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(This deepens my conviction that Kiev's war with the separatists was as
reactionary as the secessionist movement itself.)
NY Times, Feb. 19, 2018
In Ukraine, Corruption Is Now Undermining the Military
By ANDREW HIGGINS
KIEV, Ukraine — Nearly four years into a grinding war against rebels
armed by Russia, Ukraine’s Defense Ministry proudly announced last month
that it had improved its previously meager medical services for its
wounded troops with the purchase and delivery of 100 new military
Not mentioned, however, was that many of the ambulances had already
broken down. Or that they had been sold to the military under a no-bid
contract by an auto company owned by a senior official in charge of
procurement for Ukraine’s armed forces. Or that the official, Oleg
Gladkovskyi, is an old friend and business partner of Ukraine’s
president, Petro O. Poroshenko.
Ukraine’s spending on defense and security has soared since the conflict
in the east started in 2014, rising from around 2.5 percent of its gross
domestic product in 2013 to more than 5 percent this year, when it will
total around $6 billion.
This bonanza, which will push procurement spending in 2018 to more than
$700 million, has enabled Ukraine to rebuild its dilapidated military
and fight to a standstill pro-Russian rebels and their heavily armed
But by pumping so much money through the hands of Ukrainian officials
and businessmen — often the same people — the surge in military spending
has also held back efforts to defeat the corruption and self-dealing
that many see as Ukraine’s most dangerous enemy.
The problem has throttled the hopes raised in February 2014 by the
ouster of Ukraine’s notoriously corrupt, pro-Russian former president,
Viktor F. Yanukovych. It has also left the country’s dispirited Western
backers and many Ukrainians wondering what, after two revolutions since
independence in 1991, it will take to curb the chronic corruption.
“It serves no purpose for Ukraine to fight for its body in Donbas if it
loses its soul to corruption,” Secretary of State Rex W. Tillerson
warned last year, referring to regions of eastern Ukraine seized by
Russian-backed separatists after the ouster of Mr. Yanukovych.
Ukraine has made considerable progress since 2014 in draining pools of
corruption in the gas business, a major source of income for crooked
tycoons under Mr. Yanukovych. It has overhauled the state energy
company, Naftogaz, and reduced the scope for corrupt gas deals by
insiders by cutting its reliance on supplies from Russia’s energy giant,
Military spending, however, has opened up new vistas for opaque insider
deals, sheltered from scrutiny by a cone of secrecy that covers the
details of military spending.
“Corruption in the energy sector has been reduced, so some of the main
avenues for corruption have moved to defense,” said Olena Tregub, the
secretary general of the Independent Defense Anti-Corruption Committee,
a research group funded by Western donors.
While Mr. Gladkovskyi acknowledged that the ambulance purchase did not
involve an open tender for bids, there is no evidence that he tilted
military contracts for ambulances and other vehicles toward his own
company, something he denies doing. But the appearance of a blatant
conflict of interest is just one of many in a country where business and
political power form a tangled skein of overlapping, opaque and often
“There is no proof that he influenced purchasing decisions, and there
never will be. It is all secret,” said Victor Chumak, an independent
member of the Ukrainian Parliament and deputy chairman of its
anticorruption committee. “The merging of politics and business is our
Emblematic of the intertwining of business and politics and the rich
fruit this can yield are three lavish villas on the southern Spanish
coast. They are owned by President Poroshenko, Mr. Gladkovskyi and Ihor
Kononenko, another business partner of the president who leads Mr.
Poroshenko’s faction in Parliament.
All three were wealthy businessmen before taking official posts, but
they have nonetheless stirred suspicion by being less than forthcoming
about their holdings. None of them declared the Spanish properties in
mandatory filings of assets, an annual declaration of wealth by senior
officials introduced in 2016 as part of a now-stalled drive for greater
transparency and accountability.
Conflicts of interest are so widespread “that you are no longer even
shocked,” said Aivaras Abromavicius, a former investment banker from
Lithuania who helped lead a since-becalmed push for clean government
while serving as Ukraine’s minister of economy and trade. “They are all
over the place. It is sad, depressing and discouraging.”
Such disappointment has already cost Ukraine dearly. The International
Monetary Fund and the European Union, frustrated by foot-dragging over
the establishment of a long-promised independent anticorruption court
and other setbacks, have suspended assistance money totaling more than
“Ukraine lived for decades in a state of total corruption,” said Artem
Sytnyk, director of the National Anti-Corruption Bureau of Ukraine,
known as NABU, an independent agency set up in 2015 during an initial
burst of enthusiasm for clean government following the ouster of Mr.
Yanukovych. “These schemes have now been renewed and are again working.
Some people simply don’t want to get rid of them.”
His bureau has assembled evidence in 107 cases against previously
untouchable officials, but only one has ended with a court sentence. The
rest are stalled in a sluggish judicial system addled by corruption and
NABU’s efforts to delve into defense-related embezzlement, which led to
the arrest last year of a deputy defense minister and the ministry’s
procurement chief, led to a flurry of moves to neuter the anticorruption
“This is a very sensitive zone,” Mr. Sytnyk said.
