SCRAP INSTEAD OF REVERSEVENDING MACHINES

Reverse-vending machines (RVM), used in many European cities for collecting plastic bottles and aluminum cans, could have appeared in Ukraine a few years ago, but the corrupt ingenuity of the Ukrekoresursy management stood in the way. Under the guise of buying such RVMs, they spent almost UAH 14 million for something of a drastically different quality. This scrap is now gathering dust, while the former enterprise head and other persons involved in the crime became suspects in NABU’s case.

RecycleTech RVMs, which were supposed to be delivered, are cutting-edge technological devices capable of accepting up to 1,000 plastic bottles and 800 aluminum cans. However, instead of negotiating with this manufacturer, the corrupt officials chose another company and paid it USD 100,000 for 100 RVMs with a capacity of 300 plastic bottles and/or 400 aluminum cans. As further examination established, these machines, very similar to the original ones from the outside, but completely different in terms of technical components, were actually unusable.

In order to give the appearance of the legality of the purchase, the participants in the scheme introduced changes to procurement terms, altering both the technical requirements for RVMs and the order of payments. They also engaged an intermediary - a company registered in Panama.

The ex-director of Ukrekoresury, the scheme’s organizer, was remanded in custody with an option of being released on UAH 3.7 million bail.

PROCUREMENT OF PCR TESTS FOR UKRZALIZNYTSIA

NABU and SAPO exposed a scheme used by Ukrzaliznytsia officials to purchase more than 11,000 COVID-19 PCR tests at inflated prices. The illegal overpayment could have amounted to almost UAH 5 million, if not for the vigilance of Ukrzaliznytsia auditors. They reported the criminal intent to the National Bureau, which, in turn, notified the perpetrators of suspicion.

The scheme was as follows: securing the victory of a predetermined company in a tender for the purchase of PCR testing services and ensuring the conclusion of a contract with the agreed price - one and a half times higher than the market average (UAH 1,280/test instead of UAH 837/test). Thus, the overestimation of each test made UAH 443.

The officials of Ukrzaliznytsia used the opportunity to add the biomaterial transportation cost to the expected purchase price since the tender documentation contained this requirement. They then pumped the total price by UAH 443, being aware that no such service will be actually necessary - the customer, Ukrzaliznytsia, could itself perform the collection of biomaterials for their further examination in Ukrzaliznytsia hospitals.

The price inconsistency was exposed by the auditors of Ukrzaliznytsia. This proves the fact that conscientious monitoring and security, in the absence of pressure, can prevent the commission of corruption offenses.

UAH 558,000 FOR AN MP

At the end of January 2022, the National Anti-Corruption Bureau of Ukraine and the Specialized Anti-Corruption Prosecutor`s Office exposed an incumbent MP, who offered assistance in ensuring that predetermined companies won tenders for the purchase of medical equipment for hospitals in the Zhytomyr region. The lawmaker asked for 30 percent of the contract cost for his «services». According to the investigation, the communal enterprise «Hospital No.2 named after V.P. Pavlusenko» became the first object - it purchased an ultrasound diagnostic system for UAH 1.86 million. After the payment for the supplied equipment was received, the MP asked for the agreed remuneration - UAH 558,000. He also planned to use the scheme for other contracts, in particular for the supply of MRI and a laparoscopic set for surgical procedures, which could bring him some UAH 12 million.

These intentions were ruined by the Detectives, who exposed the corrupt MP red-handed receiving the undue advantage.

Parliamentary immunity then saved the lawmaker from being detained on the spot. Subsequently, the Prosecutor General issued a notice of suspicion. Despite the suspect’s avoiding the meetings of the High Anti-Corruption Court, ignoring the summons to NABU, and finally being declared wanted, a preventive measure was still applied to him at the end of May - four months after the exposure.

