

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100 90 80 70 60 50 40 30 20 10 0

2021

2022

Fig. 6.1 Monthly dynamic of detected organized criminal groups and criminal organizations in Ukraine (2021–2022)

aggressor state aimed at supporting the Russian Federation, pseudo-republics and their armed groups is the manifest.9 From a methodological point of view, the interconnection of war and organized crime can be assessed according to three projections10 : war as a consequence of organized crime (reflects the consequence of the criminalization of governance and the penetration of organized crime into political relations on both the Ukrainian and Russian sides long before the war); war as a determinant of organized crime (highlights the causal links between the transformations of the social landscape brought about by the war and the inspiration of criminal practices); war as a process (demonstrates the adaptability of certain units of criminal groups to turbulent changes and its military cases). The first two projections allow to assess the long-term risks associated with the continuation of pre-war criminal ties or the spread of wartime criminal practices to post-war relations, as well as the consolidation of new illegal markets or distribution channels with an impact not only on the Ukrainian but also on the global legal order. The last projection is mainly aimed at identifying short-term operational risks. The trend lines of organized crime by month in Ukraine in 2022 do not show significant differences from similar trends in 2021, except an unusual decline in the number of detected groups at the very beginning of the war, in March 2022, probably due to general disorganization (Fig. 6.1, Appendix B). Despite the presumption of war as a favourable circumstance for the development of organized crime, at the same time, it should not be ignored that war is a threat to the life and health of the military, ordinary citizens and traders from illegal markets, as active hostilities indiscriminately affect victims. Experience has 9

Anonymous interview with an active employee of the Prosecutor General’s Office of Ukraine, conducted in February 2023. 10 Tuliakov (2022).

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shown that the Russian military attacks not only military targets but also civilians, completely peaceful objects and settlements. At the beginning of the war, according to law enforcement reports, some persons involved in organized crime, identified as ‘thieves in law’, voluntarily left the country11 (this raises the question of the legality of their crossing the state border if they belonged to the category of men of military age). Some ‘thieves in law’, mostly foreigners from the National Security and Defence Council’s sanctions list, left the country under the official expulsion procedure.12 Such persons could probably continue to control the remnants of criminal business in Ukraine through proxies from abroad.13 There is also an assumption that they will try to continue their criminal activities in the host countries, looking for weaknesses and using local ethnic communities with contacts in political and business circles. There is a danger that criminal proceeds may be laundered in the real estate, tourism and gambling sectors, which will affect local economies and politics. It is also possible that such persons will return to Ukraine when the military threat stabilizes. Considering the intertwining of Ukrainian organized crime in the general social tissue, it is not paradoxical that criminal groups support the Ukrainian armed forces, presumably inspired by patriotic motives.14 At the same time, a purely utilitarian motivation should not be dismissed, as the war is a direct threat to some groups’ established criminal practices. Such support was mostly, but not exclusively, exercised through: supplying local volunteers with the necessary items for the army, who were not too interested in the origin of aid during the war; hacker attacks on Russian institutions; participation of individuals involved in shadow or criminal circles in selfdefence units, etc. Such actions indicate clear pro-Ukrainian sentiments, although it should be recognized that the public attitude to the war is ambiguous. The groups that support Russia were mentioned above; there are also completely apolitical groups, but they also perceive certain prospects for themselves from the continuation of hostilities. After an initial period of disorientation, many forms of organized crime resumed their activities. For traditional low-level organized criminal groups that focus on common crimes, the war was no obstacle to continuing professional theft, robbery and fraud. Thematic types of fraud have emerged. According to the General Staff of the Armed Forces of Ukraine, taking advantage of the emotional state of relatives and friends of servicemen who were captured or reported missing, fraudsters offered to ‘provide information’ about the soldier and ‘facilitate his release from captivity’ for a monetary reward. There have been cases where Ukrainians in the occupied territories paid large sums of money for evacuation routes, and the fraudsters disappeared.15 11

Strategic Investigations Department of the Ministry of Internal Affairs of Ukraine (2022). See Main Office of the National Police in Odesa region (2022), Main Office of the National Police in Ivano-Frankivsk region (2022). 13 Global Initiative against TOC (2023). 14 Ibid. 15 Ministry of Internal Affairs of Ukraine (2002). 12

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The number of crimes involving the fraudulent seizure of citizens’ funds under the pretext of collecting money to help the Armed Forces of Ukraine, using fake ads about the transportation of refugees abroad, and renting out housing has increased. A significant part of fraudulent schemes is based on the use of current information and communication technologies, and internet capabilities. Cybergroups are also active, disguising phishing as resources for social benefits from the state and EU countries.16 Groups that operate using the legal infrastructure of the economy have found themselves in a more difficult situation. This is indirectly evidenced by a 26% decrease in the total number of registered economic crimes in Ukraine in 2022 compared to 2021. The economy has come to a standstill, shifting towards cash circulation due to significant restrictions on cashless currency transactions imposed by the banking system. Officially registered businessmen, who were involved in illegal operations and used the services of criminal groups, tried to move their businesses and capital abroad, which exacerbated the problem of illegal capital outflows and money laundering, etc. The significant decrease in the number of criminal proceedings related to raiding is caused by the prolonged ban on registration actions by both notaries and state registrars, which were previously used in raider schemes.17 Instead, the budgetary sphere and public procurement under martial law became the areas of increased criminal risk. In 2022, the largest number of all identified in economic sphere criminal groups—32 groups consisting of 123 people—committed crimes in the budgetary sphere, including misappropriation of budget funds intended for various types of state social benefits, among others. At the beginning of the war, the authorities rationalized procurement by removing sensitive state information from public access. However, state orders for the defence sector are carried out during martial law without actually holding tenders, which, on the one hand, is justified by objective necessity, but on the other, has opened the field for abuse. In addition, since January 2023, the auction procedure for public procurement has been temporarily cancelled due to the constant shelling of energy infrastructure facilities by the Russian Federation and the inability of bidders to participate in electronic auctions in the ProZorro electronic procurement system.18 For high-level organized crime with corrupt ties to the government, martial law has been a time of relative decline. Organized crime is a regional and inter-regional phenomenon in Ukraine and, due to the war, it is likely that previous high-level corrupt connections are mostly on hold. The data on the severance or continuation of pre-war ties between Russian and Ukrainian organized criminal groups can be neither refuted nor confirmed at this time. Russian groups, in a way, revitalized the activities of Ukrainian groups before the war. It is assumed that this trend has been disrupted by the war. Such opinions appear in the reports of UN research institutions: while cross-border criminal cooperation between Ukrainian and Russian criminal groups was commonplace before February 16

