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A Tarnished Gem? Building Bad On Ukraine's Black Sea Coast

ODESA, Ukraine — Studded with Mediterranean-style cottages and modest low-rise homes, the winding descent toward the Golden Shore public beach might be charming — if it weren’t for the huge concrete hulk thrusting itself into view from below.

Here, on the southern outskirts of Ukraine’s Black Sea port city, beachgoers grab snacks and souvenirs under the looming presence of the unfinished 15-story Aura Apart housing complex, a towering gray skeleton that critics say represents the rampant and often illegal development that is ruining Odesa’s characteristic charm.

“This project is the most lawless,” said Oleh Mykhaylyk, a local anti-corruption activist. “It violates absolutely everything.”

Long cherished for its rich history, cultural eclecticism, and sprawling beaches, Odesa boasts a laid-back seaside atmosphere. In the historic center, regal buildings line leafy streets, with courtyards evoking the stories of Isaac Babel hidden on nearly every block. Down below, a maze of tunnels — one of the world’s largest underground labyrinths — snakes through the city.

WATCH: Bunkers, Bones, And Booze: The Eerie Mysteries Of Odesa’s Catacombs

As Ukraine’s best-known coastal gem, Odesa is rivaled by Crimea, the Black Sea peninsula that has been controlled by Moscow since Russia seized it in 2014, sending in troops and staging a referendum rejected as illegitimate by Kyiv, the West, and the majority of countries.

But the city is also plagued with especially high levels of corruption, according to activists, investigative journalists, and officials. President Volodymyr Zelenskiy effectively acknowledged Odesa’s reputation as a smuggling haven after authorities arrested a so-called “godfather of contraband,” a prominent local businessman, last year. The mayor, Hennadiy Trukhanov, remains under investigation after being accused of lying about his wealth.

A particularly visible indicator of the scourge of corruption is unchecked housing development: Many structures go up in flagrant violation of various building and land codes, thanks to dubious documentation and complicit officials — and then result in major losses for investors if the projects go belly-up.

For proud locals, as well as those fighting to rid their country of graft and mismanagement, it’s painful to watch.

“Corruption is destroying the potential of a wonderful city,” said Oleksandr Stepanyuk, a lawyer for Common Goal, an Odesa-based NGO fighting in court against illegal development.

Legal Loopholes

Though not unique to Odesa, experts say the problem is particularly acute here. According to real-estate lawyer Volodymyr Kopot, whose Kyiv-based firm monitors the housing market, 76 percent of new apartment buildings are considered “risky” investments, compared to around 55 percent in the Ukrainian capital.

Tourists flock to Ukraine’s Black Sea port city of Odesa every year.

Tourists flock to Ukraine’s Black Sea port city of Odesa every year.

That’s because of the legal liability developers face for infractions such as building without permits, possessing faulty documentation, carrying debt, or being tied up in existing legal proceedings. In the case of Aura, the complex was originally approved as a “family-style” guest house — not multilevel apartment housing — and had been built on land designated as a recreational zone, according to local media.

Thanks to a motion by Mykhaylyk, its permit was revoked by a regional court in July. But that ruling is currently under appeal.

When projects like these fall apart, investors — usually those seeking to buy an apartment — are often the ones who suffer. One popular scheme, according to Mykhaylyk, involves prospective homeowners being tricked into becoming “associate” members of a cooperative, the business entity created by the developer. That designation allegedly deprives them of any real agency in the decision-making process and leaves them financially exposed, having voluntarily invested their cash.

In the cases when buildings are successfully finished, developers have been known to drive up various costs for investors to cover.

Mykhaylyk has experienced similar machinations firsthand: He’s been in court for years over an apartment that he invested in back in 2006 but was never delivered to him. He claims the company handed the apartment complex off to another developer, which tweaked the legal address in the process and left him empty-handed.

“They just took it from me,” he says, “and I can’t prove anything.”

What makes such schemes possible, activists say, are networks of cooperation among influential developers and allegedly crooked officials. From approving bogus building plans to blocking attempts by investors to reclaim ownership of their promised apartments, experts say builders, corrupt bureaucrats, and on-the-take judges have a powerful arsenal of resources.

The graft that activists say plagues development in Odesa mirrors the broader problem of corruption in Ukraine, a long-standing challenge for a country struggling with economic troubles and a nearly seven-year war with Russia-backed separatists in the east.

The Aura Apart housing complex is 15-stories high.

The Aura Apart housing complex is 15-stories high.

Successive governments have pledged to tackle it and failed to make as much headway as reformists and Western leaders, who say uprooting corruption is crucial to curbing Moscow’s influence, would like to see. According to Kopot, of the Kyiv firm Monitor.Estate, the construction sector is a prominent arena where powerful business interests and a broken judicial system converge.

“Who’s going to prosecute these people when they’re all partners?” he said.

Two written requests for comments to the Odesa City Council’s Department of Architecture and Construction Oversight went unanswered.

Fight For Rights

Still, in this city of nearly 1 million, activists against illegal construction are collecting what they consider to be minor but meaningful victories. Weeks after the ruling against Aura, Stepanyuk and his organization also found themselves celebrating after a judge issued a similar decision against Graf U Morya, one of several controversial projects just up the shoreline from Aura.

It’s an example of the pressure civil society is able to bring to bear on local officials in a country where political power is largely decentralized. Calling out a judge on Facebook with an appeal to “not let us down” can go a long way, according to Stepanyuk.

Odesa is known for its sprawling beaches.

Odesa is known for its sprawling beaches.

“We make them understand that it just won’t fly if they break the law or make an illegal ruling,” he said, adding that many judges sympathize with their plight but find it difficult to resist pressure.

Yet despite that measured success, Stepanyuk and like-minded locals say that the interconnected nature of these schemes, as well as the sheer sums of money involved, make for an uphill battle. If a lower court rules in their favor, he said, defending that ruling is likely to be more difficult at the appeals level.

And although activism is still possible, it carries its own risks. Mykhaylyk, for example, believes his efforts to expose local corruption are what led to a brazen attempt on his life in downtown Odesa in September 2018.

He narrowly survived a gunshot wound to the chest and is still working to recover feeling in one arm. But he is fighting on, he said because the rule of law in Odesa — and throughout Ukraine — hangs in the balance.

“Everything is done in such a way that people’s money can be stolen,” he said.

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Copyright (c) 2014. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave NW, Ste 400, Washington DC 20036.

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