Almost every law enforcement agency in Ukraine helped cover up corruption in state defense conglomerate UkrOboronProm, according to a new investigative journalist report by Bihus.info aired on March 11.
The report is the fourth and final part of an investigative series by the Ukrainian investigative team Bihus.info, which uncovered alleged corruption schemes in the state defense enterprises.
The investigation has caused an uproar since its first part aired in late February because of its connections to top officials: one of the key people in the scheme was allegedly a son of Oleh Hladkovskiy, a top ally of President Petro Poroshenko and the now former deputy head of Ukraine’s National Security and Defense Council.
Hladkovskiy and his son have denied the allegations of corruption. However, Hladkovskiy was fired on March 4.
The journalists alleged that a small group of well-connected young men headed by Hladkovskiy’s son were smuggling used parts for military equipment from Russia and selling them to Ukrainian defense companies at inflated prices, with Hladkovskiy himself getting a cut.
The scheme has allegedly been operating since 2015, the year when Poroshenko appointed his business partner Hladkovskiy to the National Security and Defense Council, and is estimated to have brought at least Hr 250 million ($9.3 million) to its perpetrators.
The final part of the investigation reveals that the State Fiscal Service, Security Service, the Military Prosecution, and even the National Anti-Corruption Bureau, allegedly helped cover up the group’s dealings.
Cover-up circle
According to the journalists from Bihus.info, every law enforcement agency at some point opened a case against the key firm in the scheme, OptimumSpetsdetal, but later closed those cases — allegedly for bribes.
The journalists obtained what they say are leaked messages and emails of the three people in the center of the scheme: Ihor Hladkovskiy, his former classmate Vitaliy Zhukov, and his business partner Andriy Rogoza. Using the messages, they illustrated how the three were allegedly bribing law enforcement agencies.
The three couldn’t be reached for comment. Hladkovskiy earlier denied all allegations of wrongdoing, while Rogoza and Zhukov have not spoken to journalists and didn’t respond to requests for comment sent to them on social media.
Their company’s trouble began in 2016 with Ukraine’s Fiscal Service, which started investigating it for tax evasion, suspecting that the company was cashing out its profits through proxies.
However, that case soon fell apart.
The Bihus.info journalists say the three men paid the Fiscal Service $8,000 to shut down the investigation. The Fiscal Service dodged direct questions concerning the service’s connections with OptimumSpetsdetal.
Next in line to open a case was Ukraine’s SBU security service, which in late 2016 became suspicious about OptimumSpetsdetal’s contracts with state-owned defense companies, according to Bihus.info.
But that led nowhere, too.
According to Bihus.info, a man named Dmytro Moskalenko, an investigator at the Kyiv office of the SBU, helped close the cases against OptimumSpetsdetal, allegedly receiving a BMW from Rogoza.
In 2015–2017, Ukrainian journalists released several investigations showing the lavish lifestyle of SBU employees that didn’t correspond with their official income. The SBU officers’ taste for luxurious cars was often the focus of the investigations.
The SBU issued an official statement, saying Moskalenko has been under criminal investigation for fraud since 2016, and hasn’t been working since then. His case is in court, according to the SBU. However, the messages cited by the journalists allege Moskalenko was still helping the trio in early 2017.
The Military Prosecutor’s Office also looked into the scheme. It opened cases against OptimumSpetsdetal back in 2015, when the prosecution alleged that the company didn’t pay taxes from an Hr 5 million ($185,000) deal. The case was transferred to the Fiscal Service, where it eventually died.
A second case was opened by the Military Prosecutor’s Office in 2017, according to Bihus.info. The office opened an investigation into a suspected case of fraud at the company worth Hr 300 million ($11 million). However, the case was allegedly closed for a $20,000 bribe, paid to unnamed officials in the Military Prosecutor’s Office.
The Military Prosecutors Office has allegedly opened cases against OptimumSpetsdetal at least three times, even conducting searches. However, all of the cases eventually fell apart. Prosecutor General Yuriy Lutsenko on March 12 denied wrongdoing on his office’s part.
NABU’s role
Last but not least, the National Anti-Corruption Bureau, or NABU for short, had multiple encounters with OptimumSpetsdetal, between 2015–2018.
The appearance of NABU in the investigative report was a surprise to many: the bureau, created after the EuroMaidan Revolution of 2013–2014, is an independent body supposed to investigate top-level corruption.
In late 2016, NABU added OptimumSpetsdetal to the list of untrustworthy companies that must be banned from doing business with UkrOboronProm. A month later, the bureau put out an updated list — but this time it didn’t include the company connected to Hladkovskiy’s son.