Cyberpolice of Ukraine (2022). Balina (2022), p. 109. 18 Ministry of Economy of Ukraine (2023). 17

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2022, this is no longer the case.19 Even though the line of active hostilities physically prevents the former illegal flows across the quasi-border of the DLPR, it cannot be excluded that such flows continue, as the demand for illegal goods and services still remains on both sides. However, organized crime is highly adaptive, and there is evidence that new schemes are emerging to replace the old ones that are not working, and that the war has opened up opportunities for them. Criminal groups associated with criminal markets and the trafficking of illegal goods and services have found themselves in the most favourable position. The conflict has allowed new and emerging organized criminal enterprises to develop and expand. New activities include the transportation of commercial goods under the guise of humanitarian aid; smuggling of deficit products, such as fuel and lubricants from neighbouring countries into Ukraine; smuggling newly sanctioned goods; and trade in looted commodities, such as grain from Ukraine. The conflict has generated plenty of opportunities for traffickers and human smugglers, putting especially women and children at risk, and there is an urgent need for preventive and monitoring measures. Significant demand has also arisen for the smuggling of military-aged men out of Ukraine.20 On the first day of the war, martial law was declared and men of military age between 18 and 60 were banned from leaving the country. This significantly increased the demand for smuggling services for a monetary reward. The cost of such a ‘service’ ranges from US$1,000–$20,000. Criminal groups engaged in such criminal activities were exposed in 2022 in Volyn, Zakarpattia, Lviv, Odesa and Chernivtsi regions,21 bordering Poland, Slovakia, Hungary, Romania and Moldova. There are schemes for entering the EU, but through the territory of the Russian Federation using at first the border region of Kharkiv or the Autonomous Republic of Crimea. Conscripts are transported across the border both outside and through checkpoints, but with fake or fictitious documents granting them the right to leave—under the guise of volunteers, drivers of carrier companies, disabled people or their accompanying persons.22 A popular scheme is the production of a fictitious package of documents on complete unfitness for military service in peacetime and wartime, which is used to remove people from military registration. In this case, the criminal groups involve doctors of the military hospital commission, who allegedly conduct medical examinations, and employees of military commissariats. The ‘clients’ of such groups are perfectly healthy men who receive documents about their unfitness for military service without visiting a military enlistment office, but with genuine signatures, seals and data

19

United Nations Interregional Crime and Justice Research Institute (2022). United Nations Interregional Crime and Justice Research Institute (2022). 21 Anonymous interview with an active employee of the Prosecutor General’s Office of Ukraine, conducted in February 2023. 22 Security Service of Ukraine (2022a, c, d). 20

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entered into the relevant databases and registers. The service package also includes support at the border in case of additional questions from border officers.23 The war has led to the redeployment of smuggling routes. The total length of Ukraine’s border is 6,993 kms, with the longest sections along the border with Russia and Moldova. As a rule, the length corresponds to the most active areas of illegal smuggling. Until 2014, the criminal activity along the border in terms of illegal movement of goods was distributed as follows: Ukrainian-Russian—37.9% of all detected smuggling; Ukrainian-Moldovan—18.6%; maritime—9.3%; UkrainianBelarusian—8.7%; Ukrainian-Polish—6.8%; Ukrainian-Romanian—6.5%.24 After 2014, Ukraine lost control of certain sections of the border with Russia, and smuggling flows shifted to the quasi-border with the LDNR. Since the beginning of 2022, due to the closed airspace and sea borders, Ukraine’s western border with Poland and south-western borders with Moldova and Romania have become the most vulnerable to crime. The front line also prevents drug smuggling from eastern Ukraine to the west; the Russian naval blockade is causing Odesa to lose its role as a smuggling hub in the Black Sea, affecting incoming drug flows from Turkey and Latin America, and shifting drug smuggling to the western border.25 Synthetic drugs continue to be produced and distributed throughout the country.26 Any war means the inevitable use of weapons and significant flows of weapons. The experience of previous wars demonstrates that weapons can be illegally trafficked and acquired by criminal organizations. Therefore, the risks of trafficking, smuggling and the criminal use of weapons exist and are quite high in the context of the Russian war in Ukraine. That is why Europol is working closely with Ukraine to reduce the risk of arms trafficking during and after the war.27 The topic of illegal arms trafficking originating from Ukraine is associated with certain information manipulations in the media, so it would be unwise to exaggerate the problem, the facts of which have not been established. To date, the predictions of a large-scale illegal arms trade, including those of foreign origin, have not materialized. High risks of human trafficking are associated with the vulnerable situation of millions of refugees and internally displaced persons. The majority of people fleeing Ukraine are women, children, and people with disabilities. All are ideal potential victims for criminal networks involved in human trafficking. Places of reception, transit or destination in the EU, as well as public transport, such as railway and bus stations, are of greatest concern.28 Many people, especially in the early days of the war, crossed the border without passports or other properly validated identity 23

Anonymous interview with 31-year-old conscript Ukrainian man seeking temporary protection in Europe, conducted in September 2022. 24 Kukhar (2013), p. 410. 25 State Bureau of Investigation of Ukraine (2022). 26 See National Police of Ukraine (2023), State Bureau of Investigation of Ukraine (2023). 27 Europol (2002). 28 Europol Operations Directorate Operational and Analysis Centre European Migrant Smuggling Centre (2022).

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documents. In addition, it was possible for minors to travel with relatives or even strangers without formalized parental permission. Most of them did not register with the consular authorities in the countries of destination. The large number of refugees arriving from Ukraine has placed a significant burden on host countries to fully control, monitor and register those arriving from the war zone. On the other hand, a new slave market has opened up in the occupied eastern and southern regions of Ukraine, apparently with informal permission and under the control of the Moscow regime. There is widespread evidence of arbitrary arrests of not only military personnel but also civilians, with their subsequent involvement in forced military service.29 The problem of illegal trade in sanctioned goods and grain crops has become more acute during the war, but it is not a product of 2022. Since 2014, Ukrainian law enforcement agencies have been aware of schemes to circumvent sanctions and trade with companies in occupied Crimea and Russia.30 During the war, a criminal scheme to embezzle funds from the export of Ukrainian grain involving high-ranking officials of the State Customs Service and the management of the Odesa Customs was exposed. They set up a large-scale mechanism for tax evasion for the export of Ukrainian grain. To implement the scheme, its participants employed more than 370 commercial entities with signs of fictitiousness. In particular, in August–September 2022, entrepreneurs exported more than one million tonnes of grain of dubious origin through the grain terminals in the Black Sea, Pivdennyi and Odesa ports.31 Numerous cases of theft of grain from the occupied territories and its export to the territory of the Russian Federation have been recorded—for example, in Kherson and Kharkiv regions.32 The humanitarian crisis and the need to support Ukraine’s armed forces have inspired a surge in volunteer movements. Mimicking the volunteer activities of criminal groups leads to abuses in the receipt and distribution of humanitarian aid, charitable donations or free aid for profit. For example, cases of trade in humanitarian aid, military clothing or supplies that were transferred to pseudo-volunteer organizations free of charge, and import of goods under the guise of humanitarian aid that are not subject to inspection by customs officers have been identified. The lack of regulatory requirements for accounting and reporting on the results of humanitarian aid distribution and the inability to track the distribution of humanitarian aid in ‘hotspots’ led to high criminal risks. The distribution of humanitarian aid in areas of active hostilities directly depends on the logistical ability to deliver food, clothing, medicines, etc., as well as on the safety of movement. There are no clear guidelines for donors on the packaging and labelling of humanitarian aid for delivery to international humanitarian hubs, which makes it impossible to accurately determine the category of cargo, its weight and the tracking of these goods along the entire route.33 29

