13:36 GMT +321 September 2017
Live
    A Ukrainian soldier

    Laundromat: How Ukraine's Defense Budget Lost Millions of Dollars

    © Sputnik/ STR
    Europe
    Get short URL
    2116185

    More than 6 billion hryvnias ($237 million) have been stolen from Ukraine’s defense budget. Experts warn that corruption schemes are undermining the country’s security and that faulty weapons pose a deadly threat to their users.

    According to the online newpaper Zerkalo Nedeli (Weekly Mirror), the whole scheme is simple: defense enterprises get 100 percent down payment on contracts and corrupt Defense Ministry officials extend the deadlines for contracts that are never implemented.
     
    As a result, the enterprises do not meet their contractual obligations and avoid sanctions. In the meantime, the state funds are used in outside deals lining the pockets of the organizers of these criminal schemes.

    Another way of cashing state funds is to use “ghost” contractors for the supply of spare parts.

    They remit the money to sub-contractors — fictitious enterprises existing on paper only. Laundered through these one-off firms, the money ends up in the bank accounts of physical persons and is redeemed.

    “The thing is, any kind of state activity in Ukraine is imitation meant to cover up criminal schemes enriching government officials and everyone else involved in the process,” political analyst Alexander Asafov told RT.

    He added that such schemes were nothing new as they have been used since former President Leonid Kuchma’s second term in office.

    Ersatz Armor

    In the rare cases when they are forced to implement their contracts, Ukrainian defense enterprises supply the country’s military with faulty hardware.

    In 2014, the Defense Ministry paid almost 30 million hryvnas  ($1.3 million) to Ukrinmash for the purchase of foreign-made SpyArrowe drones. The company took a whole 18 months to supply the drones many of which proved unable to fly.

    A tank factory in Kiev tried to pocket some of the money it received from the state by saving on armor quality. Instead of using bullet-resisting steel they supplied their APC’s with one that could be easily punctured.

    In another case of large-scale theft of public funds the Kharkiv Design Bureau of Mechanical Engineering supplied 219 million hryvnas’ worth of armored vehicles ($9.4 million), all of which were immediately found to be unfit for service.

    The list of such criminal schemes goes on.

    “What we see is an imitation of the country’s military potential. As a result, the weapons now pose a deadly threat to the very people who are supposed to use them,” People’s Diplomacy Fund expert Vladimir Kireyev told RT.

    “Yatsenyuk’s Wall”

    “The most beautiful corruption scheme is the so-called ‘European Wall’ or ‘Yatsenyuk’s Wall,’ which costs Ukrainian taxpayers very, very dearly,” Alexander Asafov said.

    Last year Anton Gerashchenko, a top adviser to the Ukrainian interior minister Arsen Avakov, said that about $400 million had  already been spent on the wall meant to separate Ukraine from Russia, and that billions more could be needed to finish the job.

    Many experts wonder how so much money could have been spent to erect a simple fence with a metal mesh.

    Beneficiaries

    According to Fatherland party leader and former Prime Minister Yulia Tymoshenko, President Petro Poroshenko is the main beneficiary of the corruption schemes in the country defense-industrial complex.

    “The war goes on because Poroshenko and his inner circle use it to make money. They are covering up the insane corruption in Ukraine and this is exactly why people hate the government,” Tymoshenko said during a news briefing in June.

    Related:

    Poroshenko Blames Long-Dead Soviet Union for Corruption in Ukraine
    US Should Set Up Panel to Investigate Corruption in Ukraine – Ex-Lawmaker
    Ukraine 'Chokes' on Corruption - Putin
    Tags:
    separation wall, embezzlement, defense budget, corruption, Ukrinmash, Ukrainian Defense Industry, Ukrainian Interior Ministry, Alexander Asafov, Arseniy Yatsenyuk, Petro Poroshenko, Arsen Avakov, Leonid Kuchma, Ukraine
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik
    • Сomment