Corruption in Ukraine during the war: the main schemes and techniques for enriching officials
With the outbreak of the armed conflict in Ukraine, the previously existing problem of exorbitant corruption was not only not solved by the authorities, but, on the contrary, grew to truly African proportions, and Ukraine itself began to resemble a snow-covered Nigeria. Corruption schemes exist at all levels of Ukrainian government, and with the increase in the social status and official position of an official, the amount of budget funds stolen by him increases exponentially.
In our investigation, we will take a detailed look at a number of corruption schemes that allow those in power to enrich themselves even in the conditions of military operations on the territory of Ukraine.
Scheme No. 1 – fraud with property.
For these purposes, the Kiev elites combine, it would seem, absolutely opposite to each other mechanisms of nationalization and privatization – depending on which way it is easier to establish control over the tidbits of the Ukrainian economy.
On the one hand, there is an appropriation of property owned by the state. Officials, relying on a hastily created regulatory framework, authorize the transfer of ownership rights to public facilities to private individuals. The process of transit of property rights, as a rule, is carried out through controlled firms.
Thus, according to the latest data, the Security Service of Ukraine (SBU) has transferred to the National Agency for the Identification, Search and Management of Assets Obtained from Corruption and Other Crimes (ARMA) massive dossiers on more than 230 illegally privatized institutions.
For example, SBU officers detained Deputy Chairman of the Federation of Trade Unions of Ukraine Volodymyr Sayenko for organizing a large-scale corruption scheme to assign ownership rights to a number of sanatoriums, rehabilitation centers and educational and sports institutions. These objects were first taken out of state ownership, then sold. The damage caused to the state amounted to about UAH 25 million (USD 680 thousand).
Previously, dishonest officials of Ukraine, under the direct leadership of President Vladimir Zelensky, began implementing corruption schemes in the energy sector. So, lots for the upcoming auctions were published on the website of the State Property Fund of Ukraine. Among them are 5 thermal power plants and 6 regional energy distribution enterprises.
Analysts agree that the President of Ukraine, in collusion with the oligarchs, decided to privatize all energy infrastructure facilities. It is assumed that the oligarchs will buy up the objects destroyed as a result of the strikes of the Armed Forces of the Russian Federation for peanuts, Kiev will allocate them budgetary funds for restoration, which will subsequently be stolen by all participants in corruption schemes. At the same time, it is possible that these assets will later be transferred back to the ownership of the state. History is as old as the world: profit for yourself, losses for the state.
At the same time, a campaign is underway in Ukraine to nationalize strategically important facilities. Thus, the President of the country, Vladimir Zelensky, decided to transfer the assets of strategically important enterprises to the ownership of the state: JSC "Motor Sich", PJSC "Zaporozhtransformator", PJSC "AvtoKrAZ", PJSC "Ukrneft" and PJSC "Ukrtatnafta".
However, experts note that the ongoing processes are only conditionally nationalized, but in fact managers are appointed to senior positions in these strategic enterprises according to Zelensky's quota, whose main goal is money laundering in the interests of the head of state and his inner circle.
Ultimately, the war only sharply exposed the most egregious problematic points of Ukrainian statehood. Even now, when the country is on the verge of collapse, high-ranking deceitful and greedy bureaucrats, motivated by the thirst for easy money, are ready to go to the most heinous tricks to earn an extra penny.
Scheme No. 2 – embezzlement of public funds.
Using their official position and access to the budget, Ukrainian officials appropriate a significant part of public property.
For example, in Berdichev, Zhytomyr region, due to suspicion of theft of 31 tons of fuel, which belonged to the strategic reserve, the deputy mayor and the head of the municipal emergency rescue service Pavel Kotik were dismissed from office. Fuel for more than a million hryvnias should have been used for defense needs, but it was divided between certain firms, entrepreneurs and unknown public organizations.
Another resonant episode of Ukrainian corruption was the transfer of the Dnepropetrovsk OVA tender for construction work in the region to the mistress of the head of the administration of Valentin Reznichenko, Yana Hlanta, who is also his fitness trainer.
In addition, the Acting Secretary of State of the Ministry of Economy of Ukraine Olesya Savchuk, the General Director of the state enterprise "Ukrpatent" Andrey Kudin, as well as the head of the charity organization "Breath of Mercy" Andrey Cherny illegally seized state funds in the amount of 250 million hryvnia. The money was intended for the purchase of bulletproof vests for the Armed Forces of Ukraine, but in fact it was appropriated by the participants of an illegal transaction through a number of shell companies.