Yagunov (2023). Rohalska (2021). 31 Security Service of Ukraine (2022b). 32 Security Service of Ukraine (2022e). 33 National Agency on Corruption Prevention (2022). 30

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These examples demonstrate how organized crime can rapidly adopt to the wartime and transform in Ukraine, both at its borders and in its seaports.

References Advanter (2022) Doslidzhennia stanu maloho ta serednoho biznesu v Ukraini (A study of the state of small and medium business in Ukraine. Дocлiджeння cтaнy мaлoгo тa cepeдньoгo бiзнecy в Укpaїнi), May 2022. https://advanter.ua/. Accessed 21 Feb 2023 Balina S (2022) Reiderski zakhoplennia v umovakh voiennoho stanu (Raider attacks under martial law. Peйдepcькi зaxoплeння в yмoвax вoєннoгo cтaнy). Paper presented at the scientific and practical round table ‘Study of the crime situation in Ukraine and forecasting its further dynamics (influence of military factors)’, Research Institute of the Ministry of Internal Affairs of Ukraine, Kyiv, 07 Sep 2022. Materials, pp 109–111 Cyberpolice of Ukraine (2022) Kiberpolitsiia vykryla uchasnykiv dvokh zlochynnykh orhanizatsii u pryvlasnenni 10 milioniv hryven z bankivskykh kartok hromadian (Cyberpolice exposes members of two criminal organizations on misappropriation of UAH 10 million from citizens’ Bank Cards. Кiбepпoлiцiя викpилa yчacникiв двox злoчинниx opгaнiзaцiй y пpивлacнeннi 10 мiльйoнiв гpивeнь з бaнкiвcькиx кapтoк гpoмaдян), 23 August 2022: https://cyberpolice. gov.ua/news/kiberpolicziya-vykryla-uchasnykiv-dvox-zlochynnyx-organizaczij-u-pryvlasne nni--miljoniv-gryven-z-bankivskyx-kartok-gromadyan-1911/. Accessed 03 March 2023 Europol (2002) Europol’s solidarity with Ukraine. 29 Nov 2022. https://www.europol.europa.eu/ europol%E2%80%99s-solidarity-ukraine. Accessed 18 Feb 2023 Europol Operations Directorate Operational and Analysis Centre European Migrant Smuggling Centre (2022) War in Ukraine – Refugees arriving to the EU from Ukraine at risk of exploitation as part of THB. March 2022 Ref. No.: 2022-340. https://www.europol.europa.eu/cms/ sites/default/files/documents/Early_Warning_Notification__War_in_Ukraine_%E2%80%93_ refugees_arriving_to_the_EU_from_Ukraine_at_risk_of_exploitation_as_part_of_THB.pdf. Accessed 15 Feb 2023 General Prosecutor’s Office of Ukraine (2023) On registered criminal offenses and results of their pre-trial investigation. https://gp.gov.ua/ua/posts/pro-zareyestrovani-kriminalni-pravoporu shennya-ta-rezultati-yih-dosudovogo-rozsliduvannya-2. Accessed 27 Jan 2023 Global Initiative Against TOC (2023) New front lines. Organized criminal economies in Ukraine in 2022. Research Report. https://globalinitiative.net/wp-content/uploads/2023/02/Newfrontlines-organized-criminal-economies-in-Ukraine-in-2022-GI-TOC-February-2023.pdf. Accessed 18 Feb 2023 Institute for Economic Research and Policy Consulting (2002) Shchomisiachne opytuvannia pidpryiemstv ‘Ukrainskyi biznes pid chas viiny’ za lystopad 2022 roku (Monthly survey of enterprises ‘Ukrainian business during the war’ for November 2022. Щoмicячнe oпитyвaння пiдпpиємcтв ‘Укpaїнcький бiзнec пiд чac вiйни’ зa лиcтoпaд 2022 poкy). http://www.ier. com.ua/ua/institute/news?pid=7046. Accessed 05 Feb 2023 International Organization for Migration (2022) Zvit pro vnutrishnie peremishchennia v Ukraini. Opytuvannia zahalnoho naselennia, raund 11 (25 lystopada–5 hrudnia 2022 roku) (Report on internal displacement in Ukraine. General population survey, Round 11 (25 November– 5 December 2022). Звiт пpo внyтpiшнє пepeмiщeння в Укpaїнi. Oпитyвaння зaгaльнoгo нaceлeння, payнд 11 (25 лиcтoпaдa–5 гpyдня 2022 poкy)). https://displacement.iom.int/sites/ g/files/tmzbdl1461/files/reports/IOM_Gen%20Pop%20Report_R11_IDP_UKR.pdf. Accessed 21 Feb 2023 Kukhar V (2013) Dekryminalizatsiia tovarnoi kontrabandy: teoriia ta praktyka (Decriminalization of commodity smuggling: theory and practice. Дeкpимiнaлiзaцiя тoвapнoї кoнтpaбaнди: тeopiя тa пpaктикa). Universytetski Naukovi Zapysky 3:408–412

