Cor­rup­tion Kills

Kyiv Post - - Front Page - BY I LLIA PONOMARENK­O AND OLEG SUKHOV PONOMARENK­[email protected] [email protected]

With Ukraine fight­ing off Rus­sia's war for four years now, the na­tion's se­cu­rity and de­fense sec­tor is be­set by scan­dals and con­tro­ver­sies.

Even as Ukraine’s lead­ers tout progress in es­tab­lish­ing a mod­ern NATO-com­pat­i­ble army and a glob­ally com­pet­i­tive mil­i­tary in­dus­try, re­forms stall amid cor­rup­tion, nepo­tism and non-trans­par­ent de­fense pro­cure­ment.

All the while, Ukraine is com­mit­ting more money to its de­fense and se­cu­rity, with 2018 fig­ures reach­ing Hr 129 bil­lion ($4.95 bil­lion) or more than 5 per­cent of the coun­try’s gross do­mes­tic prod­uct, in­clud­ing Hr 86 bil­lion ($3.1 bil­lion) for the army alone.

Yet the sky­rock­et­ing spend­ing is barely mak­ing a dif­fer­ence at the front. Sol­diers and of­fi­cers still rely heav­ily on decades-old Soviet-era weaponry and mil­i­tary equip­ment. A se­ries of re­cent scan­dals un­der­score the progress that still needs to be made.

Here are some of the big­gest scan­dals:

Hlad­kovsky and Bo­hdan

Oleh Hlad­kovsky, Ukrainian Pres­i­dent Petro Poroshenko’s for­mer busi­ness part­ner and a deputy sec­re­tary of the Na­tional Se­cu­rity and De­fense Coun­cil, the main co­or­di­nat­ing and con­trol­ling body in the de­fense area, is be­lieved to wield in­flu­ence in ap­prov­ing se­cre­tive, no-bid mil­i­tary pro­cure­ment con­tracts.

Au­tomaker Bo­hdan Group, owned by Hlad­kovsky and for­merly co-owned by Poroshenko, won a De­fense Min­istry ten­der and pro­vided 100 new Bo­hdan-2251 field am­bu­lances at a price of $32,000 each. It was the first time Bo­hdan had pro­duced such ve­hi­cles, the de­sign of which was based on a Chi­nese Great Wall car.

How­ever, the qual­ity of the new am­bu­lances has been chal­lenged. Many broke down af­ter only sev­eral months in ser­vice, ac­cord­ing to a mem­ber of the Vol­un­teers Coun­cil of the De­fense Min­istry, Va­len­tyna Var­ava.

On Feb. 11, the min­istry said pro­duc­tion would be sus­pended un­til the de­fects are fixed. The cor­po­ra­tion claimed that its cars broke down due to the use of low-qual­ity fuel by the army, and the care­less use of the ve­hi­cles.

Nev­er­the­less, the De­fense Min­istry in­tends to buy even more of Hlad­kovsky’s ve­hi­cles. The deal be­tween the Bo­hdan Group and the mil­i­tary was later clas­si­fied as se­cret.

Off­shore sup­plier

An off­shore com­pany af­fil­i­ated with Hlad­kovsky also won a mil­i­tary con­tract.

HUDC Hold­ing Lim­ited, a Cyprus­based firm of un­known own­er­ship, sold four ar­mored ve­hi­cles to a state-owned de­fense com­pany Spet­sTech­noEk­sport in 2015 for $428,000. Hlad­kovsky’s of­fice told the Kyiv Post that he “used to have an in­di­rect con­nec­tion” to the seller com­pany through a dif­fer­ent off­shore firm.

In June, Ukrainian jour­nal­ist Olek­sandr Du­bin­sky pub­lished what he said were copies of agree­ments show­ing the same off­shore firm lend­ing money to its Rus­sian auto-mak­ing sub­sidiary Avto Real be­tween Septem­ber and De­cem­ber 2014, claim­ing that Hlad­kovsky was do­ing busi­ness in Rus­sia even amid its war on Ukraine.

Hlad­kovsky didn’t com­ment on the ac­cu­sa­tions, but in­stead wrote to the Se­cu­rity Ser­vice of Ukraine, or SBU, ask­ing the law en­force­ment agency to open a trea­son case against Du­bin­sky. The SBU com­plied, ac­cus­ing Du­bin­sky of “mis­in­form­ing cit­i­zens about se­cu­rity threats.”

