22.08.2024 Fortification

Achievements of the Temporary Investigation Commission on the construction of fortifications and procurement of drones for 3 months of activity

Рада створила ТСК щодо облаштування фортифікацій та закупівлі дронів - Korrespondent.net

On 22 May 2024, after another Russian offensive in the Kharkiv region, the Verkhovna Rada of Ukraine decided to create a Temporary Investigation Commission on the construction of fortifications and the purchase of drones. At that time, MPs solemnly declared that they would fight embezzlement in the defence forces and, most importantly, build fortifications.

The Commission unexpectedly included a number of odious MPs with dubious reputations. For example, Vitaliy Bort is a representative of Yanukovych’s entourage, a person who openly supported the referendum on ‘self-determination of Donbas’ and repeatedly visited the occupied Crimea, entering its territory through Russian Rostov and Moscow. Bort also continues to control state forestry enterprises, which in turn manage and sell timber for the fortification of frontline regions. Fortunately, the MPs came to their senses in time and excluded Bort from the Temporary Investigation Commission within five days.

But even then, the Temporary Investigation Commission was still stained with corruption. Two months after the Commission’s establishment, its Chairman, MP Mykola Zadorozhnyi from the Servant of the People party, was served with a suspicion notice by the NABU for extortion of a bribe of UAH 3.4 million. He allegedly ‘asked’ for 14% of the funds allocated for the repair of a water supply system in Sumy region. After the suspicion, the commission stopped meeting for some reason.

And only a month after the shameful revelation, Zadorozhnyi was dismissed from his post. What results has the Temporary Investigation Commission achieved in the 3 months of its work and how can it report on the period of its activity? It is unlikely that anyone will be able to answer this question, given the territorial losses of Ukraine during this time.

Finally, yesterday, a new Head was appointed to replace Zadorozhnyi – MP Oleksandr Bakumov. We hope that these changes will be crucial for the issue of embezzlement at the fortifications and that those responsible will be punished and the stolen billions will be used for defence. We have a lot of materials that we will provide to Bakumov, and we believe that the information will help the new Head of the Temporary Investigation Commission to restore order and understand who is who.

Here are the highlights of our investigations, which will be useful to Bakumov and the entire Temporary Investigation Commission when investigating the issue of fortifications.

Олександр Бакумов, народний депутат України ІX скликання

Theft at fortifications in frontline regions of Ukraine

Mykolaiv region

In the Mykolaiv region, headed by Vitaliy Kim, timber for fortifications was purchased at UAH 11,400 per cubic metre. To put this into perspective, this is three times higher than the market price of UAH 2,400 per cubic metre and seven times more expensive than in other regions. The most obvious difference is with the prices in the estimates of the State Agency for Reconstruction in Sumy region, where logs are accounted for at just over UAH 1,700.

In addition, Mykolaiv timber is almost three times more expensive than the prices found by the media in the ProZorro system. For example, in April, two military units ordered logs worth hundreds of millions of hryvnias at 4,000 per cubic metre. Moreover, even in the scandalous contracts of the Kharkiv OVA, the wood is half the price of the Mykolaiv estimate.

Even taking into account delivery, the price of a cubic metre is around UAH 4,000, but not UAH 11,400. Interestingly, most of the contracts were concluded with individual entrepreneurs or private enterprises, such as Prima Terra LLC, Sangria Lux PE, and others. At the same time, the local forestry of the State Enterprise ‘Forests of Ukraine’ offered wood at half the price.

According to law enforcement estimates, more than UAH 10 million could have been stolen from the procurement of timber for the Armed Forces in Mykolaiv. So where is the reaction from the head of the OVA, Kim?

Donetsk region

On 17 May 2024, the Pokrovsk City Council of Donetsk Oblast announced a tender for timber worth a total of UAH 13 million. The delivery period is one month from the date of signing the contract. The list of timber to be purchased includes pine timber and boards of a certain size.

The cost of timber was estimated at an average of UAH 7,000 per cubic metre, while the boards were offered for UAH 10,000. Again, we are talking about inflated prices. After all, the market value of timber is half that of the proposed price.

Even before the winner was chosen, it was obvious that the procurement was created specifically for the players, whose main goal was to withdraw budget funds and legalise them. Subsequently, the right to supply timber was granted to Investinprom LLC, which, despite the higher offer, became the winner.

Kharkiv region

Kharkiv region is remembered for the largest number of conflicts related to thefts at fortifications. Thus, Kharkiv’s largest construction company, Zhytlobud-1, was also involved in the construction of defences. Its share in these was about 40%. In particular, UAH 1.73 billion allocated by the Kharkiv Regional Infrastructure Restoration and Development Service was fully allocated to Zhytlobud.

