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EXCLUSIVE Corruption Watch

The Ministry of Defense Continues to Buy Food at Excessive Prices – Investigative Journalist

The Inside story of how a reporter exposed corruption at the Ukrainian Ministry of Defense.

In an exclusive interview with Yuri Nikolov, an investigative journalist who exposed corruption in the Ministry of Defense (MoD) at the beginning of the year), reported that the MoD continues to purchase products well above market prices. Nikolov believes that Minister Reznikov needs to solve the corruption problem in the Ministry - but he is a part of the problem himself.

On 21 March, President Volodymyr Zelensky signed a law introducing transparency in defense procurement, which requires defense contracting authorities to publish prices for goods and services in the Prozorro electronic system. The law is meant to attract more suppliers and finally improve the procurement process in the MoD.

You published the Defense Ministry's contract at prices far below market prices, which caused officials' heads to roll. Please tell us where you got this information?

My source connected with the military was the first to see this contract. It was signed a few days before the New Year and came into force in January. After the holidays, my source received it, looked at it, saw the numbers, and handed me a copy with the words: “Look at the food prices in the contract, and then at the contract volume.”

I printed out the prices in the contract, and there were potatoes for 22 Hr., eggs for 17 Hr., and cabbage for 30 Hr. With these printed contracts, I went to the nearest Varus store to compare prices and realized that they were three times more expensive in the contract.

The contract price for potatoes was 22 Hr., and there in the store, it was seven.

I thought maybe something was wrong with the store, so I went to another store – Silpo. But their potatoes were 7.5 Hr., eggs 7 Hr., and cabbage 15.

We started to think about what to do about it, especially since the contract size is one of eight contracts worth 13 billion Hr ($350 million).

If the entire contract had been executed at those prices, that company would get more than 5 billion Hr. over the market price in one year - more than the "Come Back Alive" Foundation fundraised for weapons. From just one contract, one company is getting this much money.

My colleagues and I thought about what to do about it. We decided to do something without disclosing or publishing the materials to prevent the enemy from spreading the word that something was being stolen in Ukraine again.

Did you contact the Ministry of Defense?

Yes, we did. We addressed the Ministry of Defense with a request, and they should have understood what we were talking about.

Moreover, we unofficially appealed to the President's Office's leadership and reported our information. It paid off because the President's office responded when we came out with the publication. For the first time, they reacted correctly. Before that, the President's office had been covering up for corrupt officials about whom we published investigations.

However, in this case, dismissals and investigations began in a couple of days. Our story became a catalyst, a trigger for change.

For the first time, our investigation became not a story about corruption but a story about the fight against corruption.

After our publication came out, several events took place. The country's leadership began a real fight against corrupt officials, arrests and resignations began, and our Western partners saw this.

President Joe Biden personally stated that Ukraine is monitoring military procurement, and it is excellent that President Volodymyr Zelensky is personally involved in the fight against corruption.

Then the US President decided to provide Ukraine with Abrams tanks, and after Biden, [German Chancellor] Olaf Scholz decided to provide Ukraine with Leopard tanks too.

Our story did not create any problems but helped the whole world see that Ukraine can fight corruption.

However, Minister of Defense Reznikov has remained in his position, hasn't he?

Minister Reznikov has proved that he is not the solution to the problem. He is part of the problem and defends the existing procurement scheme.

He also personally said that “the publication of potato prices was idiotic” – this is his direct speech. He does not understand why people need to know what they buy and at what price.

We immediately sent him a request to provide the invoices used to supply the military units, and he hasn't responded for two months.

Do they continue to buy at excessive prices?

For some items, for example, apples, but all the publicity forced the Ministry to reduce those extravagant prices at least, so eggs are no longer 17 Hr., but nine. In stores, they are still seven; at wholesale vendors they are  four, but nine is no longer seventeen.

These are billions of hryvnias purchases. Shouldn't it be cheaper than in the store?

Sure, but the Minister continues to tell some interesting stories about logistics and delivery. Maybe some squirrels are wrapping eggs in the foil (jokes).

Tell us about your source, is this a person who witnessed this, couldn't accept it, and decided to pass the information on to you? Is this a person who cares?

It is a person who was outraged by the margins that were sewn into the contract. In addition, this person had the opportunity to follow the previous year's procurement, which also had high prices, but not as much as 17 Hr. eggs.

Did the person see seventeen hryvnias for the eggs and decided it was too much?

From the new year, some items cost fifteen hryvnias, became already twenty-five. Ten to fifteen is understandable because the delivery cost to the front line is more expensive than usual, but how much more expensive? Should it cost the same as delivering Glovo from Miami to San Jose? When there is such a price spike, it’s serious. and this was my trigger to publish this information.

Last year, like many journalists, I deliberately turned away from the topic of corruption in Ukraine and focused on anti-Russian sanctions.

When the Ukrainian army started to win, when the whole country was uplifted - we liberated the Kharkiv and Kherson regions, the corrupt officials decided that if we were winning, they can open the pockets they had sewn closed at the beginning of the invasion.

Do you think they sewed up their pockets in the beginning of the full-scale invasion?

