18 August 2016

The anti-corruption civil society organization Transparency International Ukraine addressed the Prime-Minister of Ukraine Volodymyr Groisman with the proposal to perform an audit of the State Concern Ukroboronprom by one of the independent auditor companies. The organization considers that an audit by the State Audit Service or other audit company is not enough for obtaining objective data on the financial situation of the Concern.

The challenge is now for the Ministry of Economic Development and Trade of Ukraine to create projects on the strategical development of defense industry complex in the country and state target program of reforming for the period until 2020. The projects will be financed from the state budget. For calculating how much financing would be needed, the Ukroboronprom audit data from the previous years were used. These audits were, probably, conducted by the State Audit Service or other audit companies, which cannot be deemed fully independent from external influence. ТІ Ukraine does not exclude the possibility that such audit may not be entirely objective, a situation which would result in the inefficient use of the state funds.

Financing of defense and industrial complex (DIC) projects is a priority for Ukraine. Especially, when taking into account that UAH 785,18 mln is planned for the DIC activities in 2016.  The organization proposes to take a decision on the amount of financing for the next years based on the data obtained in the course of the independent audit.  Such an audit may be performed, for example, by the “great four” companies with the international donors’ assistance. That is why, according to TI Ukraine, the Prime Minister of Ukraine should initiate an independent audit of the Concern, and the Cabinet of Ministers – to discuss the allocation of the required funds with international organizations and partners abroad.

Besides, ТІ Ukraine pays attention to the fact that the Oversight Council has not been formed in the Ukroboronprom State Concern since its creation in December 2010. One of the functions of the council  would be to provide regular independent audits of the Concern’s enterprises. This is the reason why the oversight council should be established.

‘The level of the international assistance, to the national security and defense sector of Ukraine isunprecedented today. Therefore, we should demonstrate the efficient use of both international and budget resources invested in this sphere, especially amid the constant accusations as to their misuse. The independent audit of the key defense enterprise, from the one side, will demonstrate the readiness to work within the international standards and the standards of NATO and, from the other side, once for all will reject the possibility to manipulate the topic of extra expenses in the sphere of the national security and defense. The efficient use of military funds in war is not a right, but the obligation of the Ukrainian authorities. And it is an obligation owed not only to the international partners, but to the tens and hundreds of thousands of Ukrainians, heroically defending our Motherland in the ATO zone’ stated Executive Director Yaroslav Yurshyshyn.

Thus, Transparency International Ukraine insists that the financing of any activities which have as their object the preparation or expansion of production of arms using the funds from the budget to be, as an exception, completed only after the independent audit is performed.