FRAUD WITH THE PURCHASE OF VIDEOCONFERENCE EQUIPMENT

The National Anti-Corruption Bureau of Ukraine and the Specialized Anti-Corruption Prosecutor`s Office exposed another act of corruption at Derzhinformiust. From January 2014 to February 2015, the company’s general director, two his deputies, and two heads of private companies implemented the scheme, which resulted in over UAH 7.7 million losses to the state. They ensured the conclusion of contracts between the enterprise and controlled companies for the supply of the TrueConf computer program intended for videoconferencing. In fact, the companies did not provide services, and there was no need for such products at that time. In addition, it turned out that the company that was supposed to supply the software had nothing to do with IT but was engaged in the production of lifting and loading-unloading equipment. The crime was peculiar by its international nature: the participants used foreign accounts and companies to launder funds. To establish the details, the Detectives sent seven requests for international legal assistance to the law enforcement agencies of Estonia, Germany, Great Britain, Switzerland, Latvia, and the russian federation.

The former head of the enterprise is accused in another case where, together with other persons, he organized the misappropriation of UAH 7.4 million of the same enterprise, concluding contracts for the supply of products at an inflated cost and securing payment for software development services that were never provided.

ATTEMPTED BRIBERY OF SIAUP HEAD

The National Anti-Corruption Bureau of Ukraine and the Specialized AntiCorruption Prosecutor`s Office, in cooperation with the head of the State Inspectorate for Architecture and Urban Planning of Ukraine (SIAUP) Semen Kryvonos, prevented his attempted bribery. A representative of one of the capital’s developers offered the official about USD 120,000 in exchange for a certificate of commissioning of a high-rise building in Kyiv, erected with a number of violations. He also hinted he was ready to solve similar issues in a similar way in the interests of other construction companies.

The Detectives started the pre-trial investigation into the above facts in December 2021 and within a month — in January 2022 — the person was caught red-handed. Interestingly, the detention took place near the NABU head office, in one of the parking lots.

SIAUP was formed in December 2020 to replace the State Architectural and Building Inspection, one of the most corrupt agencies in the country, as announced by the President of Ukraine Volodymyr Zelenskyi in the spring of 2020. In June 2021, the first Director of the National Bureau, Artem Sytnyk, Minister for Communities and Territories Development of Ukraine Oleksii Chernyshov, and SIAUP Chairman Semen Kryvonos signed a memorandum of cooperation. Shortly after the SIAUP Chairman reported the National Bureau about an attempt to give him undue advantage.

RECEPTION OF UNDUE ADVANTAGE BY KYIV CITY COUNCIL DEPUTY

The investigation established that a deputy of the Kyiv City Council, in collusion with close associates and officials of communal enterprises, organized a corruption scheme to receive undue advantages from entrepreneurs for placing seasonal mobile kiosks in Kyiv. While the right to place such kiosks was to be granted based on the results of open biddings, the potential bidders were informed that only pre-determined companies could win after paying a certain amount. A utility enterprise, which the deputy influenced as the head of the city improvement commission, organized the respective tenders.

The Detectives recorded negotiations discussing seven locations in different districts of the capital and an agreement to transfer a UAH 1.39 million undue advantage in two tranches. During the receipt of the second tranche in the amount of UAH 1.26 million the participants of the scheme were caught red-handed. Interestingly, in one of the talks, the Kyiv City Council deputy recognized NABU as the only «problematic organization» due to «the lack of communication there.» In the end, NABU exposed the criminal activity of the official.

On June 17, 2022, NABU and SAPO completed the investigation

Under prosecution 6 suspects*

• the deputy of the Kyiv City Council (chairman of a standing commission)
• a deputy aide
• the acting director of a utility company
• a deputy director of a utility company
• a deputy director of a utility company
• a person close to the deputy

The actions of the deputy of the Kyiv City Council fall under Part 4 Article 368 of the Criminal Code of Ukraine, of all other participants in the crime - under Part 5 Article 27 Part 4 of Article 368 of the Criminal Code of Ukraine

