Investigation Links Ukraine’s State Agencies to Defense Corruption

13 March 2019 21:10

Numerous state agencies, including Ukraine’s Security Service, State Fiscal Service, Military Prosecutor Office and the National Anti—Corruption Bureau, aided the cover up of multi—million dollar embezzlement schemes in the defense industry, according to an investigative series by Nashi Groshi on Bihus.info.

Numerous state agencies, including Ukraine’s Security Service, State Fiscal Service, Military Prosecutor Office and the National Anti-Corruption Bureau, aided the cover up of multi-million dollar embezzlement schemes in the defense industry, according to an investigative series by Nashi Groshi on Bihus.info.

These allegations were made in the final part of the series, according to which Igor Gladkovsky – son of Ukraine’s National Security and Defense Council deputy secretary Oleg Gladkovsky – along with partners Vitaly Zhukov and Andrei Rogoza were involved in large-scale embezzlement schemes that involved smuggling Russian military equipment into Ukraine.

“If you delve into the court register, it will become obvious: over the years of the Gladkovsky-Zhukov-Rogoza scheme, there is no one left in this country that would not have touched the boys' schemes. Tax service, national police, prosecutor office, the Security Service of Ukraine (SBU), the National Anti-Corruption Bureau (NABU) – they all started – but they all either buried or put the brakes on the investigation,” said Lesya Ivanova, a journalist with Nashi Groshi.

She stressed that the correspondence between the participants of the scheme suggests that the investigations "turned sour for a price," mostly this involved bribes of $10,000 to $20,000 at a time. Those who took part in the scheme, either for secrecy reasons or as a joke, called the money “candy” in the correspondence. "Candy in green wrappers", apparently, meant dollars.

State Fiscal Service

The tax agency first began to investigate the schemes of Optimumspetsdetal – the main company involved in the Gladkovsky-Zhukov-Rogoza schemes – back in 2016, according to the investigation. Tax authorities discovered a conversion center through which participants of the scheme converted the money made from the smuggling of spare parts into cash. As a result of the investigation, Optimumspetsdetal itself came under suspicion. Its owners were threatened with considerable sanctions for tax evasion. But, according to journalists, it was easier to close the case at the tax agency level. This is evidenced by fragments of Rogoza’s messages, where he complains to his friend that it is easier and cheaper to deal with problems with the State Fiscal Service than the prosecutor office.

Ukraine’s Security Service

Rogoza’s aforementioned friend is Dmytro Moskalenko - an investigator at the Kyiv branch of the SBU. According to journalists, he organized the necessary documents for Optimumspetsdetal from the security service, as well as from the prosecutor's office. Rogoza transferred Moskalenko the money directly through his driver. Judging by the correspondence, Moskalenko received his share of money, and at one stages, a BMW from Rogoza as a gift.

Deputy Prosecutor General of Ukraine - Chief Military Prosecutor Anatolii Matios (left) and Prosecutor General of Ukraine Yuriy Lutsenko in Kyiv on December 1, 2017. Photo: Musienko Vladyslav / POOL / UNIAN

In the winter of 2017, counterintelligence officers of SBU’s Kyiv Central Board became interested in the schemes within the defense industry. Optimumspetsdetal seemed suspicious to them, so counterintelligence sent out letters to Ukrainian armored plants, demanding an explanation for contracts with the company. Rogoza assured Zhukov that the case will be closed in one of the messages.

Journalists conclude that this is how it ultimately happened, because immediately after the release of the first part of the investigation, Aleksey Petrov, head of the SBU counterintelligence department, told the authors of the investigation that Optimumspetsdetal had never been part of the SBU’s operation.

Military Prosecutor Office

The military prosecutor office started to investigate the activities of the publication’s central figures three times. The first time their investigators started looking into Optimumspetsdetal was at the end of 2015. According to journalists, the investigators latched on to one of many deliveries - this one worth $190,000. But during the six months they spent investigating, they found no evidence of embezzlement. They only established a fictitious owner of an intermediate company, Promomarketgroup LLC, through which deliveries were made. The owner told Nashi Groshi journalists that she was promised one thousand hryvnia ($38) a month for signing documents as a director and accountant of a fictitious company.

In the winter of 2017, the military prosecutor office took on Optimumspetsdetal for the second time. This case was more serious. It featured losses inflicted on four defense plants, equating to 300 million hryvnia ($11.4 million). But in the end, the military prosecutor’s office redirected the case to the tax office.

In the spring of 2017, the military prosecutor office conducted a search of state defense company Ukroboronprom’s central office. Investigators were looking for documents on Optimumspetsdetal. But this case also went nowhere and the decision regarding the search itself completely disappeared from the electronic registry, according to journalists.

National Anti-Corruption Bureau

According to the investigation, the National Anti-Corruption Bureau has also known about smuggling in the defense industry for years.

In the fall of 2016, NABU added Optimumspetsdetal to a list of fictitious companies because of its suspicious contracts with state enterprise Kharkiv Armored Plant. The company sold tank parts to the plant and NABU at that time was carrying out the investigation into the plant’s purchases. NABU passed this list on to the leadership of Ukroboronprom. The company then stopped payments to Optimumspetsdetal.

Correspondences show that in December 2016, Zhukov demanded that Rogoza resolve this issue with NABU’s deputy director Gizo Uglava. He wanted the company to be excluded from the list. According to journalists, the following day Rogoza received a letter, signed by Uglava, stating that that “Optimumspetsdetal” was longer on the list.

NABU’s so called special agent Yevgeny Shevchenko appeared live in the studio of Nashi Groshi to discuss this. Shevchenko is not a regular NABU agent; journalists call him a volunteer assistant who took part in many NABU operations under cover. Shevchenko is also involved with a business that’s tied to the defense industry.

Journalists suspect Shevchenko was connected to Optimumspetsdetal’s exclusion from the list of fictitious companies. Shevchenko refuted all accusations and claimed that Uglava never signed such documents.

The investigation also discusses another NABU employee – a staffer – detective Dmytro Lytvynenko. According to fragments of published correspondences, Lytvynenko clarifies with Rogoza which company he should remove from the list of problematic contractors. After that, "Optimumspetsdetal" falls off NABU’s radar – until the end of 2018.