18.12.2024 Money laundering Tenders Utility scams

How Kim and Shmyhal earn money on the construction of a water supply system for Mykolaiv

Завдяки журналістам у Миколаєві вдалося здешевити реконструкцію водогонів - Кім

Residents of Mykolaiv have been without access to quality drinking water for more than a year, but this has not stopped officials from turning the problem into a source of enrichment. In the midst of the crisis, the Mykolaiv Oblast Infrastructure Restoration and Development Service ordered the construction of a water intake from the Southern Bug River and a water main for UAH 7.44 billion, without open tenders.

Doubtful “winners” of tenders

  • Ukrtransmost LLC will receive UAH 2.53 billion. This company is involved in criminal proceedings for embezzlement of budget funds allocated for the development of Kyiv’s road infrastructure.
  • Rostdorstroy LLC will receive UAH 2.63 billion. The firm is known for its ties to Odesa Mayor Gennadiy Trukhanov’s party Trust the Deeds. Among the final beneficiaries are Odesa City Council member Yuriy Shumacher and businessman Yevhen Konovalov, a representative of the same party.
  • Avtomagistral-Pivden LLC will receive UAH 320 million for the construction of the Ingulets River – Pivdenne Reservoir water main to supply water to Kryvyi Rih due to the need to eliminate the negative consequences associated with the destruction of the Kakhovka
  • Hydroelectric Power Plant, Dnipropetrovska oblast. The main activity of Avtomagistral-Pivden LLC is the construction of roads and highways. In 2024, the company won government tenders for more than UAH 640 million. In 2023, Avtomagistral-Pivden LLC received government contracts worth UAH 25.3 billion.

Prior to the full-scale invasion, the company received the largest contracts from Ukravtodor as part of the Big Construction project. In addition, the company is involved in criminal proceedings for embezzlement.

Based on our materials, the Prosecutor General’s Office initiated criminal proceedings under No. 42024000000001268 under part. 4 Art. 191 of the Criminal Code of Ukraine, and the authorized persons of the Odesa Regional Prosecutor’s Office registered a criminal proceeding under No. 42024160000000123 under Part 1 of Article 212 of the Criminal Code of Ukraine.

Back in July 2024, the head of the Mykolaiv Regional State Administration Vitalii Kim stated that he had optimized the project budget to UAH 3 billion. However, in September, Prime Minister Denys Shmyhal announced a new figure of UAH 8.8 billion.

As you can see, the cost of the work is growing, despite promises to cut costs. While the residents of Mykolaiv will receive water (according to optimistic forecasts) no earlier than the summer of 2025, officials are successfully using the state budget.

Money in the pocket?

Despite the critical need, the water intake project will be serviced by companies with a mixed reputation. In the absence of open tenders and competition, the funds end up in the hands of those who have already been involved in scandals involving embezzlement of budget money.

Why is it important?

When officials enrich themselves at the expense of critical needs, ordinary citizens suffer. Hundreds of thousands of Mykolaiv residents are left without access to water, while billions of public funds end up in the pockets of corrupt officials.

We have sent materials to law enforcement and regulatory authorities. We’ll see what the Cabinet of Ministers, Mykolaiv Regional State Administration and, most importantly, NABU and SAPO will say.

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