05.07.2024 Kharkiv Reconstruction of Ukraine

No Reconstruction of the Kharkiv Region: How Companies Close to the Government Receive Billions from the Budget and International Aid

На Харківщині війною зруйновано 858 об'єктів, держава відбудує кожен з них – Тимошенко | Факти ICTV

Over 30,000 infrastructure facilities have been destroyed across the Kharkiv region. The damages inflicted on the regional center, Kharkiv, amount to over 10 billion euros. These figures were announced by Kharkiv’s mayor, Terekhov, during a conference in Berlin in June of this year.

Rebuilding the Kharkiv region is a process that requires significant time and funds, which are insufficient in the local and national budgets. This is why international donors are involved, sponsoring the repair of specific facilities. But do these partners’ funds always go where they’re supposed to?

Rebuilding the Kharkiv Region

A video circulating online shows a resident of Kamianka (Izyum district, Kharkiv region) talking about the situation in the village, which was almost completely destroyed and captured at the start of the war, and then liberated by the Armed Forces of Ukraine in the fall of 2022.

“Houses are still in ruins, there’s no electricity or gas – ‘they just promise.’ People prefer to take certificates to buy new homes and not return. This is also advised by local authorities.

“They only show on social media that everything is restored and people are satisfied. What are we satisfied with? This is not Bucha near Kyiv, this is Kamianka,” the woman says.

Witnesses report that a similar situation persists in most of the settlements in the Kharkiv region that suffered from the occupiers at the beginning of the war.”

Since November 2023, funds from the state budget have started to flow into local budgets. For example, in just the last two months of last year, the Balakliya community received 25 million UAH, and the Izyum community received 21 million UAH. So where is the reconstruction?

An analysis shows that the most common category of reconstruction objects in the Kharkiv region funded by the Armed Aggression Consequences Elimination Fund includes multi-apartment buildings and dormitories (which remain unreconstructed) as well as educational institutions – 33 and 31 objects respectively. For 2024, financing was planned for three administrative building projects, three medical facility projects, and three special transport procurement projects, as well as one project for reconstructing a water pipeline in the Chuhuiv community.

Interestingly, in many cases, the amount allocated by the Fund for a specific object is significantly less than the sum that later appears in the contract with the tender winner. For example, 40.7 million UAH was allocated for the reconstruction of a lyceum in Chuhuiv according to a Cabinet of Ministers’ order from June 16, but the contract between the Kharkiv Regional State Administration’s capital construction department and the contractor lists the sum as 235.1 million UAH. After this deal, local media already raised the issue of significantly inflated prices for materials and equipment included in the contract with the tender winner.

Where is the Most Money Planned to be Spent?

The largest expenditures in 2024 were planned for the completion of the reconstruction of the Staryi Saltiv Lyceum and the Chuhuiv Lyceum No. 2. With a total cost of work at 205.1 million and 274.4 million UAH, the financing for the reconstruction of these objects in 2024 was to amount to 127.4 million and 257.7 million respectively.

More than 100 million UAH was also spent on restoring the building of the Izyum City Council. The total cost of its reconstruction exceeds 214.6 million UAH, most of which has already been allocated from the budget.

Do you see residential multi-story or private houses among these projects? Why are hundreds of millions being allocated for schools when there’s no one to study in them? Wouldn’t it be more logical to first initiate the return of local residents by restoring their homes and creating conditions for normal life?

Who is Rebuilding the Kharkiv Region?

The undisputed leader in the number of tenders won remains PE “Construction Company ‘Promtex'” owned by former MP from the Party of Regions Anatoliy Denysenko. In addition to three previously received contracts for the reconstruction of the lyceum in Chuhuiv, the Izyum City Council, and an administrative building in Ruska Lozova, the company received another contract for restoring three multi-apartment residential buildings in Pivnichna Saltivka.

Incidentally, “Promtex” also won a tender from the Department of Landscaping, Reconstruction, and Construction of the Kharkiv City Council for the capital repair of a multi-story building at 60 Nataliya Uzhviy Street, Kharkiv. Denysenko’s firm is set to receive 100 million UAH in 2024 and 208,643,905 UAH in 2025.

We have already analyzed this tender in previous articles, concluding that the overall cost of dismantling is greatly inflated and does not correspond to the real price by several times. Therefore, the legal department of NGO “NON-STOP” submitted materials to law enforcement and oversight agencies to check the appropriateness of budget spending. The Kyiv District Court of Kharkiv, by decision dated June 27, 2024 (case No. 953/5623/24), ordered Kharkiv Regional Police Department No. 1 to start a pre-trial investigation.

The well-known PJSC “Zhytlobud-1” in Kharkiv also received multiple reconstruction projects. The company has 385 contracts worth over 7 billion UAH, mostly in the Kharkiv region, with the majority involving construction work. One example is the repair of buildings at 9-A Amosov Street and 262 Saltivske Highway, totaling over 7.1 million UAH.

As stated by the head of Zhytlobud, Kharchenko: “Yes, most of the houses are being restored by ‘Zhytlobud-1,’ no other organization in Ukraine has restored as many as we have, he assures. But I wouldn’t say we are monopolists. If only we were given contracts – then yes [we would be monopolists]. Most other enterprises lack the proper qualifications and enough staff.”

“The problem is not in repairing houses. The biggest problem is financing. We will find specialists, we are involving science to solve problems. But speeding up everything is only possible if there is more money. More financing will mean the reconstruction process goes faster,” noted the chairman of “Zhytlobud-1.”

However, it should be noted that Zhytlobud has repeatedly been involved in cases concerning winning tenders in a non-competitive manner, as well as inflating work costs. For example, based on our materials, NABU started a criminal case No. 52023000000000148 on March 9, 2023, and the State Bureau of Investigation in Poltava opened case No. 620231700200000665 on April 11, 2023.

In conclusion, it is worth noting that the winners of the largest tenders in the Kharkiv region are a rather limited circle of construction firms. The top 10 contractors by contract sums include, besides the mentioned “Promtex” and PJSC “Zhytlobud-1,” “Zhytlobud-2,” LLC “Project Alliance,” LLC “Palmaz Group,” LLC “BB Ukraine,” LLC “TT 2006,” and LLC “Dragon Eco.”

The activities of most of these firms have already been analyzed by us: criminal proceedings have been initiated, and court decisions have been satisfactory, for example, the Economic Security Bureau case No. 72024000420000008 from February 2, 2024, under part 5 of Article 191 of the Criminal Code of Ukraine (LLC “Project Alliance”). What explains such indifferent reactions from law enforcement to systematic embezzlement? Possibly kickbacks and bribes they receive? This is why neither law enforcement nor tax authorities are interested in further investigations?

Did you witness a crime?

Let us know about it. We will help protect the violated rights!

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