13.06.2024 Fortification Kharkiv

UAH 2.5 billion from the government for Kharkiv region. Chronicle of thefts of billions at fortifications

The government is allocating an additional UAH 2.5 billion to Kharkiv region. According to Prime Minister Shmyhal, the funds will be used to restore the region’s and the city’s power system, install cogeneration units, modular boilers, and gas generators.

I wonder how quickly the siphoning off will happen this time? Let’s recall the companies that received the most billions from the budget to strengthen the region and where these funds disappeared in the end.

Zhitlobud-1 and Zhitlobud-2

Before the war, and now, the Zhitlobud-1 trust was the largest state-owned urban development enterprise, which had a virtual monopoly on housing construction in Kharkiv. Since auctions are not required due to martial law, there is a risk that Zhytlobud-1 could have received many contracts literally through an agreement with the city authorities.   

“The firm has been a construction favorite of the Kharkiv City Council for the past 10-15 years and one of the main beneficiaries of the ‘cooperative scheme’ of land allocation in the city, where former mayor Mikhail Dobkin is among the accused.”

Out of the total number (223 contracts worth UAH 4.51 billion) for the construction of fortifications signed by the Department of Housing, Utilities and Fuel and Energy Complex of the Kharkiv Regional Military Administration, 46 contracts worth UAH 993.8 million were concluded with Trust Zhytlobud-1 LLC, headed by Oleksandr Kharchenko.

Trest Zhytlobud-1 received another UAH 758.8 million from the budget to carry out work in the field of territorial defense.

The works performed by Zhytlobud-1 do not meet the technical conditions and those specified in the specifications to the contracts. They apparently do not care about quality, as they have long received and continue to receive their earnings.

Moreover, representatives of Zhytlobud-1 did not even show up for a briefing by the Kharkiv Military District Administration on the issue of fortifications, demonstrating open indifference to the issue of fortifications.

The Kharkiv Regional Police Department allegedly investigated the facts of embezzlement by Zhytlobud-1, and even entered information into the Unified register of preventive investigation No. 42023220000000073 and Part 4 of Article 191 of the Criminal Code. However, this was the end of the law enforcement initiative.

There was a similar situation with Zhytlobud-2, which supplied concrete and concrete mixtures. In the end, the goods of its own production turned out to be of absolutely poor quality.  The pre-trial investigation authorities conducted an investigation into these facts (the Investigation Department of the Kharkiv Police Department No. 3 of the Kharkiv Regional Police Department No. 3 at 12023221230002391), but the perpetrators were not brought to justice. I wonder why… 

In total, in 2023, Zhytlobud-2 entered into 69 contracts for routine repairs, emergency repairs and supplies of building structures and construction in the field of territorial defense for budgetary funds totaling UAH 533.7 million.

LLC “Project Alliance”

Kharkiv Regional Military Administration signed 81 contracts for UAH 687.4 million with Project Alliance LLC. The owners are a former official of the Kharkiv Regional State Administration and a member of the city council, Andrii Kolos and Oleksandr Sorochynskyi. At the beginning of 2023, when the company had already begun to actively receive contracts from the Regional Military Administration, Igor Rozhkov was among the founders. A person with this name is listed in Russian registers as a citizen of the Russian Federation and the founder of several Russian companies. Rozhkov’s family, which includes Mykyta Rozhkov, a deputy of the Kharkiv District Council elected from the now banned OPFL, was actively engaged in business in Russia. In fact, it was after the information about the possible “Russian trace” of the Rozhkovs became public that the list of owners of the Project Alliance changed.

Based on our materials, the General Investigation Department of the Security Service of Ukraine initiated a pre-trial investigation within the framework of criminal proceedings No. 12023220000000147 under Part 4 of Article 191, Part 1 of Article 364-1 of the Criminal Code of Ukraine, and the Specialized Defense Prosecutor’s Office of the Eastern Region – No. 42024222750000038 under Part 4 of Article 191 of the Criminal Code of Ukraine. However, once again, the case remained without any progress.

Delivering timber for fortifications

In May of this year, Forests of Ukraine received a tender from the Ministry of Defense for the supply of almost 28 thousand cubic meters of wood at a price of UAH 3.75 thousand per cubic meter with delivery.

“We are the largest state-owned company. If necessary, Forests of Ukraine is ready to significantly increase the volume of supplies,” said CEO Bolokhovets, adding that the company has been fulfilling all defense orders without exception.

In fact, the real picture is not as ideal as the authorities portray it. Dozens of fictitious one-day companies have already received millions of dollars in procurement contracts for the supply of wood for fortifications. Moreover, the average cost of beams, including delivery and unloading, ranged from 5 thousand to even 8 thousand UAH per 1 cubic meter. The market price is UAH 3.5 thousand!

Repeatedly, representatives of the Kharkiv Regional Military Administration and the supplier companies noted that they had to bring a large amount of wood in a short time. That’s why they hired private contractors, as Kharkiv forestry enterprises allegedly did not have such volumes.

However, the Kharkiv Regional Military Administration, despite the promise of Sinegubov’s deputy, Mykhailo Kharnam, could not name the forestries that refused to provide wood for the construction of the fortifications. The journalists made the request immediately after a press conference between Sinegubov and his deputy, Kharnam, who told reporters that the forestries had refused to provide them with the required amount of wood.

Later, it was discovered that most of the timber shipped by the suppliers belonged to state forestry enterprises. However, if the beams had been purchased directly, the price would have been many times lower, which is why private players were needed. 

Director of the State Enterprise “Forests of Ukraine” Bolokhovets and Head of the State Agency of Forest Resources of Ukraine Smal are well aware of each of these schemes. They are the ones who are at the origin of the manipulations and receive kickbacks from the contract. Moreover, the Minister of Environmental Protection and Natural Resources, Strelets, stubbornly fails to notice the fraud of his subordinates. Therefore, at such a fast pace, Ukraine risks being left without fortifications, budget, and environment.

So, should we expect the Government to allocate a new tranche to the real needs of the region?

Wonder how much of the UAH 2.5 billion in aid will be used for its intended purpose? Given that the “watchdogs” Abramovich and Yarovoy could have already divided the fate of the sphere of influence equally through the latter’s godfather, Arakhamia.

We are preparing a major investigation in which we will analyze in detail the largest builders of defense facilities in Kharkiv region and how much money was actually spent by each of them. And how much was diverted through shadowy flows.

Did you witness a crime?

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

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