Fruit Pines – the story of Mac Paw’s “virtuous” business. What schemes will be green-lighted by draft law 12089?

Draft law 12089 on strengthening the protection of “bona fide purchasers” is expected to be adopted by the Verkhovna Rada. It was already on the agenda on March 12.

Its corruption risks have already been extensively written about, including by the civic initiative “Holka.” On the sidelines of Parliament, MPs who are ready to support the bill mention several cases. The first is the case of Ihor Mazepa, and the second is the case of Oleksandr Kosovan, a representative of the Forbes list of the country’s richest and the owner of the MacPaw company.

The search warrants on Kosovan two years ago caused a considerable stir. And the scenario was the same as with businessman Mazepa. The “poor multimillionaire” was being persecuted by a “corrupt prosecutor’s office” and was trying to take away his honestly purchased land plots.

Let us take a look at what really happened in this story.

How about we begin with a little test? Are the playground and the house in the photo built in a pine forest?

MacPaw development near the village of Tsybly. Photo by Volodymyr Herasymov for Forbes Ukraine.

If so, you are mistaken. This is not a pine forest but some arable land. Or maybe those are unique Ukrainian fruit pines. Thus, Mr. Kosovan and his McPaw Property Management LLC have bought up more than 20 hectares of land on the banks of the Dnipro River that look exactly like the photo, but, according to the documents, they are free privatized fields and orchards.

Looking at these pines, the multimillionaire could not even guess that something was wrong and he was buying a forest, not a field. This is not our assumption – the Supreme Court noted that McPaw Property Management LLC is a bona fide purchaser and should be subject to a vindication lawsuit when it refused to return the forest stolen from the state to the prosecutor’s office. Eventually, this was the only reason for dismissing the claim.

Actually, it is not even necessary to continue here. As it appears, in Ukraine, you can buy a pine forest under the guise of arable land, previously privatized free of charge. And the Supreme Court easily recognizes the buyer as a bona fide purchaser who could not even guess that something was wrong. What is more, it is precisely such “bona fide” purchasers that Verkhovna Rada is now holding as a symbol of a victim of unlawful prosecution by the prosecutor’s office.

However, the story of Kosovan and MacPaw goes much deeper and is a perfect example to demonstrate how manipulations by dishonest businesses easily turn offenders into victims of arbitrary power in the eyes of society. And then lawmakers use this wave to change legislation in the interests of dishonest business and ensure impunity.

According to Oleksandr Kosovan, “the reason for the searches was the desire of officials to take possession of the land plots that MacPaw legally acquired between 2016 and 2021”.

However, he was deceiving the public. The environmental prosecutor’s office conducted the searches for unauthorized work and an attempted seizure of water fund lands. The prosecutors’ suspicions were well-founded, hence, anyone can use Google Earth to look at historical satellite photos of what MacPaw Property Management LLC, whose beneficiary and director was Oleksandr Kosovan, was doing.

Comparison of satellite photos before and after the land acquisition by Kosovan and his company

Significant hydraulic dredging has been conducted in the area since 2017. As of the fall of 2021, about a hectare of the Kaniv Reservoir was covered with sand. In total, a strip more than 10 meters wide was washed up on a plot of land about 500 meters long, and two much wider beaches were created. All this was done without any permits or environmental impact assessment.

It has already been noted that Kosovan and his company became the owners of the forest, which by law could not be privatized. However, a significant part of the plots is located in the coastal protection zone of the Kaniv reservoir. Land in the coastal protection zone can only be owned by the state or municipalities.

Map of plots and the Dnipro coastal protection zone

For example, Oleksandr Kosovan personally owns a pine forest plot with cadastral number 3223388200:02:015:0009 with an area of about 1.5 hectares, which is mostly within the coastal protection zone and is designated for gardening according to the documents.

Another private forest plot owned by McPaw Property Management LLC (3223388200:02:015:0018, 1.2 hectares) is almost entirely within the coastal protection zone and is designated for private farming. Even plot 3223388200:02:015:0030, which the court refused to return to state ownership, is partially within the coastal protection zone. However, for some reason, court decisions do not mention this.

By the way, after politicians such as Deputy Prime Minister Mykhailo Fedorov and the head of the Servant of the People faction, David Arakhamia, came to the defense of Oleksandr Kosovan, the prosecutor’s office stopped fulfilling its duties and no longer tried to return even the plots within the coastal protection zone to the state, although there are all the legal positions of the Supreme Court on such land.

There were other violations as well. The photo below shows a large recreation building with a swimming pool (about 1400 square meters in total). However, according to the documents, (building 1 and building 2), it is an agricultural building, “an outbuilding with a fire tank”.

MacPaw development near the village of Tsybly. Photo by Volodymyr Herasymov for Forbes Ukraine.

Why such a strange name, and why the fraud? It is built on a leased communal plot for haying and grazing. And not completely — according to the cadastral map, it is not only a self-induced construction due to manipulations with the type of building, but it is partially located on squatted land. All of this is within the coastal protection zone, where even agricultural structures are prohibited from being built.

Location of a recreation building with a swimming pool, partially located on squatted land

In other words, in addition to illegally filling part of the Kaniv reservoir with sand, Kosovan’s company went ahead with unauthorized construction within the coastal protection zone and seized land. Is anyone surprised that the environmental prosecutor’s office opened criminal proceedings against an “honest” businessman after all this?

This is not about any mistakes made by a novice developer who simply does not know the law and cannot afford to hire experienced lawyers. Oleksandr Kosovan himself later admitted that he had agreed with the village authorities to include his whims in the new master plan for the village of Tsybly, so he was counting on the subsequent legalization of all the violations.

He wasn’t kidding – the draft of the new village master plan includes the MacPaw project. And specifically for it, the reservoir’s nature-reserved coastline was reduced to 25 meters, which is striking compared to the 100 meters nearby. There is no explanation for this in the project materials – they simply falsified the diagrams of the existing state, saying that these 25 meters had always been there. However, they did not have time to adopt this project – first, local elections, then criminal cases.

A fragment of the draft master plan for the village of Tsybly with the size of the nature-reserved coastline reduced for the benefit of MacPaw

As this story shows, nothing is impossible here. If you want to build a recreation center in the woods right on the banks of the Dnipro River, no prohibitions of the Land and Water Codes can stop you. The algorithm is simple.

First, you quietly buy up the forest stolen from the state, including within the coastal protection zone.

Secondly, you agree with the village council that they will draw a tiny nature-reserved coastline in the new general plan or a detailed plan of the territory so that they do not interfere with construction and the desired functional purpose for the former forest.

Thirdly, beaches can be easily washed without permits, and sand can be quietly mined on site without licenses.

Fourthly, you can build your dream buildings without worrying about urban planning legislation conventions because you have already agreed with the village council on the next legalization anyway.

Fifth, if law enforcement agencies decide to do their job, you start publicly accusing them of corruption and raiding. Most importantly, it must be done very confidently and constantly, stating that this discredits Ukraine in the eyes of Western investors.

Instead of being punished for the offense, you will not only get the opportunity to realize your dream project, but the Verkhovna Rada is likely to amend the legislation so that the arrogant prosecutor’s office does not get confused under your feet. For this purpose, draft law 12089 was submitted and will be considered in the second reading.

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