27 May 2019

On 27 May 2019  a press conference entitled “What to Do with Ukroboronprom? Directions and Goals of Reforms” was co-organized by NAKO at the Ukrainian Crisis Media Center. Participants included: the former Deputy Minister of Defence Yury Husev, former Minister of Economic Development and Trade Aivaras Abromavicius, NAKO Secretary General Olena Tregub, UAPRA President Ihor Kabanenko, Head of MoD Volunteers Council in 2014-2017 David (Braun) Arahamiya, businessman and civil activist Stanislav Liudkevych, former Ukroboronprom’s Deputy General Director Denys Hurak, defence and security expert from Maidan of Foreign Affairs Olexander Polischuk, military expert Valentyn Badrak, founder of StateWatch expert organization Olexander Lemenov and Head of StateWatch Hlib Kanevsky.

At the press conference it was agreed that thier  consolidated stand on the necessary reforms of Ukraine’s military and industrial complex (MIC), including the state defence enterprise Ukroboronprom, would be presented to President Zelensky. To this end, a working group will be created to become the platform which will define key civil society recommendations pertaining to reforms of the military and industrial complex (MIC). The recommendations are to be given to the Commander-in-Chief through his representative Aivaras Abromavicius. 

A key step for reforming Ukraine’s MIC is an independent international audit of Ukroboronprom stressed the former Minister of Economic Development and Trade Abromavicius. He noted that not a single company in the world which has counteragents and sourced money from banks  didn’t have an independent audit:

‘Astarta, Kernel and Mironovsky Hliboproduct are regularly under audit as well as other normal companies from other Ukraine’s sectors. It is done to reveal the counteragents that hide money offshore. Such audits should be conducted by the Big Four accounting firms. If the company has a billion dollar turnover, it should submit to an audit. The first one will be more expensive than subsequent ones.

At the same time, it is also necessary to implement OECD standards toward Ukroboronprom’s Supervisory Board, – said NAKO Secretary General Olena Tregub:

‘The Supervisory Board has five people although it’s practically unable to function. There are no independent members, the Supervisory Board members work free of charge. Basically, there is no corporate governance at Ukroboronprom’.

This position was supported by former Deputy Minister of Defence Yury Husev. He confirmed the Supervisory Board doesn’t correspond to the best examples of efficient corporate governance.   

‘This is an imitation of corporate governance where the owner appoints his people in the Supervisory Board, and this Supervisory Board can in no way influence the efficiency of Ukroboronprom’s activity’.

The majority of speakers agreed on the following first steps to reforming the state defence enterprise: a change of management, implementation of the effective Supervisory Board and standards of effective corporate governance and the international audit. They also agreed that Ukroboronprom will  ot be successful without the large-scale reformation of the MIC. This is a large volume of work, – noted Olena Tregub who hopes President Zelensky’s team has the understanding and the political will for such change.