NABU and SAPO uncovered a scheme to embezzle public funds in the procurement of food for the Armed Forces. Two supplier companies, controlled by the same owner, overcharged for popular foods and undercharged for rarely used or seasonal foods. This kept the price of a meal package unchanged and allowed the companies to win tenders.
According to the investigation, in this way they illegally received more than UAH 733 million in excess profits between August and December 2022. The owner of the companies could use these funds to buy hotels in Croatia and other real estate, NABU said.
"Following the launch of the pre-trial investigation in January 2023 and media reports highlighting the procurement of eggs at 17 UAH a piece, the scheme participants lowered the prices of 11 key food products. This prevented the embezzlement of an additional UAH 788 million," the statement said.
Suspects in the case include:
- the former head of a department within the Ministry of Defense of Ukraine;
- the owner of affiliated supplier companies;
- two executives of supplier companies;
- an individual.
According to Suspilne, the case involves food supplier Tetiana Hlyniana and the former head of the state procurement department at the Ministry of Defence, Bohdan Khmelnytsky.
After two years, society finally received the first results of the scandal in which suppliers to the Defence Ministry decided to make cosmic super-profits on food supplies for the Armed Forces, says NAKO analyst and deputy head of the Public Anti-Corruption Council under the MoD Tetiana Nikolaienko. Since that scandal, some of the shortcomings in the food procurement system have been corrected, such as setting upper and lower limits for food prices, and introducing a restriction that a company cannot receive more than two lots in one tender.
However, procurement for the army is still vulnerable. Suppliers continue to speculate on catalogue prices in the same way. "Everything we heard on the NABU tapes is still there. Companies like Hlyniana continue to play with the quality of stew, carry margarine instead of butter, and include raspberries in the winter catalogue at UAH 27, which no one will ever deliver," says Nikolayenko. At the last auction, Tetiana Hlyniana's companies won contracts worth almost 4 billion UAH, playing with prices in catalogues just like on the NABU tapes, the NAKO analyst notes.
Among other risks in the food procurement system, Nikolaienko highlights the minimisation of fines, the unclear principle of subscriptions for companies, and the closed nature of framework procurement.
NAKO is currently working on an analysis of the current state of food procurement for the Armed Forces to discuss with the State Logistics Operator (DOT).