NABU and the SAP have uncovered a scheme involving the embezzlement of more than $43 million at a state-owned enterprise
30 October 17:37
The former head of a state-owned enterprise—which is part of the “Ukrspetsexport” State Corporation and holds exclusive authority to export and import military and special-purpose goods and services—is suspected of embezzling more than one billion hryvnias. This was reported by
Over $43 million was transferred for fictitious services
According to the investigation, in 2015, the then-head of the state-owned enterprise entered into a contract with a foreign intermediary company. Under the agreement, the firm was to receive an agency fee for supporting and facilitating the sale of Ukrainian military products to a customer in one of the Middle Eastern countries.
“In fact, the state-owned enterprise conducted negotiations with the foreign client from a Middle Eastern country on its own. The foreign company did not participate in them. Despite this, during 2018–2019, the former head signed documents regarding allegedly provided agency services and arranged for funds to be transferred to the foreign company,” law enforcement agencies note.
Investigators determined that the services were not actually provided, and the information included in the official documents and payment records was knowingly false.
As a result of the former company head’s illegal actions, the state suffered losses of more than 43 million U.S. dollars (which, at the exchange rate at the time of the offense, amounts to more than 1.1 billion hryvnias). This represents approximately 30% of the total value of the military contract.
The former executive faces up to 12 years in prison
The former official’s actions have been classified under two articles of the Criminal Code of Ukraine: Part 5 of Article 191—misappropriation of another person’s property through abuse of official position on an especially large scale; Part 1 of Article 366—the drafting and issuance by a public official of knowingly false official documents.
Specialists from the State Audit Service of Ukraine actively assisted in the pretrial investigation.
In their statement, the NABU and the SAP did not specify the name of the former executive, the name of the state-owned enterprise, or the name of the foreign company. Nor did they report whether a notice of suspicion had been served or provide information on the suspect’s current procedural status.
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This is not the first case of corruption at Ukroboronprom
As reported by
The scheme involved forged or fictitious supplementary agreements, which served as the basis for transferring funds abroad. As a result of these schemes, three defense enterprises were affected:
- State Enterprise “Artem” – 3.63 million euros in losses;
- State Enterprise “AviaCon” —86,900 euros;
- State Enterprise “Spetstekhnoexport” – 64,600 euros.
SEE ALSO: “Oschadbank” Reports a 7.2-Fold Drop in Net Profit
What is known about “Ukrspetsexport”
“Ukrspetsexport” was established by Cabinet of Ministers Resolution No. 944 of August 14, 1996. It incorporated the foreign trade organizations “Ukroboronservice” and “Ukrinmash.” Later, “Promoboronexport,” “Spetstekhnoexport,” and “TASKO-Export” joined the organization.
The company exports, imports, and sells on the domestic market weapons, ammunition, military equipment, components, explosives, technologies, and services for military and dual-use purposes. It also handles goods that constitute state secrets and are subject to export controls. Its areas of focus include the repair, maintenance, and modernization of weapons for foreign customers; participation in the state defense procurement program; research, development, and design work; and representing Ukrainian defense enterprises at international exhibitions.
Over the course of its operations, the company has established supplies of military and specialized equipment, weapons, and services to more than 90 countries worldwide. In 2019, “Ukrspetsexport” and the Turkish company Baykar Defense established a joint venture in the field of precision-guided weapons and aerospace technologies.
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