Avakov's son

In­te­rior Min­is­ter Arsen Avakov’s son Olek­sandr has been charged with em­bez­zling Hr 14 mil­lion in a case re­lated to the sup­ply of over­priced back­packs to the Na­tional Guard. He was ar­rested by the Na­tional Anti-Cor­rup­tion Bureau of Ukraine in Oc­to­ber and re­leased by a court with­out bail.

In De­cem­ber, a court re­turned Olek­sandr Avakov’s pass­port and took off his elec­tronic bracelet and Ukrain­ska Pravda re­ported that he was al­lowed to spend his Christ­mas hol­i­days in Italy. More­over, the freeze on his as­sets was can­celed by a court in the same month.

Ihor Pavlovsky

In Oc­to­ber, the Na­tional An­tiCor­rup­tion Bureau of Ukraine ar­rested Deputy De­fense Min­is­ter Ihor Pavlovskyi and the head of the min­istry’s pro­cure­ment depart­ment, Volodymyr Hu­lyevych.

They are sus­pected of em­bez­zling Hr 149 mil­lion ($5.5 mil­lion) through the pur­chase of fuel at in­flated prices for the De­fense Min­istry.

The fuel sup­plier in the case is a Ukrainian com­pany called Trade

Com­mod­ity. Ac­cord­ing to the on­line pro­cure­ment sys­tem ProZorro, Trade Com­mod­ity won 16 open pro­cure­ment ten­ders worth $80 mil­lion with the De­fense Min­istry over 2015–2017, sup­ply­ing gaso­line, jet fuel, and diesel fuel.

One of the self-ac­knowl­edged in­vestors of Trade Com­mod­ity is busi­ness­man An­driy Adamovsky. He is best known as a for­mer busi­ness part­ner of Olek­sandr Hra­novsky, an in­flu­en­tial law­maker with the Bloc of Petro Poroshenko fac­tion. This con­nec­tion caused the Ukrainian me­dia to link the com­pany’s suc­cess to Hra­novsky. The law­maker de­nied any con­nec­tion to Trade Com­mod­ity.

Ry­bal­sky Kuznya

The Na­tional Anti-Cor­rup­tion Bureau, or NABU, is also in­ves­ti­gat­ing a case of em­bez­zle­ment, abuse of power and forgery in­volv­ing Kyiv’s Ry­bal­sky Kuznya ship­yard, which is owned by Poroshenko and his top ally Ihor Kononenko — also a mem­ber of the pres­i­dent’s dom­i­nant, 136-mem­ber fac­tion in par­lia­ment.

Ry­bal­sky Kuznya de­nied ac­cu­sa­tions of in­volve­ment in cor­rup­tion.

The Bor­der Guard con­cluded a con­tract in 2015 to buy Tri­ton mine-re­sis­tant ar­mored ve­hi­cles worth Hr 59 mil­lion from Ry­bal­sky Kuznya. It took de­liv­ery of the ve­hi­cles in 2015–2016.

Ac­cord­ing to a 2015 de­ci­sion by the Cab­i­net of Min­is­ters, the Kharkiv Oblast branch of Ukraine’s Bor­der Guard was ex­pected to buy 34 re­mote weapon sta­tions worth Hr 161.5 mil­lion, or Hr 4.75 mil­lion per sta­tion. How­ever, de facto the price of each re­mote weapon sta­tion sup­plied by Ry­bal­sky Kuznya amounted to Hr 14.9 mil­lion, the NABU said.

The NABU also said that the ve­hi­cles sup­plied by Ry­bal­sky Kuznya had not been used for their in­tended pur­poses and that they were un­suit­able for use.

Nev­er­the­less, Ry­bal­sky Kuz­nia ship­yard also won govern­ment con­tracts, in­clud­ing mil­i­tary ones, worth $2.5 mil­lion in 2016 and con­tracts worth $560,000 in 2017.

While Poroshenko’s big­gest com­pany, con­fec­tionary hold­ing Roshen, has been al­legedly man­aged by a blind trust since 2016, Kuz­nia is owned by Poroshenko through his Ukrainian fund Prime As­sets Cap­i­tal.

Sab­o­tag­ing re­form

The progress of Ukraine’s mil­i­tary re­forms has re­cently come un­der fire.

Glen Grant, a Bri­tish mil­i­tary an­a­lyst and for­mer ad­viser to Ukraine’s De­fense Min­istry, wrote in a Jan. 31 op-ed for the Kyiv Post that “the Ukrainian army gets bet­ter ev­ery day, but over­all it is not one of the best in Europe be­cause it has some crit­i­cal or­ga­ni­za­tional flaws.”