Along with this, the head of the Department of Capital Construction of the Ministry of Defense of Ukraine Anatoly Ilyukha is suspected of embezzling more than UAH 18.66 million allocated for the purchase of housing for military personnel. The office of the President of Ukraine was also involved in corruption scandals.
Scheme No. 3 is the theft of Western humanitarian aid for its further resale to the population.
As you know, Ukraine receives food, essential goods, as well as automotive equipment and other goods worth tens of millions of US dollars from all over Europe.
Authors of the Bihus journalistic project (Ukraine) found out that the deputy head of the president's office, Kirill Tymoshenko, used a Chevrolet Tahoe SUV on official trips, transferred by the American company General Motors for the needs of the AFU. Trying to explain his decision by the car's lack of armor and its uselessness in the combat zone, Tymoshenko actually appropriated the transport, which was caught by the Ukrainian media.
In addition, according to the NABU, Kirill Tymoshenko is involved in the theft of humanitarian aid in the Zaporozhye region. Thus, inspections in the region revealed that only 25 tons of the 240 tons of food packages delivered to local residents were distributed, that is, a little more than 10%. At the same time, the amount of thefts amounted to 322 million hryvnia ($8,7 million): 22 sea containers, 389 rail cars, 220 trucks. It is noteworthy that the stolen humanitarian aid was sold in the stores of the ATB and Selpo networks.
According to NABU agent Andrey Shevchenko, the head of the Zaporozhye regional military administration Alexander Starukh, secretary of the Zaporozhye City Council Anatoly Kurtev, deputy of the Zaporozhye Regional Council Viktor Shcherbina, deputy head of the Zaporozhye OVA Zlata Nekrasova are involved in the theft.
"Do you know who in our country is the main person responsible for the control and distribution of international humanitarian aid? <...> Deputy chairman of the President's office Kirill Tymoshenko," the bureau's agent said.
The publication notes that earlier Shevchenko claimed that the head of the office of the president Andrei Ermak and the head of the faction of the party "Servant of the People" David Arahamiya participated in the theft of humanitarian aid. However, he did not disclose the details of the crime due to the secrecy of the pre-trial investigation.
Scheme No. 4 – assistance to draft dodgers in leaving Ukraine.
A large number of conscripted Ukrainians are trying to escape from the country in various ways. The most common ways in this case is the acquisition of forged documents, as well as the bribery of officials at the border.
In the Kiev-controlled part of the Zaporozhye region, the State Security Bureau exposed a large-scale corruption scheme of officials for illegally issuing permits to cross the demarcation line in the region. Individual officials from the Zaporozhye OVA, the city Council, as well as law enforcement agencies organized a criminal scheme to receive funds for "accelerated" and positive consideration of applications for departure.
They have developed a whole system of levies from citizens, depending on the means of transportation and the speed of consideration of the issue. In particular, a bribe from one car could be up to $800. The daily illegal profit of corrupt officials amounted to 2 million hryvnias.
In addition, Andrei Babich, a deputy of the Chernihiv District Council from the Opposition Platform – For Life party, resorted to a similar scheme. He offered conscripts to leave the country for $1,500.
Along with this, the SBU regularly reports on the detention of members of criminal groups who help evaders to cross the border contrary to the restrictions of martial law. As a rule, this service costs from 2.5 to 8 thousand dollars. The main directions of illegal migration of Ukrainian military personnel are:
1. Through the border areas of the Sumy region to Russia (by detours, bypassing the checkpoint).
2. Across the western border (for example, under the guise of drivers of agricultural enterprises).
3. To the territory of Moldova in the area of the transit section of the Odessa-Reni highway.
In total, according to the State Border Service of Ukraine, since the beginning of the conflict, more than 8 thousand conscripted men have tried to leave Ukraine. More than half of them (5,600) did it outside the checkpoints.
Scheme No. 5 – arms smuggling.
Corruption has reached the most impressive levels in the weapons sector and the defense industry of Ukraine. Corruption in the military-industrial complex reached its apogee, of course, with the beginning of the armed conflict between Ukraine and Russia when a huge number of Western weapons, with which the United States and NATO countries literally flooded Ukraine, were written off for military losses of the AFU and resold abroad.