*positions at the time of committing the crimeу

NON-DECLARATION OF UAH 87.6 MILLION BY MP

According to the investigation, a Ukrainian MP of the 8th and 9th convocations did not indicate in his asset/income declaration for 2020 the property/funds worth UAH 87.6 million, owned by a person with whom he lives, has mutual rights and responsibilities, and raises three common children. The undeclared assets/funds comprise an office facility; 13 apartments and eight parking spaces in Kyiv; 2 houses in a cottage town outside Kyiv with a total area of over 2,000 square meters; 27 land plots with a total area of about 115 hectares in the Kyiv region; 2 cars; shares in a number of business entities; income from the sale of real estate. The declaration also lacked information on another office facility in downtown Kyiv, which the lawmaker uses for his professional needs

This is the first suspicion notice served on an MP under Art. 366-2 after the resumption of criminal liability for deliberate misstatements in asset/ income declarations. As reported, in October 2020, the Constitutional Court found Art. 366-1 of the Criminal Code of Ukraine («Declaration of false information») unconstitutional. This led to the closure of 111 criminal proceedings, in which detectives investigated 180 facts of misstatements by top officials. On June 7, 2022, NABU and SAPO completed the investigation.

Under prosecution: 1 suspect

• the MP of the 8th and 9th convocations

CORRUPTION WITHIN NATIONAL GAMBLING OPERATOR

A member of the Commission for the Regulation of Gambling and Lotteries (KRAIL) requested USD 90,000 for issuing permits to use commercial premises in the Chernihiv and Zaporizhzhia regions for gambling. In order to expose the criminal scheme, the anti-corruption agencies conducted a special operation involving undercover Detectives. As a result, on Aug. 20, 2021, the official was caught redhanded receiving the entire amount of undue advantage. On the same day, he was notified of suspicion.

According to the investigation, the suspect, in addition to his post within KRAIL, also worked for the Security Service of Ukraine, from where he had resigned shortly before his arrest. He even continued to use one of the SSU’s cars for his everyday needs. His work with the commission turned out to be no less interesting: searching for objects in the gambling business, which would bring «profit» in the future. That is, the official not only requested money for corrupt assistance, but also wanted to have his share in the business.

On June 14, 2022, NABU and SAPO completed the investigation in the criminal proceedings and disclosed the case file to the defense

Under prosecution: 1 suspect

• former member of the Commission for the Regulation of Gambling and Lotteries - Part 4 Article 368 of the Criminal Code of Ukraine

UKRTELEFILM: DISCLOSURE OF CASE FILE TO FOUR SUSPECTS

The former head of the state enterprise «Ukrtelefilm» (the Ukrainian Television Film Studio), in collusion with other persons, sold the property rights to 62 real estate objects in Kyiv (24 apartments with a total area of 2,704 square meters, seven non-residential premises and 31 parking spaces) in favor of a private company. The sale was carried out with numerous violations, in particular, without the consent of the governing body represented by the State Committee for Television and Radio Broadcasting of Ukraine. As a result, Ukrtelefilm suffered losses in the amount of UAH 67.73 million. The 62 real estate objects were sold for just UAH 14.5 million, while their estimated market value made UAH 82.23 million. In order to simulate activities in the interests of the enterprise an additional agreement to the basic contract was concluded to raise the cost by UAH 1 million - from the initial UAH 13.5 million to UAH 14.5 million. At this, the fictitious valuation of all assets, which was ordered to substantiate the price to the Ukrtelefilm staff, amounted to UAH 14 million. On May 30, 2022, NABU and SAPO completed the investigation of four suspects. Thus, the number of alleged participants in the crime increased to eight. Three of them are being tried by the High Anti-Corruption Court. One suspect – the organizer of the corruption scheme – is wanted internationally.