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Main Office of the National Police in Ivano-Frankivsk region (2022) V Ivano-Frankivskii oblasti politseiski zatrymaly «vora v zakoni» z sanktsiinoho spysku RNBO (Police detained a ‘Thief in Law’ from the NSDC sanctions list in Ivano-Frankivsk region. B IвaнoФpaнкiвcькiй oблacтi пoлiцeйcькi зaтpимaли «вopa в зaкoнi» з caнкцiйнoгo cпиcкy PHБO), 11 May 2022. https://if.npu.gov.ua/news/v-ivano-frankivskiy-oblasti-politseyski-zat rimali-vora-v-zakoni-z-sanktsiynogo-spisku-rnbo. Accessed 13 Feb 2023 Main Office of the National Police in Odesa region (2022) Odeski politseiski prymusovo vydvoryly za mezhi krainy ‘kryminalnoho avtoryteta’ z sanktsiinoho spysku RNBO (Odesa police forcibly expel a ‘Criminal Authority’ from the NSDC sanctions list. Oдecькi пoлiцeйcькi пpимycoвo видвopили зa мeжi кpaїни ‘кpимiнaльнoгo aвтopитeтa’ з caнкцiйнoгo cпиcкy PHБO), 21 May 2022. https://od.npu.gov.ua/news/odeski-politseyski-primusovo-vidvorili-za-mezhi-kra ini-kriminalnogo-avtoriteta-z-sanktsiynogo-spisku-rnbo/ Accessed 19 Feb 2023 Ministry of Economy of Ukraine (2023) Uriad zminyv pravyla provedennia torhiv na ProZorro: tymchasovo vidminyly auktsiony (Government changed the rules of bidding on ProZorro: auctions were temporarily cancelled. Уpяд змiнив пpaвилa пpoвeдeння тopгiв нa ProZorro: тимчacoвo вiдмiнили ayкцioни), 03 January 2023. https://me.gov.ua/News/Detail?lang=ukUA&id=3483cd5a-5b3d-4e5e-81e2-3067a6298b43&title=Prozorro. Accessed 03 Feb 2023 Ministry of Internal Affairs of Ukraine (2002) Denys Monastyrskyi: Pravookhorontsi rozsliduiut 247 kryminalnykh provadzhen shchodo rozkradannia humanitarnoi dopomohy (Denys Monastyrskyi: law enforcers are investigating 247 criminal proceedings on embezzlement of humanitarian aid. Дeниc Moнacтиpcький: Пpaвooxopoнцi poзcлiдyють 247 кpимiнaльниx пpoвaджeнь щoдo poзкpaдaння гyмaнiтapнoї дoпoмoги), 22 June 2022. https://mvs.gov.ua/uk/news/denis-monastirskii-pravooxoronci-rozsliduyut-247kriminalnix-provadzen-shhodo-rozkradannya-gumanitarnoyi-dopomogi. Accessed 21 Feb 2023 Ministry of Reintegration of Ukraine (2022) The Order of 30 October 2022 No. 208 National Agency on Corruption Prevention (2022) Zlovzhyvannia z boku osib, vidpovidalnykh za rozpodil/vydachu/vykorystannia humanitarnoi dopomohy, z metoiu zadovolennia pryvatnykh interesiv svoikh abo tretikh osib (Abuse by persons responsible for the distribution/issuance/use of humanitarian aid to satisfy private interests of their own or third parties. Злoвживaння з бoкy ociб, вiдпoвiдaльниx зa poзпoдiл/видaчy/викopиcтaння гyмaнiтapнoї дoпoмoги, з мeтoю зaдoвoлeння пpивaтниx iнтepeciв cвoїx aбo тpeтix ociб). Anti-corruption portal of authorized persons. https://antycorportal.nazk.gov.ua/en/risks/116/?print=1. Accessed 18 Feb 2023 National Police of Ukraine (2022) Pid chas viiny my fiksuiemo zrostannia kilkosti zlochyniv, poviazanykh iz zastosuvanniam zbroi – Ihor Klymenko (During the war, we record an increase in the number of crimes related to the use of weapons – Ihor Klymenko. Пiд чac вiйни ми фiкcyємo зpocтaння кiлькocтi злoчинiв, пoв’язaниx iз зacтocyвaнням збpoї – Iгop Климeнкo), 02 July 2022 poкy. https://www.npu.gov.ua/news/pid-chas-viyni-mi-fiksuemo-zrostannya-kilkosti-zlo chiniv-povyazanikh-iz-zastosuvannyam-zbroi-igor-klimenko. Accessed 18 Feb 2023 National Police of Ukraine (2023) Masshtabna spetsoperatsiia Natspolitsii: zneshkodzheno diialnist kryvorizkoho narkokarteliu, uchasnyky yakoho zabezpechuvaly narkotykamy maizhe vsi rehiony Ukrainy (Large-scale special operation of the national police: the activities of the Kryvyi Rih drug cartel, whose members supplied drugs to almost all regions of Ukraine, Were Neutralized. Macштaбнa cпeцoпepaцiя Haцпoлiцiї: знeшкoджeнo дiяльнicть кpивopiзькoгo нapкoкapтeлю, yчacники якoгo зaбeзпeчyвaли нapкoтикaми мaйжe вci peгioни Укpaїни), 27 February 2023. https://www.npu.gov.ua/news/masshtabna-spetsoperatsiia-natspolitsii-zne shkodzheno-diialnist-kryvorizkoho-narkokarteliu-uchasnyky-iakoho-zabezpechuvaly-narkot ykamy-maizhe-vsi-rehiony-ukrainy?fbclid=IwAR2BE459XGAPm6Yzj8TPSSxL0Vh7vkk 2LJEvtEPfDcalmuytmEiX7ElF_F4. Accessed 18 Feb 2023 Rohalska N (2021) Reiderstvo, spivpratsia z boiovykamy y dovedennia derzhportu do bankrutstva: u chomu pidozriuiut odesku hrupu ‘Transshyp’ (Raiding, cooperation with militants and bringing the state port to Bankruptcy: what Odesa-based ‘Transship’ group is suspected of. Peйдepcтвo, cпiвпpaця з бoйoвикaми й дoвeдeння дepжпopтy дo бaнкpyтcтвa: y чoмy

