22.02.2025 Corruption Investigations

As Minister of Defense, Umerov questions the country’s defense. Low-quality ammunition for the Armed Forces

Міноборони озвучило реальну потребу у боєприпасах та скільки 155-мм снарядів ЗСУ вистрілюють на місяць | Defense Express

How are budget funds allocated in the defense sector? This question has long been a concern of Ukrainians. However, neither Minister Umerov nor his subordinate heads of agencies such as the State Logistics Operator can answer this seemingly simple question. For example, the problems with the development of the Dzvin-AS automated combat management system for the Armed Forces of Ukraine are not only impressive in scale, but also raise many questions about the involvement of dubious companies and affiliates in government contracts.

Dzvin-AS: what is known?

In 2016, the Ministry of Defense signed a contract worth UAH 722.6 million with Everest Limited, which was to develop software for an automated troop management system. The company had no experience in this field, and its participation in the tender was secured through lobbying of the Ministry of Defense officials.

At the same time, instead of creating the latest software, Everest Limited bought off-the-shelf systems from affiliated companies such as Megapolis.DocNet, UnityBase Defense, and SMS Communication System. This resulted in unnecessary expenditures of UAH 239 million. Of this amount:

  • UAH 98 million was spent on “development of special software”
  • UAH 141 million was spent on the revision and adaptation of these systems

Later, it became known that a significant part of the budget funds received by Everest Limited was transferred through a chain of companies that were in fact only intermediaries:

  • Icusion IT
  • Integrity Bays
  • Research Institute Avtoprom
    RKI Consulting.

These companies received money for software and hardware that did not meet the contract requirements. Everything looked good on paper, but the real situation was quite different.

According to the conclusions of the internal audit of the Ministry of Defense, the troop management system developed under this project did not meet the technical requirements. The auditors found a number of violations, including:

  • UAH 171.9 million – illegal expenses for postponement of deadlines, VAT payment and adjustment of documentation.
  • UAH 550.7 million – risk of loss of property due to lack of inventory.
  • UAH 15.2 million – expenses for software that was never used.
  • UAH 3.9 million – unjustified expenses for documentation that was never used.
  • UAH 263.7 million – probably overstated volumes of work performed.

Who lobbied Everest Limited?

Particular attention should be paid to Everest Limited’s connections with other companies and individuals who could influence decisions at the Ministry of Defense. One of them is Modern Communication Solutions, which was founded in 2016 when the contract with the Ministry of Defense was signed. The company is owned by Everest Limited and Ukrainian Armor, headed by Yuriy Chubatiuk and Oleksandr Kuzma. Vladyslav Belbas, who is a director and owner of 10% of this company, also plays an important role.

Law enforcement response

The NABU is currently investigating corruption schemes involving the companies. Suspicions have already been brought against high-ranking officials of the Armed Forces of Ukraine, including Oleh Korol (Head of the Automation Development Department of the General Staff of the Armed Forces of Ukraine) and Yuriy Pastukhov (Director of Everest Limited). This list was supplemented by former Deputy Chief of the General Staff of the Armed Forces of Ukraine Radion Tymoshenko and former Chief of the Communications Troops of the Armed Forces of Ukraine Volodymyr Rapko.

The question of who exactly lobbied Everest Limited and why they became reliable contractors for the Ministry of Defense of Ukraine is not the last one.

But this is not the end of the story and is only a small part of the schemes that originated within the Ministry of Defense.

Ukrainian armored vehicles and fictitious procurement

Officials of the Ministry of Defense of Ukraine and affiliated enterprises, including the State Enterprise “Defense Procurement Agency” and LLC “Ukrainian Armor”, formed an organized criminal group. Its goal is to illegally embezzle budget funds allocated for the country’s defense.

This is realized through the conclusion of contracts with a number of controlled companies, in particular, with the Romanian company Carfil S.A., which produces ammunition. Such cooperation is extremely questionable: most of the mortar rounds that were to be delivered to Ukrainian military units had factory defects. The discovery of this fact confirmed that the number of defective ammunition far exceeds the permissible standards.

Although the interdepartmental commission found the reasons for the poor quality of the supply – improper storage and use of low-quality powder charges – the responsible officials tried to hide the true extent of the problem. To do this, they used random inspections to hide the violations and avoid punishment.

By the way, all the money for the supplies went to the controlled accounts of Ukrainian Armor. The presence of a huge receivable exceeding UAH 134 million did not stop the company from entering into new contracts with the Ministry of Defense. And even the dubious reputation of the person behind the company, former MP Serhiy Pashynsky, did not hinder the process.

In addition, another co-owner of Ukrainian Armor, Vladyslav Belbas, has also been caught by law enforcement agencies.

It is clear that not only private companies benefit from each of the schemes. Officials of the Ministry of Defense, in particular, the head of the Ministry, Umerov, and the director of the procurement policy department, Kanevskyi, as well as officials of the State Enterprise “Defense Procurement Agency” and the State Enterprise “State Logistics Operator”, actively cooperate with Ukrainian Armor, which allows them to receive illegal kickbacks in the form of significant amounts. With these funds, they can adjust tenders, influence the conclusion of contracts and, ultimately, direct budget money to the needs of affiliated companies, rather than to the real defense capability of the country.

So where is the reaction of law enforcement? We have sent complaints and written statements many times, but we have received nothing but formal refusals. Perhaps the security forces and controllers have been aware of this for a long time and do not want to confront the theft of the army and the decline in defense capability?

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