NABU has come under sustained attack in recent months, with Parliament
drafting legislation, later dropped, that would have emasculated the
agency and with the domestic intelligence service raiding the homes of
Mr. Poroshenko who is expected to seek re-election next year, has
positioned himself as a leader who rebuilt Ukraine’s ramshackle military
and stood up to President Vladimir V. Putin of Russia. To the
consternation of the Ukraine leader, though, the conflict with
pro-Russian separatists is slowly mutating in the public mind from a
heroic struggle into yet another sinkhole of profiteering and graft.
Helping along this shift has been Mikheil Saakashvili, the former
president of Georgia who, until he was grabbed by Ukrainian security
officers last week in a Kiev restaurant and bundled against his will
onto a plane bound for Poland, had led a new political party in Kiev
focused on denouncing corruption. His supporters in Kiev have joined
angry veterans of the war in the east in a protest encampment outside
the Ukrainian Parliament. Their tents and barricades are festooned with
banners accusing Mr. Poroshenko and his business pals of thieving while
soldiers are dying.
“Nobody mentions Putin anymore, and the ‘P’ word now is Poroshenko,” Mr.
Saakashvili said in an interview in Kiev shortly before his expulsion
from Ukraine. “This is not fair, because Putin is mostly responsible,
but people see that there is a war and that Poroshenko and his friends
are making money out of it.”
Mr. Abromavicius, the former economy minister, who quit in fury over the
backtracking on anticorruption efforts, said he did not believe that Mr.
Poroshenko was profiting personally from the conflict in the east. But
he said the president has left himself exposed by failing to deliver on
promises to sell off his business assets or to set up a genuinely
independent anticorruption court.
Mr. Gladkovskyi defended the secrecy and the absence of public tenders
for most military equipment, including ambulances, as necessary to
prevent Russia from meddling in purchases by submitting phony bids
through fake companies, which he says it has done repeatedly when
competitive bidding has been attempted.
“Nobody is making money from the war,” he said.
Mr. Gladkovskyi said that he had withdrawn from business decisions at
his auto company, Bogdan Motors, and that his only knowledge of the
ambulances came from visits to the front line, where he saw his vehicles
and felt proud that Bogdan was assisting the war effort.
“Corruption,” he added in an interview, “is really very serious, but it
is not connected with the system I am running.”
Looming large in this system is Ukroboronprom, a sprawling state
conglomerate comprising 130 defense companies and employing around
80,000 people. Dmitro Maksimov, a former employee in Ukroboronprom’s
control department, said shady deals in procurement were “the essence”
of the conglomerate’s operations.
He recounted how a small screwlike piece of metal purchased by
Ukroboronprom for an aircraft repair factory in Lviv had skyrocketed
from $50 in early 2014 to nearly $4,000 a year later, after
Ukroboronprom mysteriously shifted its business to an outside supplier.
Mr. Maksimov said he had raised this and other inexplicably high prices
with his superiors, but was told to drop the matter and was later fired,
a dismissal he is challenging in court.
Denys Gurak, the conglomerate’s young deputy director, said he did not
know about Mr. Maksimov’s complaints but acknowledged that corruption
existed in the defense sector. He added that after years of systematic
looting under Mr. Yanukovych — who he said set up Ukroboronprom in 2010
so as to centralize stealing — “it is a miracle we can still do anything.”
“It is a systemic problem for the whole country, not just one sector,”
he said. “The system does not work, so people steal. This is why the
Soviet Union collapsed.”
He said that Ukroboronprom had itself sent 200 reports to prosecutors
about corruption in its ranks but that only two of these had ended up in
convictions, and suspended sentences.
The defense conglomerate last week announced, without explanation, the
resignation of its director general, Roman Romanov.
Daria Kaleniuk, director of the Anticorruption Action Center, a
nongovernmental group in Kiev, said that transparency and accountability
are national security issues that must be addressed if Ukraine is not
only to create a functioning European-style democracy, but also to hold
its own on the battlefield in the east.
They would also help clarify why the military ambulances sold by Mr.
Gladkovskyi’s auto company keep breaking down and why they were
purchased in the first place.
A report last year by the Independent Defense Anti-Corruption Committee
said that each vehicle, whose chassis is Chinese made, had cost the
Ukrainian Defense Ministry $32,000, much more than an ambulance imported
from China would cost, and could carry only 800 pounds, far too little
for a vehicle that would need a driver, armed guards and medical staff.
Valentina Varava, a volunteer who delivers supplies to troops in the
east, said the ambulances were designed for urban roads, but “in the
military zone, there are no roads.”
She said that as many as 19 of the 50 vehicles so far delivered to the
east were out of service. The Ministry of Defense, she added, recently
decided to buy 100 more ambulances from Mr. Gladkovskyi’s auto company.
Iulia Mendel contributed reporting.
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