Under prosecution: 4 suspects

• the Deputy Chairman of the State Committee for Television and Radio Broadcasting of Ukraine (Derzhkomteleradio) (2016-2020) - Part 5 Article 27 Part 2 Article 364 of the Criminal Code of Ukraine;
• the former General Director of Ukrtelefilm (2016-2017) - Part 5 Article 27, Part 2 Article 364, Part 3 Article 358 of the Criminal Code of Ukraine;
• the deputy head of a private company - Part 3 Article 27 Part 2 Article 364, Part 3 Article 27 Part 3 Article 209, Part 3 Article 27 Part 3, 4 Article 358 of the Criminal Code of Ukraine;
• the former head of the legal department of Ukrtelefilm (2015- 2016) - Part 5 Article 27 Part 2 Article 364, Part 5 Article 27 Part 3 Article 358 of the Criminal Code of Ukraine

*positions at the time of committing the crime

RECONSTRUCTION OF SOBORNA SQUARE IN MYKOLAIV

According to the in-vestigation, in 2019, the relevant department of the Mykolaiv City Council announced a tender for the reconstruction of Soborna Square in Ukraine’s southern city of Mykolaiv. The Detectives of the National Bureau established that the deputy mayor of Mykolaiv and the first deputy of the specified department of the city council abused their official position and, in collusion with seven directors of private companies, ensured victory in the tender of a predetermined business, which carried out the work. The experts concluded that the cost for the reconstruction works was significantly higher than the market average.

The overpricing was so outrageous (by 3-15 times) that even some participants in the crime were surprised, as evidenced by their correspondence. In order for such overpricing to become possible, changes were made to the initial reconstruction project to raise the cost from UAH 34.4 million to UAH 90 million. As a result, the city budget suffered UAH 26.8 million in losses. On Jan. 18, 2022, NABU and SAPO completed the investigation.

Under prosecution: 9 suspects

• the deputy mayor of Mykolaiv;
• the first deputy director of a Mykolaiv City Council department;
• seven heads of private companies, one of them being a deputy of the Odesa City Council.

The actions of all suspects fall under Part 5 Article 191 of the Criminal Code of Ukraine. Four heads of private companies were also charged under Part 2 Article 209 of the Criminal Code of Ukraine.

*positions at the time of committing the crime

EMBEZZLEMENT OF UAH 9.6 MILLION FROM UKRZALIZNYTSIA

In 2017, state-owned Ukrzaliznytsia (Ukrainian railways) announced public bidding for the purchase of power supply devices for passenger cars. The investigation established that the acting head of an Ukrzaliznytsia branch, as the head of the tender committee, established a requirement for participation in the tender that the bidders must provide approval of product drawings, which should be issued by Ukrzaliznytsia. Meanwhile, Ukrzaliznytsia granted approval to two related companies, ignoring the rest. In the end, these companies were banned from the tender, while the «chosen» companies won and supplied the devices to Ukrzaliznytsia at inflated prices. The overpayment (actually embezzled funds) amounted to UAH 9.6 million.

Interestingly, the air temperature in the cars depends on the power supply devices in question: it should be cool in the summer and warm in the winter. Therefore, the official not only misappropriated public funds but also failed to ensure the comfort of passengers, because the purchased devices were hardly put into operation in four years

According to the materials collected by the Detectives, the Antimonopoly Committee conducted its own investigation into the actions of the winning companies, found them anti-competitive and concerted, and imposed fines. The companies tried to challenge the fines in court but failed.

Under prosecution: 1 suspect

• the former acting head, head of the tender committee at an Ukrzaliznytsia branch - Part 2 Article 364 of the Criminal Code of Ukraine

«KYIVZELENBUD» CASE

In 2016-2018, the municipal association «Kyivzelenbud», upon the initiative of a freelance adviser to the general director, the organizer of the corruption scheme, announced and conducted tenders for the purchase of special plant care equipment. The tenders’ winners were three pre-determined companies, which supplied the equipment at three times inflated prices. As the investigation established, the participants in the scheme created conditions for the procurement of specific models of expensive imported equipment, which led to UAH 115.19 million losses to Kyivzelenbud.

Part of the illegally obtained funds were transferred to foreign companies, finally landing in the accounts of a controlled company registered in Italy. The National Bureau managed to seize the corporate rights of this company and the real estate objects that could be built at the expense of the withdrawn funds

On January 24, 2022, NABU and SAPO completed the investigation.