“Giv­ing the army Javelin anti-tank mis­siles will not re­move those flaws, and may even make them worse,” Grant said. “This is be­cause there is no doc­trine, equip­ping and train­ing for do­ing this. The vi­sion of a mo­bile army is lack­ing at all lev­els.”

Grant said that Ukraine does not have the “op­er­a­tional abil­ity to de­liver force any­where and win bat­tles.” He ar­gued that, to win in Rus­sia’s war, the na­tion must shed its Soviet mil­i­tary men­tal­ity and com­pletely trans­form its army.

Natan Chazin, a Ukrainian vet­eran of Rus­sia’s war in the Don­bas and for­mer ad­vi­sor to Chief of the Gen­eral Staff Vik­tor Muzhenko, was even harsher in an op-ed pub­lished on Feb. 14. Chazin ar­gued that mil­i­tary re­form in Ukraine was “dead” and said that Ukraine’s army can­not be “trans­formed to the state of even mar­ginal ef­fec­tive­ness.”

Shy­rokyi Lan swamp

Up to Hr 370 mil­lion ($14.2 mil­lion) was al­lo­cated in early 2017 to com­pletely over­haul Shy­rokyi Lan, the army’s huge train­ing camp in Myko­laiv Oblast some 370 kilo­me­ters south of Kyiv.

By the end of 2017, 11 mod­ern con­tainer-style hous­ing units, a med­i­cal cen­ter, a can­teen and a com­mand head­quar­ters were sup­posed to have been built, ac­cord­ing to pres­i­den­tial ad­viser Yuriy Bir­iukov.

How­ever, in mid-March, a year af­ter Bir­iukov’s claim, the sol­diers liv­ing in the camp’s old, cold can­vas tents found them­selves knee-deep in mud as pud­dles of water swamped the area dur­ing the spring­time thaw, as they have ev­ery year since 2014.

Out­raged by their ap­palling liv­ing con­di­tions, sol­diers com­plained on Face­book. Grilled about where all the money had gone, pres­i­den­tial ad­viser Bir­iukov claimed that mod­ern­iza­tion work at the Shy­rokyi Lan would be de­layed, for “a hun­dred ob­jec­tive rea­sons,” un­til Au­gust 2018, and that it was the sol­diers them­selves who were re­spon­si­ble for the liv­ing con­di­tions.

The of­fi­cial said on Face­book on March 11 that the scan­dal was be­ing in­ten­tion­ally stirred up by “those fight­ing against us” and “their use­ful id­iots.”

On March 13, the Shi­rokiy Lan scan­dal turned deadly, when one sol­dier was killed and an­other seven badly in­jured in a deadly blaze as they tried to heat up a tent by us­ing gaso­line to ig­nite the damp fire­wood de­liv­ered to the camp.

Myko­laiv Ship­yard

In late Oc­to­ber 2017, the Myko­laiv Ship­yard, one of Ukraine’s big­gest and old­est ship­build­ing yards, which em­ploys some 700 work­ers, was halted due to the to­tal ab­sence of fund­ing and nearly Hr 60 mil­lion wage ar­rears.

For nearly 27 years prior to that, the yard had been work­ing on the con­struc­tion of a mis­sile cruiser, the “Ukraine.” How­ever, the Cab­i­net of Min­is­ters ceased to al­lo­cate funds to keep the ship main­tained as far back as in Fe­bru­ary 2015, push­ing the en­ter­prise to its ul­ti­mate de­cline.

Fur­ther­more, in late De­cem­ber, the Min­istry of De­fense of­fi­cially re­fused to ac­cept the rusty, long-out­dated Soviet-era bat­tle­ship, even though, ac­cord­ing to the ship­yard’s man­age­ment, it was 95-per­cent com­plete.

Amid the row, Ukrainian Prime Min­is­ter Volodymyr Groys­man in late De­cem­ber 2017 pub­licly de­manded that UkrOboronP­rom’s head Ro­man Ro­manov re­sign over his fail­ure to pay off the wage debts at the Myko­laiv Ship­yard. Ro­manov stepped down only in mid-Fe­bru­ary af­ter a months-long war of words with the govern­ment.

Nonethe­less, the is­sue re­mains un­solved. As the con­cern’s new di­rec­tor gen­eral told the Kyiv Post in a re­cent in­ter­view, the Myko­laiv Ship­yard can­not sign new con­tracts and may have to close.