132

6 Enemy at the Gate. The Impact of the Russian War in Ukraine

пiдoзpюють oдecькy гpyпy ‘Tpaнcшип’), 10 August 2021. https://www.stopcor.org/ukr/sec tion-ekonomika/news-rejderstvo-spivpratsya-z-bojovikami-j-dovedennya-derzhportu-do-ban krutstva-u-chomu-pidozryuyut-odesku-grupu-transship-10-08-2021.html. Accessed 13 Dec 2022 Scaturro R (2022) What impact can the war in Ukraine have on organized crime? 16 May 2022. https://www.orionpolicy.org/orionforum/98/what-impact-can-the-war-in-ukrainehave-on-organized-crime. Accessed 18 Feb 2023 Security Service of Ukraine (2022a) SBU likviduvala chotyry masshtabni kanaly nelehalnoho vyizdu cholovikiv za kordon (SSU dismantles four large-scale channels of men’s illegal trafficking Abroad. CБУ лiквiдyвaлa чoтиpи мacштaбнi кaнaли нeлeгaльнoгo виїздy чoлoвiкiв зa кopдoн), 12 August 2022a. https://ssu.gov.ua/novyny/sbu-likviduvala-chotyry-masshtabnikanaly-nelehalnoho-vyizdu-cholovikiv-za-kordon. Accessed 18 Feb 2023 Security Service of Ukraine (2022b) SBU likviduvala koruptsiinu skhemu na mytnytsi: rozkradaly miliony hryven na eksporti ukrainskoho zerna (SSU eliminated a corruption scheme at the customs office: millions of Hryvnias were stolen from the export of Ukrainian grain. CБУ лiквiдyвaлa кopyпцiйнy cxeмy нa митницi: poзкpaдaли мiльйoни гpивeнь нa eкcпopтi yкpaїнcькoгo зepнa), 03 January 2023. https://ssu.gov.ua/novyny/sbu-likviduvala-koruptsiinuskhemu-na-mytnytsi-rozkradaly-miliony-hryven-na-eksporti-ukrainskoho-zerna. Accessed 17 Feb 2023 Security Service of Ukraine (2022c) SBU likviduvala novi kanaly vyizdu ‘ukhyliantiv’ za kordon pid vyhliadom pereviznykiv humanitarnoi dopomohy (SSU eliminated new channels for ‘Evaders’ to go abroad under the guise of humanitarian aid carriers. CБУ лiквiдyвaлa нoвi кaнaли виїздy ‘yxилянтiв’ зa кopдoн пiд виглядoм пepeвiзникiв гyмaнiтapнoї дoпoмoги), 24 October 2022c. https://ssu.gov.ua/novyny/sbu-likviduvala-novi-kanaly-vyizdu-ukhyliantiv-zakordon-pid-vyhliadom-pereviznykiv-humanitarnoi-dopomohy. Accessed 18 Feb 2023 Security Service of Ukraine (2022d) SBU vykryla novyi kanal vtechi ukhyliantiv za kordon: do skhemy prychetna orhanizatsiia, yaku ocholiuie deputat Chernihivskoi miskrady (SSU has exposed a new channel for evaders to flee abroad: an organization headed by a deputy of the Chernihiv city council is involved in the scheme. CБУ викpилa нoвий кaнaл втeчi yxилянтiв зa кopдoн: дo cxeми пpичeтнa opгaнiзaцiя, якy oчoлює дeпyтaт Чepнiгiвcькoї мicькpaди), 26 December 2022d. https://ssu.gov.ua/novyny/sbu-vykryla-novyi-kanal-vtechiukhyliantiv-za-kordon-do-skhemy-prychetna-orhanizatsiia-yaku-ocholiuie-deputat-chernihiv skoi-miskrady/. Accessed 18 Feb 2023 Security Service of Ukraine (2022e) SBU zatrymala shche odnoho posobnyka rf na Kharkivshchyni: dopomahav okupantam vyvozyty ukrainske zerno v rosiiu (SSU detained another accomplice of the Russian Federation in the Kharkiv region: he helped the occupiers export Ukrainian grain to Russia. CБУ зaтpимaлa щe oднoгo пocoбникa pф нa Xapкiвщинi: дoпoмaгaв oкyпaнтaм вивoзити yкpaїнcькe зepнo в pociю), 10 January 2023. https://ssu.gov.ua/novyny/sbu-zatrymala-shche-odnoho-posobnyka-rf-na-kharki vshchyni-dopomahav-okupantam-vyvozyty-ukrainske-zerno-v-rosiiu. Accessed 17 Feb 2023 State Bureau of Investigation of Ukraine (2022) DBR rozsliduie prychetnist pravookhorontsiv Lvivshchyny do perevezennia u Polshchu 300 kh hashyshu (SBI is investigating the involvement of law enforcement officers of the Lviv region in the transportation of 300 Kg of Hashish to Poland. ДБP poзcлiдyє пpичeтнicть пpaвooxopoнцiв Львiвщини дo пepeвeзeння y Пoльщy 300 кг гaшишy), 01 October 2022. https://dbr.gov.ua/news/dbr-rozslidue-prichetnist-pravoohor onciv-lvivshhini-do-perevezennya-u-polshhu-300-kg-gashishu. Accessed 18 Feb 2023 State Bureau of Investigation of Ukraine (2023) DBR vykrylo u Dnipri mizhnarodnyi narkosyndykat, yakyi vyhotovliav narkotyky u promyslovykh masshtabakh (SBI exposed an international drug syndicate in Dnipro, which manufactured drugs on an industrial scale. ДБP викpилo y Днiпpi мiжнapoдний нapкocиндикaт, який вигoтoвляв нapкoтики y пpoмиcлoвиx мacштaбax), 13 February 2023. https://dbr.gov.ua/news/dbr-vikrilo-u-dnipri-mizhnarodnijnarkosindikat-yakij-vigotovlyav-narkotiki-u-promislovih-masshtabah-video. Accessed 18 Feb 2023

References

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Strategic Investigations Department of the Ministry of Internal Affairs of Ukraine (2022) Information from the post on the official Facebook page of the department. https://www.facebook.com/ DSI.police.ukraine/ Accessed 26 Feb 2023 Tuliakov V (2022) Viina ta zlochynnist: metodolohiia kryminolohichnoho analizu (War and Crime: Methodology of Criminological Analysis. Biйнa тa злoчиннicть: мeтoдoлoгiя кpимiнoлoгiчнoгo aнaлiзy). Paper presented at the scientific and practical round table ‘Study of the crime situation in Ukraine and forecasting its further dynamics (influence of military factors)’, Research Institute of the Ministry of Internal Affairs of Ukraine, Kyiv, 07 Sep 2022. Materials, pp 20–24 United Nations Interregional Crime and Justice Research Institute (2022) The conflict in Ukraine and its impact on organized crime and security. November 2022. https://unicri.it/index.php/ Publication//Conflict%20-Ukraine-impact-on-organized-crime-and-security. Accessed 04 Feb 2023 Vinokurov Y (2022) Miliony ukraintsiv vtratyly robotu cherez viinu. Zvidky vony berut hroshi na zhyttia? Yakyi realnyi riven bezrobittia v kraini i shcho narazi z ukraintsiamy, yaki vtratyly robotu, za rakhunok choho vony vyzhyvaiut? (Millions of Ukrainians have lost their jobs because of the war. Where do they get money to live? What is the real level of unemployment in the country and what is the current situation of Ukrainians who have lost their jobs, and how do they survive? Miльйoни yкpaїнцiв втpaтили poбoтy чepeз вiйнy. Звiдки вoни бepyть гpoшi нa життя? Який peaльний piвeнь бeзpoбiття в кpaїнi i щo нapaзi з yкpaїнцями, якi втpaтили poбoтy, зa paxyнoк чoгo вoни виживaють?), 08 December 2022. Ekonomichna pravda. https:/ /www.epravda.com.ua/publications/2022/12/8/694732/. Accessed 15 Feb 2023 Yagunov D (2023) Impact of the 2022 Moscovian military aggression on crime trends in Ukraine (Analysis of crime prevention policy in the light of statistics for 2013–2022). Eur Polit Law Discourse 10(1):19–88