Under prosecution: 10 suspects*

• a former external adviser to the general director of Kyivzelenbud - Part 3 Article 27, Part 5 Article 191 of the Criminal Code of Ukraine and Part 3 Article 27, Part 3 Article 209 of the Criminal Code of Ukraine (as amended by Law No. 770-VIII of Nov. 10, 2015 );
• the general director of Kyivzelenbud (2016-2018) - Part 5 Article 191 of the Criminal Code of Ukraine;
• the general director of Kyivzelenbud (2018-2019) - Part 5 Article 191 of the Criminal Code of Ukraine;
• the deputy general director for commercial issues - Part 5 Article 191 of the Criminal Code of Ukraine;
• the head of a Kyivzelenbud unit - Part 5 Article 27 Part 5 Article 191 of the Criminal Code of Ukraine;
• an employee of a Kyivzelenbud unit - Part 5 Article 27 Part 5 Article 191 of the Criminal Code of Ukraine;
• a trustee of the former external adviser to the general director of Kyivzelenbud - Part 3 Article 27 Part 5 Article 191 of the Criminal Code of Ukraine;
• the director of a company - Part 5 Article 27 Part 5 Article 191 of the Criminal Code of Ukraine;
• a private entrepreneur - Part 3 Article 27, Part 5 Article 191 of the Criminal Code of Ukraine and Part 3 Article 27, Part 3 Article 209 of the Criminal Code of Ukraine (as amended by Law No. 770- VIII of Nov. 10, 2015 ).

*positions at the time of committing the crime

Anti-corruption agencies merged efforts both to counter russian aggression and find additional reserves to strengthen the financial capacity of the Armed Forces

Almost UAH 460 million was received by the Armed Forces thanks to NABU and SAPO in April-June 2022. Together with the command of the Special Operations Forces, NABU, SAPO, and the HACC used a legal mechanism allowing these funds, seized as undue advantage within anticorruption investigations, to be directed to the needs of the Ukrainian military. Equipment, an SUV, and car parts altogether worth UAH 90 million were handed over as well.At the initiative of suspects and defendants in the NABU and SAPO cases, more than UAH 120 million posted in bail was transferred to the Armed Forces by the High Anti-Corruption Court ruling.

As for reimbursements in criminal proceedings, the largest sums, as in previous periods, are repaid at the pre-trial stage. Thus, more than UAH 731 million was returned by state-owned Ukrnafta PJSC to private companies; almost UAH 13 million was received by state-owned Zaporizhzhiaoblenergo PJSC as debt repayment for supplied electricity.

Meanwhile, such a long-awaited source of replenishment of the state budget as the confiscation of corrupt assets is bearing fruit. During the first half of 2022, sentences against 21 persons took effect providing for the forfeiture of assets worth more than UAH 25 million, which is the largest figure since the HACC started its work.

NABU and SAPO achieved the final return to state ownership of Zaporizhzhia Titanium and Magnesium Combine, one of the largest producers of spongy titanium in Europe. The first efforts were taken back in 2018. In May 2022, the Supreme Court delivered its final verdict.

Overall, the economic effect of the NABU and SAPO work in the first half of the year made UAH 1.5 billion, which is almost 80 percent more compared to the second half of 2021. This amount also includes the value of assets, whose misappropriation was prevented by NABU.

Economic effect

Reimbursement in NABU, SAPO cases

as of 30.06.2022

UAH 4,55
bln

in the first half of 2022

UAH 748,02
mln

Economic effect of NABU, SAPO work in the first half of 2022, UAH mln

744,76

funds reimbursed to state-owned enterprises

459,62

funds transferred to the Armed Forces

183,95

funds saved from embezzlement

96,06

property transferred to the Armed Forces

28,54

funds confiscated into state revenue

3,27

funds reimbursed to other legal entities

Funds/property transferred to the Armed Forces
(as of 30.06.2022)

242 mln ₴

10,21 mln $

845,500 €

20,000 £

Suzuki Grand Vitara

22,000 plus computer and other equipment