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14 March, 2021
Corruption in the Real Estate Sector of the Ministry of Defence: Risks and Recommendations

The Ukrainian armed forces have made a promise to the country’s service personnel: a commitment to provide military housing of good quality, free of charge, and in proximity to military bases. That promise, however, remains very far from the day-to-day reality that service personnel and their families have to cope with. The waiting list for defence housing includes more than 47,000 people (as for December, 2019), while those who have been assigned housing often live in unregistered buildings, sub-standard, poor quality lodgings, or in areas unreasonably far from the military bases where they need to work. The unrealistic defence housing promise also perpetuates a system of bribery and fraud, often the most reliable ways of securing housing, while problems related to construction, misappropriation of resources, and lack of effective control over MOD land affects government spending and therefore all Ukrainian citizens.

NAKO’s previous analysis of defence housing in Ukraine focused on shortcomings of the defence housing management system and governance shortcomings that contribute to bad outcomes. It identified corruption risks and potential corruption schemes as one of the key factors contributing to the parlous state of the defence housing issue. Building on that analysis, this report zeroes in on specific corruption-related schemes enabled by shortcomings in the governance of MOD real estate, which should be used to improve the defence housing situation.

Three case studies featured in this report illustrate gross violations in the process of construction of defence housing, with old, derelict buildings being passed off as ‘new’ housing; loss of state resources and control over real estate due to alleged collusion between MOD officials and contractors; and significant damages brought on by the activity of a rogue actor within the MOD able to push through unauthorised sales of defence land. These cases, chosen for their representative features rather than due to being unique, help illustrate the likely corruption schemes and the governance gaps that collectively enable them. All of these are arguably underpinned by the refusal to reconsider or adapt the promise to provide housing to all defence personnel according to the modern realities and using new mechanisms: treating it as a given appears to block reform, freeze harmful expectations, and perpetuate old schemes.