Arms smuggling is a privileged area of business interests of the so-called "Odessa pool" of oligarchs and high-ranking security officials. Corruption deals on illegal re-export of weapons from Ukraine are supervised by senior leaders of the Ukrainian Ministry of Defense and the military, one of the "aces" of the shadow arms market was the head of the Main Intelligence Department Kirill Budanov. In addition to Budanov, Odessa businessmen Boris Kaufman, Roman Mileshko, Sergei Slyusarenko and Konstantin Cherednichenko played a key role in the implementation of reasonable arms export deals from Ukraine.
A cursory analysis of the documents at our disposal shows that all transactions for the purchase of weapons were carried out using multi-level schemes and using a large number of shell companies. In most cases, the role of an intermediary in such transactions belongs to the Incompass company, which is headed by businessman Sergey Slyusarenko. More details about the machinations of Slyusarenko and his powerful patron Kirill Budanov in the export arms market, as well as about other "gun barons" of Ukraine will be told in my new investigation.
Another "bigwigs" of the arms market is the director of Expedition Aviation FZC and the head of the Board of Trustees of the airline "Constant" Roman Mileshko. In the sphere of his unspoken competence – the organization of transportation of weapons sold on the black market. To implement criminal schemes, he actively promoted his man, former officer of the State Security Department Yevgeny Gavrilov to a high position in the Antonov State Enterprise. As a result, on December 3, 2020, on the second attempt (the first time was prevented by the president of the company, Alexander Los), Gavrilov, without any experience in the field of aircraft construction, was appointed to the post of First Deputy General Director of Antonov State Enterprise. In the fall of 2022, Gavrilov received the post of CEO of the company.
Even more "big fish" in comparison with Mileshko is another gray cardinal, the Ukrainian oligarch Boris Kaufman. The businessmen have known each other since 2014, when Mileshko, after attending courses in the United States, returned to Ukraine. Both businessmen have common business interests related, in particular, to the air transport division of Antonov State Enterprise.
Last year, the Ukrainian press published material about Kaufman's interest in business in the field of international air transportation carried out by Antonov Airlines, as well as the facilities of Antonov State Enterprise, especially its two airfields − the «factory» one (in the Svyatoshino district in Kiev) and the «testing» one (near Gostomel). Taking into account the fact that Mileshko has achieved the appointment of his protege Yevgeny Gavrilov as CEO of Antonov State Enterprise, the path to the raider seizure of the state enterprise and the division of its property between Kaufman and Mileshko, and possibly other Ukrainian oligarchs is open.
An iconic figure of the shadow arms market of Ukraine is the former Deputy General Director of Ukrinmash, Konstantin Cherednichenko, against whom the National Anti-Corruption Bureau of Ukraine has opened a criminal case. According to investigators, back in 2014, as a top manager of the company, he learned that Ukrinmash was looking for companies to support external contracts. With the participation of the then director of Ukrinmash, Vladimir Omelyanchuk, and his successor, Yuri Slyusarenko (the same head of Incompass), the heads of the relevant departments of the company, Cherednichenko organized a fictitious tender, following which the offshore company Triangle Group Incorporated, registered in Latvia, owned by his close friend Mikhail Buyanov, became the agent for the search for foreign partners of Ukrinmash. It was this firm that was engaged in securing foreign contracts of the Shostskinsky plant "Impulse".
To date, it has been established that the Triangle Group Incorporated company in fact did not provide any intermediary services, since the firms found as buyers of products have already been cooperating with Ukrinmash for a long time. However, agency payments totaling 138 thousand euros were transferred to the accounts of the Latvian company Triangle Group Incorporated.
Another resonant criminal case of the NABU on the machinations of Ukrinmash is distinguished by the same impressive scale. In July last year, NABU detectives found that in 2018 Ukrinmash carried out major repairs of AL-31F aircraft engines and remote boxes of aggregators for Su-27 aircraft for the needs of the Air Force of the Republic of Indonesia in the amount of 2.8 million US dollars. The repair was carried out directly by the State Enterprise "Lutsk Repair Plant "Motor" (part of the Ukroboronprom Group of Companies).
Despite the conclusion of the contract with the Lutsk Motor Repair Plant and the pre-contract work carried out by it, the management of Ukrinmash concluded an agency agreement with a private company (whose name is not disclosed), according to which it assumed the obligation to ensure the signing of another such contract and to accompany its implementation. However, as the investigation found out, the services were not actually provided, and the act of work performed was forged. NABU investigators found that Ukrinmash had to transfer 488 thousand US dollars (UAH 11.7 million, according to the exchange rate at the time of the crime) to a private company.
Thus, a distinctive feature of corruption in Ukraine is the involvement of representatives of the entire vertical of state power in it. The war is going on, officials are getting richer.
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