According to my sources, there was very little information about corruption in the first months after the invasion. Moreover, there were many stories about officials trying to buy things cheaper in March-April, for example, purchasing bulletproof vests. At that time was difficult to distinguish between good and evil.

Due to your publication, many officials lost their positions, and investigations began. Have you received any threats or attempts to bribe you? Do you feel safe?

The only threat in this story came from the Minister of Defense Reznikov, who immediately after the publication began to threaten that all those involved in the leak should be investigated for treason and undermining Ukraine's defense capabilities.

The Ministry started to promote a completely Russian narrative that investigators should be fought, not corrupt officials. It's like with Navalny in Russia - he is poisoned and imprisoned, but all the people he investigated remain free.

 Fortunately, someone competent explained to the Ministry leadership that this is how it is done in Russia and should be different in Ukraine.

 After that, everyone crawled back, such talk stopped; and during this time, I have not received any claims from law enforcement agencies or unofficial threats.

I only did one thing – I showed the facts.

Here is the fact of the price in the contract and the fact of the price in the store, and then people choose how to evaluate it.

My only fear was that the soldiers in the trenches would misunderstand, but I received positive feedback.

Maybe they don't have those eggs in the trenches at all.

The military should get something, I hope.

They clearly understand two things: they are being killed by the occupiers, and corrupt officials, who are also killing them. If they steal the money needed to buy shells, Ukraine won't have any shells, and the soldiers will be left without anything.

There will be no radios, no thermal imagers - the soldiers will just be killed without this necessary equipment. We don't care how we lose the war, but we do care how to win it. That’s why we decided that this amount of money is too much to be stolen.

The corruption is wrong, for sure.

We were worried that this information could be used against Ukraine, but now two months have passed, and we realize that we did the right thing.

What is your personal opinion on why Reznikov continues to hold his position? Does he have any patrons?

It’s the decision of the Commander-in-Chief, and I don't want to interfere with his choices. Suppose he believes he must win the war with this team. One way or another, we have to win the war.

It’s his personal choice to appoint a manager. They may be looking for a replacement for Reznikov and waiting for a favorable moment. Or maybe the investigation showed that the Minister himself did not take a penny.

It’s the prerogative of the Commander-in-Chief, and I don’t want to interfere with his decision.

Our task is for the Armed Forces, the government, and society to defeat the enemy. We should win first and then afterward analyze these decisions.

Representatives of anti-corruption institutions emphasize the importance of working with investigative journalists. Do you cooperate with anti-corruption agencies?

Like any law enforcement agency, they often contact journalists for additional information. We pass on all the information.  Our investigations are documentaries, and we never make anything up - we publish what we have.

Do you ever get some false information?

It happens regularly. People try to either use a journalist or discredit them.

Sometimes journalists fall into such traps. For example, with this story from the Ministry of Defense. Ukrainska Pravda published a fake document, but they quickly found out and apologized.

No one is immune from this. You need to check the information before posting it.

Do you get information from such concerned sources in the government, and is this what all your investigations are based on?

Yes, and there is also an official source - the electronic procurement system Prozorro. You go online, look at the contracts and find high prices on them.

By the way, the contracts in the Ministry of Defense is the same as before the full-scale invasion, but it was published in Prozorro.

During the war, they were allowed not to publish procurement information- that's how it became secret. But the only secret information is the location of military units, which we removed from the published documents.

How long have you been working as a journalist?

Since the late nineties, for 13 years now. Our website, Nashi Groshi, is dedicated to corruption in public procurement.

You have exposed many corrupt officials. Have you ever received any threats, bribery attempts, or other pressure?

In the first place, in terms of the reaction of the figurants, are lawsuits.

We have always had a lot of such cases, and we have lost only one for some formal reason while winning the rest.

There have been attempts to bribe us not to publish materials or to withdraw a publication. In such cases, we cautiously refuse and don’t get into this terrible story of a journalist being threatened with physical violence.

We publish facts and nothing but facts. Our investigations are not emotional.

Do you think people threaten only because a published item is emotional?

Most often, this is the case. Because when a journalist tells a story on emotion. Very often, it comes to personal emotional skirmishes with the people involved.

We don't have that. Moreover, when we find information, we avoid communicating with the figurants. If the contract has a fact, we show it and compare it with information people can understand.

If it's not only about eggs. We had a case about a kindergarten - its construction cost was comparable to George Clooney's mansion in California. This is a real case we exposed: A kindergarten in Ukraine cost more than the mansion that George Clooney sold with the land on the Pacific coast. It was an impressive story. We were not threatened for our coverage of this.

Everyone understands perfectly well that the structure of our organization is grant-based. We are funded by international donors who invest to have channels of information about corruption that are independent of the authorities. If corrupt officials threaten me, they are threatening the US State Department.

Does the US State Department fund you?

No, but our international donors, European or American, certainly influence embassies, and they understand that what we do here must be supported by foreign governments.

I'm not worried about my safety. I have to do my job - keep an eye on corrupt officials so that they don't steal Ukrainian and foreign money.

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