26.05.2025 Investigations

The price of armor: how the Ministry of Economy sells protection from mobilization through shady schemes

Ukraine is going through the most difficult period in its history. While thousands of citizens are defending the country on the front lines, schemes allowing the wealthy to avoid mobilization are flourishing in the rear. One of the key instruments of such fraud is the status of “critical” enterprises for the economy. This status, issued by Ukrainian ministries such as the Ministry of Economy and the Ministry of Agrarian Policy, automatically provides reservations for employees of such companies. However, instead of supporting enterprises that are strategically important to the state, this mechanism has turned into a shadow market where reservations are sold to those who are willing to pay.

Among the beneficiaries of such schemes are companies with a dubious reputation, such as the Chinese agricultural holding COFCO Agri Resources Ukraine and the tobacco giant Tedis Ukraine. Instead of promoting economic development, both companies are associated with offshore schemes and tax evasion. So why does the government allow such schemes to exist?

The scheme in action: how booking became a business

The mechanism for granting the “critical” status looks simple enough, but it hides a complex network of corrupt connections. Here’s how it works:

The Ministry of Economy or the Ministry of Agrarian Policy issues an order recognizing an enterprise as critical for the functioning of the economy or ensuring the livelihood of the population during a special period. This gives grounds for reserving employees from mobilization.

The company’s management uses this status to hire men who are liable for military service and receive reservations. In some cases, such “employees” do not even show up at the workplace, but receive protection from mobilization for a fee.

Companies receive significant sums of money for providing reservations, which often end up in the pockets of officials or people close to them.

The number of such frauds increases in proportion to the deterioration of the situation at the front. While some are fighting, others are making money from the war, using state mechanisms for personal enrichment.

COFCO: a Chinese giant with shady schemes

One of the most striking examples is COFCO AGRI RESOURCES UKRAINE LLC, a subsidiary of the Chinese state-owned company COFCO, the largest food producer in China. On February 27, 2024, the Ministry of Agrarian Policy issued Order No. 577, which confirmed the “critical” status for this company. But what makes the Chinese agricultural holding so important for Ukraine?

COFCO Agri Resources Ukraine actively uses the so-called “twist” schemes, artificially inflating the volume of agricultural production and supply. All payments are made exclusively in cash, which allows the company to distort data in official reports and minimize tax liabilities. Does this contribute to Ukraine’s economic development? Hardly.

At the same time, COFCO not only avoids responsibility for dubious transactions, but also actively tries to suppress any attempts to expose its activities. COFCO has filed three complaints with the Qualification and Disciplinary Commission of the Bar against the head of the NGO Non-Stop, who is a lawyer. The complaints concerned alleged violations of legal ethics, although the activities of the lawyer and the NGO are independent. Such actions indicate systematic pressure to silence.

“Tedis Ukraine: cigarettes as a strategic weapon?

Another example is Tedis Ukraine LLC, a de facto monopolist on the retail tobacco market in Ukraine. According to the company, its share is 50%, although experts estimate it at 80%. By the order of the Ministry of Economy No. 8933 of 2024, Tedis received the status of a critical enterprise, and its employees were exempted from mobilization (orders No. 13497, No. 13790, No. 15612). Is the cigarette trade really so important for Ukraine’s survival in wartime?

The key figure in Tedis Ukraine is Borys Kaufman, a businessman with a long history of scandals involving tax evasion, tobacco market abuse, and corruption schemes, particularly in Odesa. Kaufman has repeatedly demonstrated the ability to avoid responsibility, even when the charges were extremely serious.

According to the investigations, Tedis Ukraine has at least 39 employees with military service obligations, 28 of whom have received reservations. These employees, according to documents, are equated with drone manufacturers or military engineers. But can a cigarette dealer be considered critical to the economy or the needs of the Armed Forces?

The lists of Tedis employees were approved by the Ministry of Defense, which indicates a possible collusion between the Ministry of Defense, the Ministry of Economy and the company. In addition, similar violations were found in Tedis-controlled entities, such as Tobacco Company South LLC and Volyn Tobacco LLC. According to our information, the SBU Main Investigation Department registered the information in the URPTI under No. 22024000000000891 dated 10/01/2024 under Part 2 of Art. 201-4 of the Criminal Code. Time will tell whether the SBU will be able to resist the interests of the oligarchs.

Why is this a problem?

Economic reservation is supposed to support companies that generate significant foreign exchange earnings, have no debts and provide decent wages to their employees. However, the reality is different. Companies such as COFCO and Tedis are granted statuses because of their connections with the government, not because of their real contribution to the economy. This undermines trust in the state, demoralizes society, and weakens the country’s defense capabilities.

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