Chapter 7

In Lieu of a Conclusion

The war in Ukraine and organized crime in times of the war has become not only a Ukrainian problem but also a considerable concern for other countries. These countries will inevitably experience, or are already experiencing, the consequences of the war, including the forced migration of people who, in the absence of proper integration, are prone to both victimization and criminalization. The war has already had and will continue to have a long-term impact on local and transnational crime. The countries at the highest risk are primarily those neighbouring Ukraine. The outcome of the war will largely determine the trajectory of the further development of organized crime. In any case, if there is a space for dealers and beneficiaries of illegal markets after the war, it will not remain unfilled for long. The question is who will fill this vacuum: hybrid state-criminal groups in the occupied territories, following the experience of the self-proclaimed republics or Ukrainian organized crime with the potential to misappropriate resources aimed at restoring the country or international syndicates that may invest criminal funds in Ukraine. Opportunities for corruption and organized crime infiltration can abound in postconflict contexts when governments are recipients of large sums of foreign aid and institutions do not have the necessary monitoring mechanisms to keep track of such funds.1 The opposite situation is also possible when governments can be inclined to turn a blind eye to sources of funds in order to restore the country as quickly as possible. Thus, just like the Ukrainian nation as a whole, organized crime is struggling to survive during the war. Amidst the turbulence of the total crime situation caused by the war, it is possible that organized crime will emerge from the war much stronger. The international community and local institutions should be prepared for this. The stabilization of the situation and the recovery of Ukraine after the war will largely depend on the ability of the criminal justice system to ensure law and order, and security, and to take proactive measures to prevent and contain possible outbreaks of organized crime. 1

United Nations Interregional Crime and Justice Research Institute (2022).

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1_7

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136

7 In Lieu of a Conclusion

The first priority is to end the war and restore peace in Ukraine. Until then, international bodies, which are responsible for counteracting transnational organized crime, should work with local organizations of similar competence to coordinate operations, facilitate local cooperation and create secure channels for the exchange of intelligence. Governmental and non-governmental organizations should monitor organized crime trends in areas where hostilities are taking place and increase awareness of potential risks that may arise.

Reference United Nations Interregional Crime and Justice Research Institute (2022) The conflict in Ukraine and its impact on organized crime and security. November 2022. https://unicri.it/index.php/Pub lication//Conflict%20-Ukraine-impact-on-organized-crime-and-security. Accessed 4 Feb 2023

Appendix A

The Rate of Organized Crime in Ukraine (Dynamic of 1991–2022)

Year

The number Including of organized criminal groups and organizations criminal organizations against which criminal proceedings were investigated

The number Including of persons criminal who organizations committed criminal offences as a part of organized group or criminal organization, for which the pre-trial investigation was completed

The number of criminal offences, for which criminal proceedings were completed

Including those committed by criminal organizations

The number of criminal misdemeanours committed by organized groups and criminal organizations

1991

275

–

–

–

2732

–

–

1992

469

–

–

–

2606

–

–

1993

631

–

–

–

2619

–

–

1994

1067

–

–

–

4215

–

–

1995

871

–

2980

–

4556

–

–

1996

953

–

4381

–

6241

–

–

1997

1079

–

4393

–

7434

–

–

1998

1157

–

4836

–

9274

–

–

1999

1166

–

4673

–

9307

–

–

2000

960

–

4074

–

7744

–

–

2001

770

–

3286

–

6703

–

–

2002

722

–

3209

–

6467

–

–

2003

634

–

2707

–

6159

–

–

2004

695

–

2861

–

5582

–

–

2005

551

–

2220

–

7741

–

–

2006

466

–

1754

–

3977

–

–

2007

420

–

1628

–

4682

–

– (continued)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

137

138

Appendix A: The Rate of Organized Crime in Ukraine (Dynamic …

(continued) Year

The number Including of organized criminal groups and organizations criminal organizations against which criminal proceedings were investigated

The number Including of persons criminal who organizations committed criminal offences as a part of organized group or criminal organization, for which the pre-trial investigation was completed

The number of criminal offences, for which criminal proceedings were completed

Including those committed by criminal organizations

The number of criminal misdemeanours committed by organized groups and criminal organizations

2008

378

–

1457

–

3670

–

–

2009

379

–

1570

–

3514

–

–

2010

397

–

1588

–

3135

–

–

2011

395

–

1584

–

3023

–

–

Jan–Nov 2012

258

–

1238

–

2128

–

–

2013

185

7

662

–

1396

–

–

2014

166

1

676

–

1337

–

–

2015

135

4

570

–

1197

–

–

2016

136

3

598

27

1043

3

–

2017

210

5

949

68

1728

5

–

2018

288

12

1429

168

2513

12

–

2019

293

16

1428

235

2344

16

–

2020

377

21

1609

190

3595

241

4

2021

499

45

2248

360

4318

662

167

2022

395

40

1637

276

3142

409

153

Appendix B

The Rate of Organized Crime in Ukraine (Monthly Dynamic of 2021–2022)

Year

2021

Month

The number of organized groups and criminal organizations against which criminal proceedings were investigated

Including criminal organizations

2022 The number of organized groups and criminal organizations against which criminal proceedings were investigated

Including criminal organizations

January

77

3

90

8

February

50

4

28

3

March

62

7

16

1

April

40

4

30

2

May

35

7

43

3

June

90

5

61

6

July

30

0

23

2

August

30

7

27

3

September

46

5

41

6

October

21

0

9

0

November

10

1

6

1

December

8

2

21

5

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

139

Appendix C

The Structure of Organized Crime in Ukraine

C.1 The Structure of Organized Crime in Ukraine (Groups Features of 2013–2022)

Year

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

The number of organized groups and criminal organizations against which criminal proceedings were investigated

