The corruption chain of the energy sector: from kickbacks to billions of dollars in embezzlement
28 November 16:51
The NABU and SAPO reported that in addition to exposing the criminal organization in the energy sector uncovered during Operation Midas, they had previously investigated other cases involving bribery, abuse of power and large-scale embezzlement schemes in the energy sector. They shared five of their most high-profile cases, some of which have already been brought to court. What kind of cases they are, who was involved in the fraud, and what kind of fraud they were, "Komersant Ukrainian" studied in more detail.
The first case of the Mindich family
Detectives have completed the investigation into large-scale embezzlement at Kharkivoblenergo. The losses amounted to more than UAH 12 million, and losses of UAH 120 million were prevented.
According to the investigation, in 2021, the organizer of the scheme, Leonid Mindich, began to personally manage the procurement of power equipment at Kharkivoblenergo. The head of the regional power company followed all Mindich’s instructions – he signed contracts for the purchase of transformers, meters, etc. with companies Mindich indicated at prices that were several times too high. In addition, Mindic set up a similar scheme for other state-owned enterprises in the energy sector. He was assisted by other heads of structural units of Kharkivoblenergo, an employee of the Kharkiv Chamber of Commerce and Industry, and a private appraiser.
on June 3 this year, Leonid Mindich was notified of suspicion of organizing a scheme of millions of embezzlement during the procurement of energy equipment and was detained while trying to leave the territory of Ukraine. He was later released on bail of UAH 8 million. Leonid Mindich is a cousin of Tymur Mindich, co-owner of Kvartal 95 and a defendant in the Midas case.
MP Yaroslav Zheleznyak said that in April 2024, Energoatom-Trading entered into an agreement with the private company Svitlo Group M to supply a large amount of electricity, for which the company systematically underpaid. As a result, Energoatom lost almost UAH 300 million. This company is not related to the energy sector, but to the Judo Federation of Kharkiv region.
Energoatom also provided Svitlo Group M with an opportunity to receive UAH 40 million in VAT refunds from the budget, despite having debts. The key figure in this scheme, according to Zhelezniak, is Jacob Hartmut, vice president of Energoatom, who has an offshore company office in London in the same building as Mindych.
They bought electricity, resold it at a higher price, and did not pay the seller
A case related to electricity fraud at the beginning of the full-scale invasion has been brought to court. The investigation found that in March 2022, United Energy LLC, at that time one of the largest traders in Ukraine, purchased electricity worth more than UAH 716 million from NPC Ukrenergo. The payment was guaranteed by one of the commercial banks, Alliance Bank, and the decision to issue the guarantee was made by the chairman of the board solely and in violation of the procedure. The company immediately sold the resource, and the money was transferred abroad. The losses amounted to UAH 716 million.
The NABU managed to seize more than UAH 700 million on the accounts of the scheme participants. In addition, they managed to block funds on the accounts of the company controlled by the organizer in two European countries. However, they tried to lift this blocking by sending forged letters to the competent foreign authorities on behalf of Ukrainian detectives and prosecutors.
The investigation believes that the organizer of the scheme is Kolomoisky’s business partner Mykhailo Kiperman. Other suspects are Dmytro Kondrashov, the former head of Ukrenergo, and Yulia Frolova, the chairman of the board of Alliance Bank.
Ukrenergo’s press service reported that United Energy owed even more than NABU’s estimate of UAH 1.7 billion in early 2022. About UAH 600 million has already been recovered from the trader and the guarantor bank, and Ukrenergo is still trying to recover the remaining UAH 1.1 billion, including fines, in court.
Half a million dollars for the Deputy Minister of Energy
The case of former Deputy Energy Minister Oleksandr Hale, who was detained in August 2024 on a large bribe, was brought to court. The official, in collusion with three officials, wanted to receive $500,000 for permission to export mining equipment from the frontline area.
According to the investigation, the deputy minister promised the heads of state-owned enterprises of the Lviv-Volyn coal basin to transfer mining equipment from the mines of the frontline district of Donetsk region for use. The equipment in question is unique and belonged to one of the state-owned mining companies in the Pokrovsk district. The official wanted to receive money for its evacuation and transfer to mines in the western region.
Of the four defendants in this case, two have already been convicted.
The case of the construction of a nuclear storage facility
In July 2021, the NABU and the SAPO sent to court an indictment against two people accused of organizing the provision of undue benefits during the construction of the Centralized Spent Fuel Storage Facility for VVER reactors at Ukrainian NPPs. The storage facility was never built, and the state suffered losses of UAH 100 million.
The investigation found that in 2017, an official of a separate division of Energoatom, abusing his official position, entered into a UAH 929 million contract with a company controlled by former MP Maksym Mykytas. Subsequently, construction costs increased to UAH 1.36 billion. The fraudulent scheme consisted of the contractor buying radiation monitoring equipment at the market price, but selling it to Energoatom for three times the price. The company overpaid about UAH 100 million.
It has also been established that in 2017-2019, Energoatom official Ihor Orlov, Director for New Nuclear Installations, received three apartments in new buildings in Kyiv worth almost UAH 4.42 million for free from a company controlled by Mykytas, which, according to the investigation, is an undue benefit.
In September 2020, NABU detectives served a notice of suspicion of corruption to MP of the VIII convocation Maksym Mykytas and Deputy Director General of the special unit Ihor Orlov, and in October – to a former official of the unit Mykola Bozhko. In November of this year, Dmytro Nesteruk, former director of the construction company BC KBR LLC, was extradited to Ukraine from Germany.
Percentage of the contract amount
The NABU is investigating a scheme in which an official of one of Energoatom’s branches demanded monthly kickbacks from the contractor in the amount of 10-15% of the contract amount. According to the investigation, the deputy director general of the Atomenergomash branch of Energoatom demanded monthly “interest” from a representative of a private enterprise for ensuring timely payment for work performed under contractual agreements and for not interfering with the fulfillment of contractual obligations.
The total amount of the unlawful benefit was about UAH 1.67 million (equivalent to $40,200). However, the official planned to receive more than UAH 6.6 million, but was detained after the first tranche was transferred.
Author: Alla Dunina
