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1 April, 2020
NAKO Calls Attention to Corruption Schemes in Defence Housing
How did the appartments in the Kyiv outskirts turn out to be better than the ones in the Kyiv centre? 
A much-publicized criminal case involving the former Commander in Chief of the National Guard Yuriy Alerov reveals one of the typical corruption schemes with investment contracts that can be implemented in collusion. Alerov is suspected of illegal abstraction of more than UAH 81mln of the Guard’s assets. It became possible when the Guard ‘moved’ the appartments for servicemen from the elite district in Ukraine’s capital to Kyiv outskirts. In 2000 the National Guard (which was then called Internal Forces) handed over a piece of land in the military base # 2260 that is situated in Kyiv downtown for investment construction. Due to the contract, in return for this, servicemen were supposed to receive 50 appartments for a total of 4 thousand square meters and 30 parking slots. But in 2016 when the real estate developer was already finalizing the construction works, the then Commander in Chief of the Guard scored ‘a better’ additory deal. As per the deal, the National Guard refused to receive the flats in the heart of the city in favour of 65 appartments in the economy class apartment block which is located 3 kilometres from end of the metro line. The Guard’s leadership explained this decision for the following reasons: the appartments built on the territory of the military base were too big, and the building itself had not been put into commission, and what is more, servicemen were not allowed to receive parking slots at the expense of the state. The leadership claimed that the exchange for the offered residential block which is located near the repair depot, scrap yards and the so-called tanks cemetery was not only equivalent but even beneficial compared to the appartments in the city centre. The results of the property expert assessment proved the leadership’s statements: according to the assessment, the appartments in Kyiv outskirts were more expensive than the ones in the city centre. However, journalists of came to different conclusions. Due to their estimate, the minimum cost of the square meter in the promised residential complex was UAH 43.5 thousand whereas servicemen received their appartments in the industrial area where a square meter costs UAH 16.5 thousand. The journalists calculated that the developer made an additional UAH 200 mln from the sale of National Guardsmen’s appartments. Yet, it should be mentioned that the probe which began on the results of the journalists’ investigation showed another harm scope: UAH 81,6 mln. On the probe results, the National Guard's Commander in Chief was placed in detention but he was released on UAH 4.8mln bail three days afterwards. As a result of such schemes and bargains between the developer and officials the state loses a lot of money, and servicemen receive appartments with housing conditions much worse than those promised to them. Because of lack of effective control and legislative protectors, land assets of the military forces are not used to enhance Ukraine’s state capabilities or social protection of servicemen but become the source of enrichment for dishonourable officials and their business partners. Ukraine loses money, and servicemen from all military forces and law enforcement bodies don’t receive social protection promised to them. One of the reasons for that is ignoring corruption risks in investment construction. Only if the transparent mechanisms are implemented and opportunities for abuse are minimized, all Ukrainian servicemen will be able to receive decent housing without state budget losses.