Another company responsible for the construction of fortifications is Project Alliance LLC.  It was allocated a total of UAH 933.47 million for construction for the needs of terrorist defence and fortification, as well as UAH 33 million 375 thousand for the supply of construction materials for defence. Moreover, the local authorities were not concerned about the fact that, for example, by 2023, i.e. a year after the start of the full-scale invasion and the time when the Project Alliance had already received contracts from the Kharkiv OVA, Ihor Rozhkov was still a member of the company. The latter is a Russian citizen and, according to the registers, a successful Russian businessman who has a business there (Promdizayn and Technoengineering LLC, Belgorodsky Promtransproekt).

We have been investigating the activities of Project Alliance for more than a year now: we have compiled materials, sent them to the regulatory authorities, and obtained results (for example, the Pechersk District Court of Kyiv No. 757/1642/24-к of 31 January 2024 ordered the Prosecutor General’s Office to enter information into the Unified Register of Pre-trial Investigations, the Moscow District Court of Kharkiv No. 643/318/24 of 23 January 2024 ordered the authorised persons of the Saltovsky District Prosecutor’s Office to initiate an investigation, etc.) However, the Temporary Investigation Commission did not respond to this in any way, but seemed to encourage brazen embezzlement.

Read more about this in the investigation.

Schemes with wood for fortifications

The situation with the supply of timber for defensive structures in Kharkiv region is no different from other regions in terms of scandal. Dozens of fictitious one-day companies have received millions of dollars in procurement contracts. Moreover, the average cost of beams, including delivery and unloading, ranged from UAH 5,000 to UAH 8,000 per 1 cubic metre. The market price was UAH 3.5 thousand.

Repeatedly, representatives of the Kharkiv OVA and supplier companies noted that they had to deliver a large volume of wood in a short time. That’s why they engaged private contractors, as Kharkiv forestry enterprises allegedly did not have such volumes.

Later, it was discovered that most of the timber shipped by the suppliers belonged to state forestry enterprises. However, if the beams were purchased directly, the price would have been many times lower, which is why private players were needed.

For example, TED LLC is the main supplier of timber for the construction of fortifications to state and municipal enterprises. At the same time, TED supplies timber at prices that are several times too high and of inadequate quality.

‘TED is a fictitious entity created for the purpose of embezzlement, misappropriation, conversion of budget funds, and participation in conversion centres. It does not carry out any other economic activity, has no fixed assets, labour resources, equipment, personnel, or capital to fulfil contracts. So how can a company supply timber without equipment and people?

In fact, the company purchases forest materials at a reduced price from the FSC of Ukraine and other forestry enterprises. Subsequently, after winning multi-million dollar tenders, it sells these materials to state-owned enterprises at an inflated price, thereby generating its own ‘profit’ at the expense of budgetary funds.

We can say that the ‘supervisors’ of Ukraine’s forestry enterprises, Smal (head of the State Agency of Forest Resources) and Bolokhovets (head of the State Enterprise ‘Forests of Ukraine’), Strelets (Minister of Environmental Protection and Natural Resources) and Bondarenko (head of the Verkhovna Rada Committee on Environmental Policy and Nature Management), are particularly involved in the activities of TED.

Another scheme to supply wood for fortifications

Under the guise of ‘sanitary’ felling, trees are cut down. After that, the illegally obtained timber is fictitiously resold at inflated prices through front companies. This allows the real origin of the wood and its value to be concealed.

Later, the timber with legalised documents is put up for sale for participation in public procurement. As part of these procurements, forest products are sold to the state at a significantly inflated price for the construction of fortifications. Thus, the illegally extracted resource is not only legalised, but also brings additional profit to the organised criminal group.

Based on our materials regarding the implementation of criminal schemes by ‘foresters and ecologists’ in the construction of fortifications in the frontline regions with fictitious resale of timber at inflated prices, the Pechersk District Court of Kyiv, by its decision of 08.07.2024 (case No. 757/29506/24-к), ordered the authorised persons of the Kyiv Specialised Defence Prosecutor’s Office to launch an investigation. But how objective will the investigation be? A question with an asterisk.

Persons involved

In addition to the environmentalists mentioned above, the head of the Kharkiv OVA, Oleh Syniehubov, and his numerous deputies, including the already dismissed Mykhailo Kharnam, had a hand in the thefts at the fortifications and putting entire frontline regions at risk. In addition, servant MPs Bondarenko and Yakymenko continue to commit environmental crimes in the Kharkiv region, despite the numerous risks to the lives and health of local residents.

So when will each of them receive the punishment they deserve?

We believe that the newly appointed Head of the PIC on fortifications and drone procurement will take control of the situation with the fortifications. And we will do our best to support him with information.

Learn more about the situation with fortifications in the frontline regions in the video.

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