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19 November, 2020
Ukroboronprom Informs about the Halt in Reforms
State defence enterprise Ukroboronprom (UOP) informs that the Ministry of Strategic Industries (MinStrategProm) interferes with its business activity and scales down the reform of the military-industrial complex. In its press release, UOP says that the Ministry requires and regularly recommends appointing external people as directors to member companies and to fire some employees who are responsible for security, export, government relations, and transformation. 
UOP claims that such policy can have signs of abuse of power and conflict of interest. Apart from that, this clearly contradicts Ukraine’s public promises to stick to OECD corporate governance principles for state-owned enterprises.   NAKO previously informed about these and other risks when the launch of MinStrategProm was broadly discussed by key stakeholders in the summer. You can read our assessment in the analytical material at the link:
Now we see that most of our warnings do come true. We envisaged that the creation of a new Ministry would put on the brake the reform of the military-industrial complex which had been already prepared. We have to admit that it’s what is happening now. Ukroboronprom’s transformation has been put on hold. 
In particular, over the last three months, the following has taken place:
  • the legislative process for the reform of the state sector of Ukraine’s defence industry was stopped whereas no alternatives were provided or constructive suggestions announced;
  • ownership policy of Ukroboronprom which was developed and approved before the Ministry was created has not been approved;
  • preparation of the Strategy of the military industrial complex didn’t start;
  • preparation of the secondary legislation to implement the Law on Defence Procurement didn’t start. This, in its turn, threatens the process of signing contracts with defence producers to meet the needs of Ukraine’s Armed Forces and other state customers.
NAKO as an independent civil society organization that has defended anti-corruption and transparency in Ukraine’s defence sector calls for the Ministry of Strategic Industries to stick to Ukraine’s official promises as for implementation of the international corporate governance standards at Ukroboronprom. We call to prevent the stop of the reform of Ukraine’s military and industrial complex. 
The full text of UOP’s press release in English is here.