According to Bihus.info, one of the businessmen in the scheme, Rogoza, had a connection with NABU through Yevhen Shevchenko, an undercover NABU agent. Rogoza allegedly paid Shevchenko to get his company removed from the NABU blacklist.
NABU opened new investigations against OptimumSpetsdetal in 2017–2018, but these were again closed without any results.
The investigative report showed messages, allegedly sent by Zhukov and Rogoza, in which the two mention that closing cases in NABU costs more than in the Fiscal Service.
In an interview with Bihus.info, Shevchenko said he was an “investor” in the company of Rogoza and Zhukov, and made $300,000 from it. At the same time, he claimed he was only participating in it as part of a NABU special operation that aimed to investigate corruption in defense sector.
Artem Sytnyk, the head of the NABU, said on March 12 his bureau had active investigations into OptimumSpetsdetal, and said Shevchenko had nothing to do with them, mentioning also that the agency doesn’t assemble lists of untrustworthy companies, even though journalists showed the list written by Sytnyk’s deputy Gizo Uglava.
“The journalists came to wrong conclusions,” Sytnyk added.
Still, Sytnyk added that the NABU has started an internal investigation to look into the allegations of corruption within the agency.
Facing criticism, NABU on March 14 said it temporary terminated the employment of two detectives mentioned in the Bihus.info report.
The reaction from anti-corruption activists has been relatively calm. However, most cited the need for a fair internal investigation and pointed out that those directly involved need to be dismissed, including Uglava, the agency’s deputy head.
Roman Maselko, an activist and a member of NABU’s Civic Oversight Council, said that NABU’s reaction to the scandal had been disappointing.
“Sytnyk’s explanation doesn’t explain anything,” Maselko said in a Facebook post.
The least satisfactory part was the lack of explanation about the role of the deputy head of the NABU, Uglava. The leaked messages received by journalists mention Uglava as the person who will remove OptimumSpetsdetal from the blacklist.
When asked by the Kyiv Post about it, Uglava didn’t respond, instead sending a link to Sytnyk’s statement, which didn’t mention him at all.
Vitaliy Shabunin, head of the Anti-Corruption Action Center watchdog and a longstanding supporter of the NABU, told the Kyiv Post that while he supports a fair investigation, the case shouldn’t overshadow the NABU’s previous successes.
“NABU detectives have proved their professional and independent stance by bringing to justice several heads of defense plants, Deputy Defense Minister (Ihor Pavlovskiy), Head of the State Fiscal Service Roman Nasirov, former head of the parliamentary committee Mykola Martynenko, and many others previously untouched,” Shabunin said in a Facebook post on March 13.
Dodging responsibility
The scandal has also demonstrated the way state agencies can smoothly shift blame from one to another.
Prosecutor General Lutsenko, during an interview with the Censor.net news website on March 9, said his office had already been investigating the participants of the scheme — although not Hladkovskiy — and saying that setbacks in the case were mostly the fault of the NABU.
Lutsenko said that his office had access to the phones of the scheme’s participants, from which the messages were allegedly leaked to the Bihus.info journalists. However, he said that some of the messages cited in the report weren’t found on those phones, hinting they could have been faked.
Chief Anti-Corruption Prosecutor Nazar Kholodnytsky, who himself is facing allegations of helping corrupt officials dodge responsibility and was urged by the U. S. Ambassador to Ukraine Marie Yovanovitch to leave his post, also blamed the NABU for losing part of the materials in the case.
Kholodnytsky claimed that the Military Prosecutor’s Office in 2016 passed to NABU87 sheets of correspondence between the scheme’s participants. The correspondence allegedly mentioned both Hladkovskiys — father and son. Speaking at the meeting of the parliament’s defense committee on March 13, Kholodnytsky claimed that these sheets had disappeared from the case files. Sytnyk responded that the NABU had never received such correspondence.
Patriotic smuggling
When the first part of the Bihus.info investigation aired in February, many were surprised to learn that Ukraine’s defense industry uses parts smuggled from Russia. They are often pre-used and of poor quality.
This contradicted the earlier statements from Poroshenko and other officials, who bragged that Ukraine’s defense enterprises stopped using Russian supplies in 2015, substituting them with domestically made ones and imports from other countries.
But after the report aired, top officials defended the practice of smuggling defense supplies from Russia, saying that in some cases there was no alternative.
However, on March 13, Lutsenko claimed that since the corruption scandal broke in late February, the Russian state security service, the FSB, had stopped the smuggling of defense supplies from Russia into Ukraine.
Lutsenko presented it as a negative outcome of the investigation, claiming that “all the mid-range missiles built in Ukraine use parts smuggled from Russia.”
