15.06.2024 Kharkiv Money laundering Utility scams

How does Terekhov distribute Kharkiv’s budget to his own circle?

Almost a billion hryvnias of the budget of frontline Kharkiv was given to the company Zolotyi Standard K, which is close to Terekhov. How does the mayor’s entourage continue to enrich themselves at the expense of the city and finally “put down roots” abroad, buying real estate and starting businesses there?

Golden fuel for Kharkiv worth billions

When Ihor Terekhov came to power, the distribution of affairs in the city changed, although the schemes remained the same. The man had long been eyeing the mayor’s job, and so he knew exactly how the budget allocation algorithm would work when he got the job.

That’s how the little-known Zolotyi Standard K LLC suddenly became a favorite for supplying fuel to Kharkiv’s municipalities.

Who is behind the city’s largest supplier?

The ultimate beneficial owner of “Gold Standard K” is Konstantin Batvinov, the owner of the “Our Right Zapravka” gas station and godfather of Terekhov’s elected representative Kuznetsova. Since 2016, the company controlled by Batvinov has been trying to break into the city budget, but its intentions were hindered by the then favorites of Kharkiv City Hall.

According to ProZorro, in 2015-2020, Golden Standard K received contracts worth a total of UAH 56.6 million in public tenders, and in 2021, when Terekhov became mayor, it received UAH 103 million. Every year, the company’s revenue grows proportionally. For example, according to the financial statements for 2023, the company’s revenue amounted to UAH 236,979,400, net profit – UAH 3,474,300, assets – UAH 57,793,300, and liabilities – UAH 50,681,100.

The largest customers of Zolotyi Standard K LLC suddenly became the city’s leading utilities. For example, Shlyakhrembud, a municipal contracting specialized enterprise for the repair and construction of highways in Kharkiv, has already concluded contracts worth UAH 248,295,114. And Kharkivvodokanal, a municipal enterprise, has paid UAH 187,023,000 to Batvinov’s company.

The lobbying of Gold Standard K by the city authorities is also demonstrated by the absolute victories of the former, even when more competitive prices are set by other companies.

For example, in the tender for the supply of diesel fuel from the Saltiv Tram Depot, KALAM LLC made a bid of UAH 25,887,600. While Zolotyi Standard K offered UAH 28,695,600. Who do you think won the tender? Is it beneficial for the local budget to spend more money on fuel supplies?

Or, for example, Kharkivvodokanal rejected the state-owned Ukrnafta-Postach, which offered UAH 66 million in a tender for the purchase of 1.5 million liters of A-95 gasoline, and recognized the winner, Gold Standard K, with a price of UAH 71.85 million.

A similar situation is seen in the tender with the Municipal Waste Management Company of the Kharkiv City Council. Two companies responded to the offer to supply diesel fuel: OVIS TRADE LLC with a bid of UAH 5,847,937.16 and Zolotyi Standard K LLC with a bid of UAH 5,891,916.06.  The offer of OVIS TRADE LLC was rejected on the unclear grounds of non-compliance of the submitted documents with the technical specification and other tender conditions.

In addition, the contract signed with Batvinova’s company is actually being fulfilled by the municipal enterprises as an exemplary counterparty – payments are made as soon as possible after receiving the fuel.

In almost a hundred transactions in favor of Zolotoy Standard K LLC, the average payment term is eight days. The terms of the tenders in which they participated provided for a 46-day delay in payment on average. With the average NBU discount rate of 16% per annum over the past year, Kharkiv utilities could have caused losses of UAH 20 million by making premature payments.

Many questions to Batvinov also arise because of his involvement in counterfeit fuel sales schemes, as documented by law enforcement. He and a group of his companies, including Zolotyi Standard K LLC, are involved in the criminal proceedings of the National Police.

The investigation exposed “a group of people who, in Kharkiv and the region, by prior conspiracy, organized the illegal manufacture, storage, transportation for sale of counterfeit fuel and established a constant sale of large volumes of illegally manufactured counterfeit fuel, namely A-92, A-95 and diesel fuel through gas stations of well-known brands in the region under the guise of brands of quality fuel from domestic producers, thereby misleading end consumers.”

The monopoly of “Gold Standard K” allowed local authorities and Batvinov to fill their own pockets with more than one million. Interestingly, the owner of the company went abroad in October 2023 as a volunteer under the “Shlyakh” system. Therefore, we would not be surprised if Kuznetsova’s godfather has already bought a house in Spain.

To be continued. Given that at our initiative, the Kharkiv Regional Prosecutor’s Office entered information into the Unified Register of Pre-trial Investigations under No. 42024222020000030 (Part 5 of Article 191 of the Criminal Code of Ukraine), the Kharkiv Regional Police Department under No. 62023170020001423 (Part 5 of Article 191 of the Criminal Code of Ukraine), and the Nemyshlyansky District Prosecutor’s Office under No. 42024222020000030 (Part 5 of Article 191 of the Criminal Code of Ukraine), the story of golden fuel in Kharkiv is just beginning

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