How to make UAH 2.8 billion on prisoners: large-scale corruption schemes in Ukrainian prisons exposed
11 March 2025 15:14
For years, private companies have been illegally enriching themselves on the labor of prisoners through an extensive system of corruption schemes in Ukrainian penitentiaries. In total, violations amounting to almost UAH 2.8 billion have been detected. This was reported by the State Audit Service of Ukraine following a large-scale inspection of 65 facilities of the State Penitentiary Service, "Komersant Ukrainian" reports
Systematic underpricing of prisoners’ products
The auditors identified mechanisms by which commercial entities received products made by convicts at significantly lower prices and then sold them at market prices. The understatement was achieved in various ways: by not including all components (unified social tax, general and administrative expenses) in the cost price, artificially underestimating the time of production, and writing off some products.
Geography of corruption schemes
Particularly illustrative cases were found in several regions of Ukraine.
Cherkasy region. A local state-owned enterprise of the State Penitentiary Service of Ukraine sold granite blocks quarried by convicts to private companies at prices below the production cost. At the same time, the company officially reported production of only granite chips, which are much cheaper than blocks. Because of this scheme, the state enterprise lost UAH 1.3 million.
Chernivtsi region. A state-owned enterprise sold stone, limestone flour, and chalk to private buyers without taking into account all material costs of extraction and processing. Losses from such activities amounted to more than UAH 3 million.
Poltava region. An enterprise specializing in the production of garments (jackets, overalls, sleeping bags, work vests) sold products to private companies at reduced prices, which resulted in revenue losses of more than UAH 1 million.
Kyiv region. The largest violations were found at the state enterprise DKVSU, which specializes in growing grain crops. The enterprise engaged 11 private companies and paid them UAH 257 million. At the same time, for example, one of the LLCs received payment of UAH 34.5 million, but the work was not confirmed for UAH 2.75 million, which led to direct losses.
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Food procurement schemes
A separate corruption scheme was found in the system of food procurement for convicts. Instead of direct purchases from producers, food was purchased through intermediaries (individual entrepreneurs, LLCs), which led to a significant increase in the price of goods.
The Directorate General of the State Penitentiary Service of Ukraine purchased food and material goods from seven intermediaries who had previously purchased these goods cheaper by almost UAH 35 million. The Kyiv pre-trial detention center purchased food from the Volodymyrsky Market utility, which, in turn, purchased it from subcontractors. As a result, the detention center overpaid UAH 104 thousand.
The materials of the audit were transferred to law enforcement agencies and the Office of the Ombudsman of Ukraine for further investigation and prosecution.
Violations of prisoners’ rights
State auditors have also recorded numerous cases of late or incomplete payment of wages to convicts. This is evidence not only of financial abuse, but also of violations of the rights of persons serving their sentences.