185

166

135

136

210

288

293

377

499

395

Among them

33

32

11

16

25

21

29

33

57

36

21

27

41

23

51

70

40

With corrupt connections With interregional connections

Among them

With international/ transnational connections

38

38

28

4

11

7

6

11

11

11

Formed on ethnic grounds

21

19

8

6

9

17

11

36

38

27

Poly-criminal activity

–

–

–

–

–

–

–

139

225

161

(continued)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

141

142

Appendix C: The Structure of Organized Crime in Ukraine

(continued) Year The duration of activity of an organized group and/or criminal organization

The number of persons who committed criminal offences as a part of organized group and/or criminal organization

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Up to 1 year

140

120

97

108

166

202

218

278

368

281

Up to 2 year

14

25

22

16

28

51

46

72

91

75

3–6 years

4

2

4

4

4

9

5

9

9

8

More than 6 years

2

2

0

1

1

1

1

1

3

4

3 persons

–

–

–

77

122

160

170

215

247

0

4–10 persons

–

–

–

59

85

120

118

153

242

213

11–20 persons

–

–

–

0

2

7

5

8

9

177

More than 20 persons

–

–

–

0

1

1

0

0

1

5

C.2 The Structure of Organized Crime in Ukraine (Crime Features of 2016–2022)

Year

2016

2017

2018

2019

2020

2021

2022

Completed criminal proceedings on criminal offences committed by organized groups and criminal organizations

1043

1728

2513

2344

3595

4318

3142

Creation, management of 4 a criminal community or criminal organization, and participation therein

11

11

14

20

66

65

Gangsterism

9

20

20

5

17

18

5

Murder

4

16

16

3

3

5

4

Including 1 committed as a contracted murder

1

1

1

0

0

1

Robbery

92

81

77

45

55

81

18

Brigandism

19

49

5

55

123

18

40

Extortion

16

21

45

58

46

80

35

Compulsion to meet or neglect civil obligations

2

0

0

2

0

0

1

Hostage taking

0

0

0

1

0

0

0

Act of terrorism

1

2

7

0

0

0

0

Illegal movement of persons across the state border of Ukraine

5

6

15

24

28

20

54

Trafficking in human beings

0

24

6

10

57

45

51

Including

(continued)

Appendix C: The Structure of Organized Crime in Ukraine

143

(continued) Year

2016

2017

2018

2019

2020

2021

2022

Illegal arms trafficking (art.262,263 of CC)

18

12

26

9

77

57

8

Criminal offences related to the circulation of narcotic drugs

118

312

706

801

1178

1276

1291

Theft

193

202

139

179

144

180

96

Including major

1

1

12

3

4

8

4

Misappropriation, 14 embezzlement, conversion, or property by malversation

34

221

85

160

180

210

Including major

10

8

30

23

25

79

28

Bribery and accepting an 18 offer, promise or receiving an improper advantage

7

6

71

32

33

43

Legalisation (laundering) of property proceeding from crime

6

12

8

37

32

20

Smuggling of narcotic 39 drugs, psychotropic substances, their analogues or precursors or counterfeit medicines

10

23

25

13

16

2

Use of money obtained from illicit trafficking in narcotic drugs

1

11

14

17

31

8

13

Misuse of budget funds, implementation of budget expenditures or provision of loans from the budget without established budget allocations or with their excess

0

0

0

0

0

0

0

Evasion of taxes, duties or 8 other compulsory payments

6

7

10

3

0

2

Financial fraud

0

0

0

0

0

0

1

Obstruction of legitimate economic activity

0

0

0

0

4

13

3

Smuggling

1

0

2

0

1

4

0

Illegal manufacturing, storage, sale or transportation for the purpose of sale of excisable goods

14

48

44

47

66

97

67

Fictitious entrepreneurship

18

11

39

17

–

–

–

2

(continued)

144

Appendix C: The Structure of Organized Crime in Ukraine

(continued) Year

2017

2018

2019

2020

2021

2022

Manufacture, storage, 2 purchase, transportation, shipment, import to Ukraine for use in the sale of goods, sale of counterfeit money, government securities, state lottery tickets, excise tax stamps or holographic security features

2016

3

12

18

78

27

11

Others

863

1060

813

1362

1976

1027

445

Appendix D

The Geographical Distribution of Organized Crime in Ukraine (Crime Series of 2001–2021)

The names of the regions

The number of identified organized groups and criminal organizations in the regions

Urban population, % of region total as of January 1, 2022a

2001

%

2006

%

2011

%

2016b

%

2021

%

Average %

Autonomous Republic of Crimea

34

4.42

32

6.87

19

4.81

–

–

1

0.20

5.37

–

Vinnytsia

10

1.30

12

2.58

9

2.28

5

3.68

14

2.81

2.53

52.3

Volyn

6

0.78

11

2.36

12

3.04

3

2.20

13

2.61

2.20

52.2

Dnipropetrovsk

101

13.12

30

6.44

26

6.58

3

2.20

39

7.82

7.23

84.2

Donetsk

97

12.60

49

10.52

35

8.86

12

8.82

24

4.81

9.12

91.0

Zhytomyr

13

1.69

8

1.72

15

3.98

6

4.41

21

4.21

3.20

59.6

Zakarpattia

24

3.12

8

1.72

9

2.28

4

2.94

9

1.80

2.37

37.2

Zaporizhzhia

38

4.94

25

5.36

25

6.33

5

3.68

21

4.21

4.90

77.5

Ivano-Frankivsk

21

2.73

10

2.15

5

1.27

7

5.15

14

2.81

2.82

44.6

Kyiv region

16

2.08

3

0.64

11

2.78

5

3.68

33

6.61

3.16

61.8

The city of Kyiv 28

3.64

14

3

24

6.08

10

7.35

39

7.81

5.58

100.0

Kirovohrad

16

2.08

11

2.36

12

3.04

6

4.41

15

3

2.98

63.7

Luhansk

30

3.90

43

9.23

31

7.85

3

2.20

13

2.61

5.16

87.2

Lviv

23

2.99

18

3.86

13

3.29

8

5.88

28

5.61

4.33

61.2

Mykolayiv

15

1.95

13

2.79

8

2.03

3

2.20

16

3.21

2.44

68.8

Odesa

33

4.29

26

5.58

15

3.98

12

8.82

28

5.61

5.66

67.3

Poltava

22

2.86

16

3.43

15

3.98

5

3.68

21

4.21

3.63

62.7

Rivne

13

1.69

6

1.29

7

1.78

4

2.94

14

2.81

2.10

47.5

The city of Sevastopol

9

1.17

10

2.15

9

2.28

–

–

–

–

1.87

– (continued)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

145

146

Appendix D: The Geographical Distribution of Organized Crime …

(continued) The names of the regions

The number of identified organized groups and criminal organizations in the regions

