According to the Ministry of Finances, the overdue accounts receivable of the Ministry of Defense of Ukraine from January 1, 2022, until May 1, 2023, total UAH 36.3 billion.
“This is the price of almost 3,000 Senator Canadian armored cars for our defenders which could save the lives of thousands of servicepersons. Or about 5,000 FGM-148 Javelin advanced anti-tank weapon systems,” compares the Executive Director of Anti-Corruption Action Center Daria Kaleniuk.
In her Dzerkalo Tyzhnia newspaper column, she reminds about the previous data of the MoD spending UAH 8.9 billion (using the taxpayer’s money) for the weapons which it failed to obtain. The Ministry of Defense litigated against the suppliers. In addition, the State Audit Service of Ukraine initiated the relevant criminal proceedings. However, the representatives of the law enforcement did not make it public.
“These billions that went down the sewer during the war is an unacceptable mistake for the Ministry’s management. However, when we saw Reznikov denying and lying during the scandal of ‘UAH 17 worth eggs’, it is now clear that the Minister can acknowledge his mistakes, let alone fix them under public pressure only,” Kaleniuk claims.
She is positive that creation of professional agencies in charge of the defense procurement and vesting the functions of purchasers to them could improve the situation. Yet the launch of the agency in charge of material supply was delayed, and it was only in late April, “thanks to the Office of Changes under the MoD, that the situation seemed to have enlivened.” What concerns weapon purchases, “the situation is currently rather sad.”
“The Defense Procurement Agency SE was established in Ukraine back in last July. According to the Minister, this state-owned enterprise ‘followed suit of the NSPA (NATO Support and Procurement Agency) logistics body to make the weapon purchases for Ukraine transparent and prevent corruption.’ Instead, the Defense Procurement Agency SE is now one of the debtors of the MoD with a share of UAH 131.5 million in the UAH 8.9 billion debt, and we have no contracted weapons from it. Again, this amount only appeared in the court register after the MoD litigated against the agency. This does not resemble the NATO standards, to put it mildly,” the author continues.
“The background of the agency’s management which was not presented publicly by the MoD is also not very optimistic. The Ministry must be very reluctant to let the Ukrainians find out who handles their UAH 355 billion worth of taxes,” Kaleniuk claims. She provides some examples.
The Defense Procurement Agency SE is headed by Volodymyr Pikuzo, “former public sector official who accrued illicit hundreds of thousands of hryvnias as bonuses and surcharges.” His deputy, Oleksandr Kovalenko, received a suspicion for official forgery of agreements with the USA and UK (the intermediary companies credited USD 7.5 million for fraud consulting services).
The weapons procurement for Ukraine is “still headed by Reznikov’s deputy and Andrii Yermak’s business partner Denys Sharapov.” The latter “together with Yermak’s father used to work at the Main Intelligence Directorate of the Russian Federation” and has strong connections with “the Russian elites.”
The author of the column also mentions the issues of MoD’s HR policy. One of the latest example is Ruslan Ryhovanov who is now Acting Director of the MoD Department of Resource Supplies. He became famous for his participation in Russian propaganda TV shows. The public disclosure led to removing him from the office, yet he was not dismissed.
“This is another proof that during the war, the Ministry is unable to conduct even a brief due diligence of its hires. We see it okays even the candidates with open connections with the RF,” Kaleniuk claims. The expert concludes that this HR policy may deteriorate the level of trust of the US and European partners, the largest weapon producers, in Ukraine.