You're reading: President calls practice corrupt even as son is biggest recipient

When it comes to what is wrong with Ukraine’s business climate, high on the list is the way that public procurement is conducted.

Even President Viktor Yanukovych has admitted that billions of dollars disappear yearly due to corruption in the awarding of government contracts and other spending.

It is not uncommon for billions of dollars of taxpayer money to go to companies whose beneficiary owners are hidden behind layers of offshore jurisdictions. The ownership often trail ends in Belize, arguably the most notoriously non-transparent offshore haven.

According to Forbes’s online database of public procurement champions, the company Premier Leasing this year won the most bids to garner Hr 5.1 billion ($637.5 million) worth of public procurement deals.

Nashi Groshi, an online watchdog, shows that the company this year supplied gondola train cars to state railway monopoly Ukrzaliznytsia.

The founder of Premier Leasing, with statutory capital of Hr 1,000 ($125), is a resident of a village in Luhansk Oblast.

In its latest report on global corruption, Washington-based Global Integrity said the public procurement process in Ukraine is weak.

According to the report, which rates disclosure requirements and conflicts of interest in 31 countries, Ukraine is effectively closed to foreign companies that hope to win a government tender fairly.

The report points out the absence of public notices containing tender rules, failure to publish tender requirements, covert preferences in the awarding of contracts and ineffective grievance and dispute resolution mechanisms.

In addition, the report points out that there are no cases of a company being found guilty of major violations,

Although information about most tenders, except those involving state enterprises, is on a specialized website, in reality the site is nearly useless due to its cumbersome layout and lack of search engine.

This prompted forbes.ua website jointly with Washington-based Organized Crime and Corruption Reporting Project, a Kyiv Post partner, to launch a database in which official information is presented in an easily comprehensible manner.

The database found at forbes.ua/ratings/people provides a list of companies and businesspeople who are the main beneficiaries of public procurement deals.

The winner is Oleksandr Yanukovych, the president’s older son who, according to the database won $1.2 billion in public procurement contracts this year. Oleksandr Yanukovych told the Kyiv Post that there “are serious doubts about the truthfulness of the data, and about the tender winners published by Forbes.ua.  He also questioned the validity of the methodology used by Forbes.

Kyiv Post staff writer Vlad Lavrov can be reached at [email protected].