27.06.2024 Kyiv Utility scams

How Klitschko Helps Russian Oligarchs Launder Budget Funds

Kyiv ranks among the ten worst cities to live in according to The Economist. Based on criteria such as infrastructure, education, environmental situation, healthcare, culture and environment, and stability, Kyiv ranks 165th out of 173 cities.

This is a result of the absolute monopoly over the capital held by Mayor Klitschko and his group, including members of the “construction cartel” like Molchanova, Komarnytskyi, and Stolar.

Interestingly, the former boxer and current mayor, after ten years of managing the city, still tries to shift responsibility to his predecessors. According to Klitschko, the previous winter’s emergency on the blue metro line was due to the negligence of past authorities. He promised the issue would be resolved within six months. Instead, residents still have to squeeze into minibuses during peak hours and endure traffic jams for hours.

“It has been definitely established that the emergency arose due to non-compliance with technology during the construction of the section 15 years ago,” Klitschko said.

While it might be possible to believe the mayor in the case of the blue metro line, there are still questions regarding the promised construction of the metro to Vynohradar.

The Chronicle of Promises 

In 2016, Vitali Klitschko publicly announced the start of work to extend the Syretsko-Pecherska metro line to the Vynohradar residential area. Although his predecessors also promised similar projects, Klitschko managed to partially realize this one. More accurately, he provided the opportunity for friends with Russian passports and interests to siphon off some of the budget.

In 2017, “Kyiv Metro” conducted a tender for the design, and in 2018, the city council approved the construction project. The winner was “Kyivmetrobud.” According to Youcontrol, “Kyivmetrobud” is owned by “Vantaris Ltd” (Virgin Islands), “T&A Industries Ltd” (Dominica), and “Berezania Holding Ltd” (Cyprus). The ultimate owner was Russian businessman Sergey Kiyashko (also the director of Russian “Vagonmash”). They received an advance payment of 4 billion UAH from the budget to start Klitschko’s project.

Later, journalists discovered that part of the funds was placed on deposit, earning the company a significant interest of 139 million UAH. Naturally, the money was not invested in further metro construction but was siphoned off through controlled firms.

Moreover, the company illegally transferred over 500 million UAH to the accounts of two other legal entities as an advance for work and materials. In reality, the companies that received money from “Kyivmetrobud” were non-operational. Thus, money was laundered through the construction project.

Hidden Facts and Connections

After a series of searches, other facts emerged. For example, the top manager of the company lived in Vitali Khomutynnik’s mansion (an ex-politician from the “Party of Regions” who voted for the dictatorial laws in 2014). It later emerged that the oligarch directly participated in managing the enterprise.

Businessman Pavel Fuks, holding a Russian passport, was also involved with “Kyivmetrobud.” According to former MP Maksym Mykytas, Fuks organized schemes to embezzle funds from the company. This is not a new accusation, as Fuks had previously been involved in plundering the capital’s budget.

Fuks and Kyiv’s Budget

In 2009-2010, Fuks’s company “Ukrrosleasing” sold 100 metro cars to the Kyiv metro system at an exorbitant price. In 2016, the company demanded penalties and “adjustment coefficients” amounting to nearly 2 billion UAH. Of this, nearly 1.2 billion was due to the coefficient added to the contract after it was signed. This scheme was later legalized with a Kyiv City Council decision in July 2018, which restructured the non-existent debt of “Kyiv Metro” to “Ukrrosleasing.” A settlement agreement was reached, and a payment schedule was established.

This demonstrates a clear connection between Fuks and Klitschko, both interested in the shadow distribution of the capital’s funds.

The Current State of the Vynohradar Metro

In May, the city authorities unexpectedly announced a new tender for the construction of the metro line from Syrets to “Prospekt Pravdy” station with two stations (“Mostytska” and “Prospekt Pravdy”) and a forked branch towards “Vynohradar” station. The preliminary cost of the work is 13.95 billion UAH, with a completion deadline by the end of 2026.

This plan raises serious questions, primarily about where the money will come from. The customer of the work, the metro, has long been unprofitable. The city budget will cover the costs, but it remains unclear where they will find the funds for a project equal to two annual subsidies for all public transport in the capital (over 6 billion UAH for 2024).

As of May 2024, according to the Kyiv City State Administration (KCSA) regarding the extension of the “green” line, the following has been completed:

The right-hand running tunnel from “Mostytska” station to “Syrets” station. The main structures of the running ventilation unit. Partially installed protective structures.

However, considering the initial promises of the city authorities, it is clear that this is a minimal result.

According to our materials, the Pechersky District Court of Kyiv ordered the Office of the Prosecutor General to start a pre-trial investigation into the embezzlement of city budget funds on the metro construction on 29.01.2024 in case No. 757/2973/24-k. A similar decision was made for the Bureau of Economic Security. But why has the investigation not yet started?

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