30.12.2024 Fortification Investigations Money laundering Reports

TOP of the most high-profile corruption scandals and revelations of 2024

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Fortification and the forest industry have become a source of billions of dollars in fraud

Ukraine’s forestry industry has always been a target of scrutiny because of its extreme corruption. But now, in times of war, when wood is critical for the construction of fortifications, the situation has become even more threatening.

How does the system of enrichment through fortifications work?

Timber procurement schemes look quite transparent: state-owned enterprises, such as the State Enterprise “Forests of Ukraine,” supply timber to the military for the construction of fortifications. However, in reality, the bulk of the budget is channelled through so-called “gaskets” that significantly inflate the cost of timber and sometimes even imitate deliveries.

An example of this is TED LLC, a company that wins tenders for the supply of timber with sky-high prices. Its connection with the leadership of the State Forestry Agency allows it to win multimillion-dollar contracts even in situations where there are offers that are many times more profitable for the budget.

Electronic timber accounting system: security or cover?

One of the main tools for timber control is the Electronic Timber Accounting System (ETS). In theory, it is supposed to ensure transparency of timber operations, but in practice it has become another element of corruption schemes.

For example, the EOD does not have a certificate of a comprehensive information security system, which allows for free interference with data. In addition, the management of the State Forestry Agency, in particular its head Viktor Smal, has full access to the system and can influence information on timber volumes and quality.

Throughout the year, we systematically appealed to law enforcement agencies and investigating judges, initiating not only formal criminal proceedings, but also real investigations and measures by controllers.

According to approximate estimates, based on the materials of the NGO Non-Stop, about 13 proceedings were initiated and 15 satisfactory rulings were received from investigating judges, which obliged law enforcement officers to start investigating the case. However, as we can see, the head of the State Forestry Agency, Smal, and his associate, the head of the State Enterprise “Forests of Ukraine,” continue to hold their positions, which is not the case with the Minister of Environmental Protection and Natural Resources, Strilets, who was fired in mid-2024, including due to corruption scandals related to fraud in the supply of wood for fortifications.

Corruption in Military Medicine: How the MoD Profits from Wounded and Fortifications

In 2024, military medicine became one of the most painful topics for society. The investigation revealed corruption schemes, negligence and systemic violations that lead to the suffering of our defenders.

The creation of the MoD Health Department in 2023 seemed to improve the situation. But in practice, it allowed officials and the MEC to make fabulous profits by deceiving the military.

According to the SBU, 15 criminal proceedings have been opened against MEC employees, and 31 people have been suspected.During numerous searches, millions of dollars hidden in pillows and mattresses were seized from doctors and MEC officials. However, the investigative actions do not stop the VLC doctors. They continue to issue mass certificates of fitness for service to soldiers with severe injuries, ignoring their condition. At the same time, generals and officials receive “golden” conclusions of unfitness, avoiding service even with minor complaints.

The head of the MoD Health Department is Oksana Sukhorukova, who was appointed with the support of the current Minister of Veterans Natalia Kalmykova. Their tandem is associated with corruption schemes, kickbacks, and the promotion of their own interests in military medicine.

During 2024, Sukhorukova and Kalmykova managed to implement the promotion of controlled Western charitable foundations and pharmaceutical suppliers (PROTOKA SOFT LLC, FORSERVICE USA SALES LLC, and others), initiate conflicts with the command of the Armed Forces of Ukraine, lobby for dubious prosthetic campaigns and block the work of the Armed Forces of Ukraine.

Thanks to Sukhorukova’s department, civilian hospitals and military hospitals systematically lack medicines and medical supplies for the rehabilitation of the wounded. Civilian hospitals, which are subordinated to the Ministry of Health, do not receive adequate funding, which only exacerbates the situation.

Although there were rumors of Sukhorukova’s resignation in 2024, the woman continues to head the Department. In the new year, we will continue to cover problems in military medicine and we are confident that the truth will prevail.

Smuggling and counterfeit tobacco: Kozlovsky and Kaufman’s empire

The Ukrainian tobacco market has long been known for its shadowy nature. Particular attention is drawn to the activities of Kaufman’s company TEDIS Ukraine LLC (formerly known as Megapolis), which controls a significant part of the country’s tobacco market.

According to the AMCU, TEDIS once controlled up to 99% of the tobacco market. In 2021, the company received a fine of UAH 3.4 billion for anticompetitive actions. However, the Supreme Court invalidated this decision, allowing the monopolist to maintain its position.

Thanks to Kaufmann, the Ukrainian tobacco market has been considered a black spot in Europe for several years. Ukraine ranks first in terms of cigarette smuggling to the EU, and companies associated with TEDIS are suspected of illegally supplying cigarettes to Hungary and other countries under the guise of salt or other goods.

Hryhoriy Kozlovsky is another businessman who has contributed to the development of smuggling. The man is the owner of the Vynnyky Tobacco Factory and another figure associated with the illegal cigarette market.

By controlling VTF LLC, Kozlovsky organized the illegal production of counterfeit excisable goods. The products are sold in Ukraine through a number of illegal outlets for cash, without paying excise duty, which leads to tax evasion. In addition, with the assistance of the State Customs Service of Ukraine and the State Border Guard Service of Ukraine, Kozlovsky, like Kaufman, set up illegal transportation across the border.

Kaufman’s and Kozlovsky’s ties to the political elite, including Arakhamia, Hetmantsev, and the Monakivtsi, provide them with “immunity” from serious investigations.

Based on our materials, more than 30 criminal proceedings against smugglers were initiated, and the BES conducted searches and massive seizures of property on the territory of the Vynnyky Tobacco Factory. Although Kozlovsky tried to resist and interfere with the investigative process with the help of hired thugs, the vast majority of property was seized.

Hopefully, in 2025, the influence of high-ranking officials like Hetmantsev on the smuggling market will diminish, and the BES, the National Police and their law enforcement colleagues will take control of the situation.

“Money instead of security”: corruption in procurement of the Ministry of Defense of Ukraine

The two state-owned enterprises that carry out key defense procurements are the State Enterprise “Defense Procurement Agency” and the State Enterprise “State Logistics Operator” under the leadership of Maryna Bezrukova and Arsen Zhumadilov.

For example, in 2024, the Defense Procurement Agency purchased 700 Mavic drones at an overpayment of UAH 10-12 thousand for each device compared to other government agencies. The total overpayment amounted to UAH 7 million.

All details of the purchase were quickly concealed, including information about the suppliers. Law enforcement agencies did not launch an investigation, and the management of the Healthcare Agency still ignores public requests for transparency.

A similar situation is observed in the supply of food for the Armed Forces. For example, the main suppliers of products have already been at the center of scandals related to the supply of low-quality products.

For example, 176 violations (unsanitary storage conditions) were recorded at Busky Cannery LLC, and ASICS GROUP LLC was found to have supplied rotten eggs and counterfeit butter.

Based on our materials, a dozen proceedings were initiated by the BES, the State Bureau of Investigation, and district and regional prosecutors’ offices. Therefore, we hope that in the new year of 2025, procurement for the Armed Forces will be transparent, open and objective.

Non-Stop will continue to expose the abuses and corruption taking place in the country’s state apparatus. We will appeal to law enforcement officers and judges until they stop covering up crimes against the country and its citizens.

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