Uncovering Large-Scale Misappropriations in Military Procurement
The investigation into millions in misappropriations in military procurement has concluded.
This was reported by SAP and NABU.
NABU and SAP officials have released the findings of an investigation into the misappropriation of public funds during the procurement of food products for the Armed Forces of Ukraine amidst the ongoing war with Russia. After reviewing the materials, the case will be forwarded to court.
It has been established that from 2022 to 2023, food for the military was procured using a set catalog containing 409 items. The most commonly used items, such as vegetables and meat, accounted for only 10% of the assortment. Other items, like spices or berries, were ordered infrequently or not at all.
The price of the set was determined based on all items in the catalog, allowing suppliers to manipulate prices: inflating them for popular products while lowering them for less demanded items.
Consequently, the price of the set appeared unchanged. For instance, potatoes were sold at inflated prices, while seasonal fruits cost mere pennies.
As a result of these manipulations, from August to December 2022, two supplier companies, controlled by the same owner, illegally profited over 733 million UAH, as confirmed by expert examination findings.
Part of these funds was subsequently withdrawn as dividends and financial assistance to related companies, which were then used to purchase real estate in Croatia. The circumstances surrounding these transactions are currently under investigation.
A Ministry of Defense official was involved in the crime, failing to notice pricing anomalies during contract signings.
Following the initiation of the investigation and media publications, including reports of egg purchases at 17 UAH each, the accomplices reduced prices on the 11 most demanded products, preserving 788 million UAH from the budget.
Additionally, after NABU and SAP suggested measures to eliminate the causes and conditions of the food procurement fraud, the Ministry of Defense amended its procurement procedures and introduced separate pilot projects.
Currently, among the suspects are:
- the former head of the Ministry of Defense Department;
- the owner of related supplier companies;
- two heads of supplier companies;
- individuals.
Charges include: part 5 of article 191 (misappropriation), part 2 of article 15 part 5 of article 191 (attempted misappropriation), part 3 of article 209 (legalization) of the Criminal Code of Ukraine.
Materials regarding other contracts concluded during this period have been separated into a new case, which is still under investigation. Furthermore, NABU and SAP are taking steps to identify other individuals involved in the criminal activities, including among Ministry of Defense officials.
Disclaimer: According to the first part of Article 62 of the Constitution of Ukraine, a person is presumed innocent of a crime and cannot be subjected to criminal punishment until their guilt is proven in accordance with the law and established by a guilty verdict of the court.