Urban population, % of region total as of January 1, 2022a

2001

%

2006

%

2011

%

2016b

%

2021

%

Average %

Sumy

28

3.64

8

1.72

9

2.28

5

3.68

12

2.40

2.74

69.8

Ternopil

25

3.25

9

1.93

7

1.78

3

2.20

6

1.20

2.07

46.1

Kharkiv

47

6.1

38

8.15

30

7.59

10

7.35

34

6.81

7.20

81.4

Kherson

19

2.47

7

1.5

9

2.28

2

1.47

10

2

1.94

61.4

Khmelnytsk

16

2.08

12

2.58

7

1.78

2

1.47

10

2

1.98

58.0

Cherkassy

13

1.69

15

3.22

11

2.78

3

2.20

12

2.40

2.46

57.3

Chernihiv

14

1.82

9

1.93

9

2.28

3

2.20

9

1.80

2.01

66.0

Chernivtsi

15

1.95

10

2.15

11

2.78

5

3.68

12

2.40

2.59

43.3

Central apparatus

–

–

–

–

–

–

4

2.94

31

6.21

4.58

–

Total in Ukraine

770

100

466

100

395

100

136

100

499

100

100

69.7

a State Statistics Service of Ukraine (2022) b Data of 2016 and 2021 for the city of Sevastopol and the Autonomous Republic of Crimea are not provided due to the

loss of control over these regions in 2014. Data of Donetsk and Luhansk regions are given only for those parts that have not been occupied and controlled by Ukraine since 2014

Appendix E

The Importance of the Role of Social Groups in the Life of Ukrainian Society, %1

Years Social groups Workers Intelligentsia Businessmen Employees Leaders Military Courts and Police Organized of the state of service prosecutor’s and crime apparatus political offices Security parties Service of Ukraine 1995

22.2

12.8

24.5

26.2

–

8.5

–

11.0

41.9

1998

18.7

11.3

25.4

29.3

–

5.7

–

10.6

42.7

1999

19.7

11.3

30.7

33.3

–

5.3

–

9.9

43.9

2001

23.9

13.8

31.2

35.7

–

8.9

–

12.7

49.0

2002

27.2

17.4

28.0

23.9

24.5

8.1

11.3

14.5

38.3

2004

22.4

13.2

27.0

23.6

25.9

4.8

9.8

12.6

40.2

2005

28.4

18.1

31.9

25.7

28.3

7.5

10.7

12.8

30.7

2006

27.6

18.8

33.4

25.7

35.8

5.3

11.9

12.1

33.9

2008

23.8

15.3

33.4

29.4

36.9

7.2

13.7

12.8

32.9

2010

25.2

13.7

32.1

24.5

36.5

6.7

17.0

14.4

32.3

2012

23.7

12.1

31.4

28.4

32.4

5.1

18.4

13.7

38.6

2014

24.1

15.4

36.9

25.4

35.8

10.4

14.5

12.5

35.8

2016

22.7

16.1

35.3

26.1

33.6

13.5

17.2

12.0

33.6

2019

25.7

16.3

33.3

25.9

35

17.4

19.5

15.6

25.5

2021

29.0

19.8

41.3

27.6

36.6

20.1

20.1

14.9

28.3

1

Data for the table were obtained from the long term research, conducted by the Institute of Sociology of the National Academy of Sciences of Ukraine. Respondents were invited to note in the given list those social groups that, in their opinion, play a significant role in the life of Ukrainian society. Vorona and Shulha (eds) (2021), pp. 39–43.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

147

Appendix F

Empirical Data

F.1 Qualitative Preliminary Data

Data

Sources

Individual Interviews

Interviewees

Expert Interviews

Name (Date)

Position

Arkusha Larysa (January 2023)

Former employee of operational units serving special units to combat organized crime in Odesa region in Ukraine (1991–2003)

Onufriienko Maryna (December 2022)

Former employee of the Prosecutor General’s Office of Ukraine (2012–2016)

Person 1 (February 2023)

Active employee of the Prosecutor General’s Office of Ukraine

Civil Interviews

Person 2 (September Owner of a small business in 2022) Ukraine (typical corruption case) Person 3 (September 31–years old male person. 2022) Ukrainian refugee in Europe (typical migrant smuggling case)

Sentences and other Court Decisions in criminal proceedings against organized criminal groups and organizations in Ukraine (selective content analysis of 2012–2023)

Unified State Register of Court Decisions of Ukraine

(continued)

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

149

150

Appendix F: Empirical Data

(continued) Data

Sources

Official releases of the press services of law enforcement agencies of Ukraine (selective content analysis of 2020–2023)

National Police of Ukraine Strategic Investigations Department of the National Police of Ukraine Cyber Police of Ukraine Security Service of Ukraine National Anti-Corruption Bureau of Ukraine

Journalistic investigative publications on organized crime (selective content analysis of 2012–2023)

Local and foreign press

F.2 Quantitative Secondary Data

Data

Sources

Reports on the rate of registered crime in Ukraine (1991–2022)

Ministry of Internal Affairs of Ukraine Prosecutor General’s Office of Ukraine

Reports on the results of combating organized groups and criminal organizations in Ukraine (1991–2022)

Ministry of Internal Affairs of Ukraine Prosecutor General’s Office of Ukraine

Reports on persons brought to criminal responsibility and types Judicial Power in Ukraine of criminal punishment in Ukraine (2019–2022) Reports on the composition of the convicts in Ukraine (2019–2022)

Judicial Power in Ukraine

References

State Statistics Service of Ukraine (2022) Naselennia Ukrainy 2021. Demohrafichnyi shchorichnyk (Population of Ukraine 2021. Demographic Yearbook. HacelennR Ukpa|ni 2021. DemogpafiqniH wopiqnik). http://db.ukrcensus.gov.ua/PXWEB2007/ukr/publ_new1/ 2022/zb_nasel%20_2021.pdf. Accessed 9 June 2023 Vorona V, Shulha M (eds) (2021) Ukrainske suspilstvo: monitorynh sotsialnykh zmin. 30 rokiv nezalezhnosti (Ukrainian Society: Monitoring of Social Change. 30 years of Independence. Ukpa|ncbke cycpilbctvo: monitoping cocialbnix zmin. 30 pokiv nezaleKnocti), vol 8 (22). Instytut sotsiolohii NAN Ukrainy, Kyiv

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 T. Melnychuk, Organized Crime as Institutional Cluster, SpringerBriefs in Law, https://doi.org/10.1007/978-3-031-39532-1

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