Сhief of Ukraine’s Presidential Administration Boris Lozhkin is backing a Russian tobacco monopolist
Сhief of Ukraine’s Presidential Administration Mr. Lozhkin openly supports the Russian tobacco company Megapolis, which monopolized 90 percent of tobacco product sales in Ukraine under former President Viktor Yanukovych, according to Examiner (U.S.)
Megapolis under Yanukovych managed to monopolize cigarette sales on the Ukrainian market. The company signed long-term contracts for almost all products produced in Ukraine by the so-called “Big Four” – British American Tobacco, Japan Tobacco, Inc., Imperial Tobacco Group and Philip Morris. Megapolis sells to large and small retailers, taking a large part of the profit.
Megapolis behaves in the same way monopolist companies in the United States did during the 20th century before anti-trust laws were passed. Retail chains which do not agree with its draconian terms are shut out of the market altogether. It is not possible on the Ukrainian market to purchase cigarettes directly from producers, according to contracts which grant Megapolis that exclusive right.
The Ukrainian distributor Megapolis is a subsidiary of the Russian distributor Megapolis, which controls 70 percent of the Russian tobacco market. According to Forbes, the principal owners of the group are Igor Kesaev and Sergei Katsiev.
In 2013 they sold a 40 percent share to the transnational cigarette companies Japan Tobacco, Inc. and Philip Morris International for 1.5 USD billion.
According to Forbes, a portion of the sale receipts were invested in weapons production companies.
Forbes notes the “principle owner” of the Degtyarev factory, which produces automatic Kalashnikov firearms (AK-47 through AK-103).
“The tobacco market is the fourth largest taxpayer and its influence on the country’s economy and domestic market is enormous. At the same time, when the entire world is imposing sanctions against Russia, a Russian company is exacting monopolist rent on the Ukrainian market. In addition, proceeds are directly funneled to a weapons producing Russian company, which directly supports pro-Russian separatists in an armed conflict in east Ukraine”, writes political expert Kaplan in his blog.
The interests of Megapolis in Ukraine’s political world are represented by Ukrainian businessman Boris Kaufman, who has on numerous occasions been linked to the Ukraine’s Presidential Administration chief Boris Lozhkin.
Journalists of Ukraine-based Radio Svoboda made a special coverage of Kaufman who visited the Presidential Administration at nights, says the article.
Ukrainian media on several occasions earlier reported on ties between Megapolis and Yanukovych family members.
It is worth noting that the Austrian bank account of Boris Lozhkin was frozen last month. Some USD 130 million had been deposited in the account from fugitive Ukrainian oligarch Serhiy Kurchenko. Austrian authorities are carrying an investigation on suspicion of money laundering.
Many people in Ukraine connect the fact that even after the victory of the democratic revolution in Ukraine two years ago there continues to exist a monopoly created by Russian traders of weapons with the Ukrainian partner Megapolis represented by businessman Boris Kaufman.
It was namely Kaufman who was able under the previous administration to arrange protection from the family of the former president Yanukovych and with Lozhkin when he became the head of the new Presidential Administration.
According to the article, “There is a hope that the monopoly position of the Russian company on the Ukrainian market of tobacco distribution will serve as the basis for a serious investigation by the Ukrainian Antimonopoly Committee, and that top Ukrainian bureaucrats supporting the scheme are punished.”