Ka­lynivka de­pot fire

There have been four ma­jor fires and ex­plo­sions at Ukrainian army am­mu­ni­tion de­pots since 2014. The lat­est in­ci­dent, a fire at an am­mu­ni­tion de­pot near the town of Ka­lynivka, 238 kilo­me­ters south­west of Kyiv, be­tween Sept. 26–27, 2017, raised ques­tions of neg­li­gence and bud­get fraud in stor­ing the army’s am­mu­ni­tion.

While claims of sab­o­tage started to cir­cu­late shortly af­ter the fire, ev­i­dence started to emerge that the de­pot had fire safety prob­lems.

Fol­low­ing the in­ci­dent, the chief mil­i­tary prose­cu­tor, Ana­toliy Ma­tios, also said that the de­pot’s fire alarm sys­tem had not been op­er­at­ing. More­over, on the night of the in­ci­dent, the en­tire de­pot was pro­tected by “sev­eral air-de­fense po­si­tions and was pa­trolled by 17 armed guards,” pri­mar­ily el­derly peo­ple paid “very low wages.”

Also, ac­cord­ing to pres­i­den­tial ad­viser Bir­iukov, in 2017 alone, the Ka­lynivka de­pot re­ceived Hr 25.5 mil­lion ($978,700) for tech­ni­cal and se­cu­rity im­prove­ments.

Kyiv Ar­mored Plant

In late Oc­to­ber 2017, an in­ves­ti­ga­tion by the Nashi Groshi TV pro­gram re­vealed that the top man­agers of the Kyiv Ar­mored Plant in 2014– 2015 al­legedly si­phoned off as much as Hr 100 mil­lion ($3.7 mil­lion) in funds al­lo­cated to buy spare parts for ar­mored ve­hi­cles for the mil­i­tary.

The plant, which is also a part of the UkrOboronP­rom state de­fense in­dus­try hold­ing com­pany, bought the parts through a chain of up to four pri­vate in­ter­me­di­ary com­pa­nies, none of which had any man­u­fac­tur­ing ca­pac­i­ties nor stocks of goods, nor even of­fices lo­cated at their statu­tory ad­dresses.

And in the end, the ar­mored plant was not sup­plied with any of the com­po­nents that were to have been de­liv­ered un­der the con­tract, Nashi Groshi jour­nal­ists said.

The mil­i­tary prose­cu­tor's of­fice in Kyiv started an in­quiry into the case as far back as De­cem­ber 2015; How­ever, there has been no progress in the in­quiry since then, Nashi Groshi said.

UkrOboronP­rom re­jected all of the al­le­ga­tions, ac­cus­ing Nashi Groshi jour­nal­ist Denys Bi­hus of “in­com­pe­tence” and “twist­ing facts.”

Col­lat­eral dam­age

Since the out­break of Rus­sia’s war in the Don­bas in 2014, there have been over 10,000 non-com­bat Ukrainian mil­i­tary ca­su­al­ties be­cause of care­less weapons han­dling, ex­ces­sive al­co­hol con­sump­tion, or crim­i­nal­ity, Chief Mil­i­tary Prose­cu­tor Ma­tios claimed in a TV in­ter­view on Oct. 28.

In the Don­bas war zone alone, up to 3,700 sol­diers have died from non-com­bat in­juries, in ad­di­tion to the al­ready known death toll of 2,700 sol­diers killed in ac­tion, ac­cord­ing to the prose­cu­tor.

“Two full bri­gades have been lost due to ig­nor­ing army rules, and crim­i­nal be­hav­ior,” Ma­tios said.

(Oleg Pe­tra­siuk)

A boy hangs on a self-pro­pelled how­itzer bar­rel dur­ing the Power of the Un­de­feated arms ex­hi­bi­tion in Kyiv on Aug. 23, 2017.

Deputy sec­re­tary of the Na­tional Se­cu­rity and De­fense Coun­cil Oleh Hlad­kovsky sits at the coun­cil's meet­ing in Kyiv on Feb. 18, 2015. (UNIAN)

A Ukrainian sol­dier checks his am­mu­ni­tion re­serve at a ma­chine gun nest near the Rus­sian-oc­cu­pied Donetsk Oblast city of De­balt­seve, 600 kilo­me­ters south­west of Kyiv, on July 31, 2017. (Volodymyr Petrov)

Deputy De­fense Min­is­ter Ihor Pavlovsky (C) stands at a hear­ing of Kyiv’s Solomyan­sky Dis­trict Court on Oct. 13. He has been charged with em­bez­zling Hr 149 mil­lion ($5.5 mil­lion) through the pur­chase of fuel for the De­fense Min­istry. (Oleg Pe­tra­siuk)

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