Ukraine’s top defense industry managers have siphoned almost Hr 100 million ($3.8 million) in funds allocated to buy spare parts for armored vehicles, according to an investigation conducted by the Nashi Groshi TV program.
According to the investigation, in 2014-2015, Kyiv Armored Plant, a part of the Ukraine’s state-owned defense industry concern UkrOboronProm, was ordered by the Ministry of Defense to buy components for armored vehicles together worth Hr 5.3 million.
For this purpose, the journalists said, the plant contracted a private company called RENAL, which turned out to be not the producer of the necessary components, but an intermediary.
In turn, RENAL was meant purchase items from another two companies – Optimumspetsdetal and Inter Stal Ltd. But again, both of these companies were only the next intermediaries in the chain, and bought the military vehicle parts from another four companies that were named as being producers of the military hardware.
However, all four of the alleged producers appear to be shell companies, with neither having any manufacturing capacities nor stocks of goods, nor even offices located at their statutory addresses.
For instance, one of them, a company named PromoMarketGroup, was registered in the name of Olena Siryk, an unemployed housewife living in a village near Kyiv. Siryk told journalists she had been asked to register the company in her name for a small sum of money, and that she had never signed any contracts for the supply of military vehicle components.
In the end, the armored plant was not supplied with any of the components under the contract, the journalists said.
In December 2015, Kyiv military prosecutors conducted an investigation into the case, but only Siryk was punished – she was fined for fraudulent business practices.
Later, in 2017, the Chief Military Procurators’ Office also started its own inquiry.
Investigators eventually arrested Volodymyr Volokhach, also an unemployed person at that time, and the formal owner of Optimumspetsdetal, one of two firms that had been meant to provide the military components to the Kyiv Armored Plant via the RENAL intermediary company.
During his interrogation, Volokhach admitted that his company had never had any transport or supplies stores, and that it had been registered in order to siphon off budget money. Investigators then uncovered even more fake deals by Optimumspetsdetal with other UkrOboronProm enterprises, and sought court approval to seize all papers on the transactions.
However, no signs of any further steps in the inquiry have been seen since then, and no verdicts in the case have been passed, Nashi Groshi said.
In 2015-2017, Optimumspetsdetal received more Hr 93 million from three big military enterprises: Hr 12 million from the Kyiv Armored Plant, Hr 49 million from the Zhytomyr Armored Plant, and more Hr 32 million from the Kharkiv Armored Plant.
Besides, private firm in Kyiv called Kuznya na Rybalskomu, owned by Ukrainian President Petro Poroshenko, has also done deals with Optimumspetsdetal, transferring up to Hr 7 million to the alleged shell company, the journalists.
Nashi Groshi also said all of the key posts in Ukraine’s defense industries are occupied by Poroshenko’s immediate and long-time business partners. Among them, there is Oleg Gladkovskiy, the deputy secretary of Ukraine’s National Security and Defense Council, who directly oversees military production and procurement.
Poroshenko and Gladkovskiy have been close business partners for more than 20 years – in particular within the Bohdan Corporation, an automobile manufacturing group.
Moreover, UkrOboronProm, the state-owned defense industry concern that includes over 100 enterprises, including all three armored plants, is chaired by Roman Romanov, a former car dealer cooperating with the Bohdan group, and a former chairman of Poroshenko’s presidential campaign in 2014 in Kherson Oblast.
UkrOboronprom in response to the allegations accused Nashi Groshi journalist Denys Bihus of “incompetence” and “twisting facts.” The concern had never had any relations with any other companies except the RENAL, UkrOboronProm said on Oct. 24, and the supplies of the necessary components for military vehicles had been completely documented.
However, the concern’s press service did not comment on the fact that according to an earlier investigation by Ukraine’s State Fiscal Service, none of the intermediary companies in the scheme had ever produced or sold any military hardware.
