During public discussions, the management of "Ukroboronprom" reported on the results of implementing the corporate governance reform in the state sector of the defense industry. As of March 2024, 34 enterprises have been corporatized. At the same time, transparent competition for appointing managers of these enterprises is ongoing, and NAKO representatives are involved as observers. 19 managers have already been elected and appointed.
Ukronoboronprom also assured that it has strengthened control over the use of funds and is cooperating with international partners to obtain the latest technologies and increase the competitiveness of Ukrainian enterprises.
Ukroboronprom's plans for this year are to develop a network of anti-corruption commissioners at enterprises and to build an updated corporate structure of scientific and industrial branches in the defense-industrial complex.
We will remind you that last year, the state concern Ukroboronprom became a joint-stock company, "Ukrainian Defense Industry." During nine months, the company issued its shares, started the construction of anti-corruption infrastructure, and received a supervisory board appointed by the Cabinet of Ministers. The Strategy for Prevention, Detection, and Counteraction of Corruption for 2023-2024 was also approved, along with the implementation plan. In addition, a draft of the Anti-corruption program was developed, which is currently being finalized considering the recommendations of the NAKO.
NAKO actively promotes the reform of the state defense concern Ukroboronprom and has promoted its implementation since 2017. Thus, NAKO advocated for and carefully monitored the adoption of the law on the reform of the concern's corporate management. NAKO also provides recommendations to Ukroboronprom regarding its anti-corruption program.
For reference:
On March 21, 2023, the Cabinet of Ministers of Ukraine announced the transformation of the state concern "Ukroboronprom" into a joint-stock company called "Ukrainian Defense Industry." According to the new structure, the JSC Ukrainian Defense Industry will include various joint-stock companies specializing in specific business areas. This is why the transformation of the Ukrainian defense industry into a joint-stock company is essential:
- Ukroboronprom receives a modern corporate structure, and thanks to this, it becomes more compatible with Western enterprises, which facilitates partnerships with foreign firms and improves weapons production capabilities compared to the previous legal structure of the concern.
- Although the Ukrainian defense industry remains a fully state-owned enterprise, the corporate structure opens up the possibility of potential mergers within the company, which could simplify operations and pave the way for future Ukrainian and foreign ones. In the long term, this opens up opportunities for privatization.
- The Western corporate structure introduces a system of internal control through various governing bodies such as the board of directors, the supervisory board, and the state as the sole shareholder (for now). This structure prevents the concentration of control in the hands of one person. The appointment of the general director should be carried out with the participation of the Supervisory Board and the Cabinet of Ministers, considering civil society's opinion.