Wartime Grabbers

The Kiev authorities got into another corruption scandal, trying to do a good deed for the military.

In 2023, the mayor announced the renovation of the Kyiv veterans' hospital in Pushcha into a modern rehabilitation center. But the current project resulted in procurement abuses, cancellation of tenders and delay of work for more than a year from the stated delivery date.

“We must create a center with a range of medical services, using innovative technologies, and providing comfortable conditions for patients. Because we understand that many of our defenders need and will need help,” Kiev mayor Vitaliy Klitschko announced the initiative last summer.

In practice, the renovation resulted in a major overhaul of the premises, facades, roof of the main building, shelter premises and landscaping. UAH 1.1 billion was spent on procurement of these works. This is a very large amount - in fact, the city authorities spent a billion on tiles in bathrooms, new windows, facades, ventilation, etc.

The chief physician of the veterans hospital, Boris Borisov, does not agree with this interpretation. “Thanks to the renovation, we will create new, more convenient conditions for access to the establishment’s branches for people with limited mobility,” he assures LB.ua. Indeed, in 2021, new State Regulations came into force, and now even construction, even renovation, or restoration of premises must necessarily take place in compliance with inclusiveness standards. But do you need a whole billion for this?

We'll come back to repairs later, but for now it's worth putting the mentioned repair costs into context. All medical institutions in Kyiv, owned by the community, are independent non-profit institutions. They receive funds for services in accordance with contracts with the NHSU, but the community budget so far almost completely covers all repairs in these institutions, and also purchases certain items of drugs and equipment provided for by city programs.

The main one, within which the medical sphere is financed, is “Health of the People of Kiev”. And, for example, in 2022 and 2023, the amount of its financing was about UAH 7 billion per year. This amount includes almost all expenses that you can imagine: from diapers to specialized departments, certain groups of drugs and vaccinations (not provided for by the National Health Service) to the functioning of an ambulance and all types of repairs of medical institutions.

The health department plans major repairs, restorations and reconstructions for a list of 25-30 institutions per year. And, for example, in 2023, about UAH 400 million was spent on the construction, reconstruction and restoration of institutions. UAH 1.849 billion was allocated to the “major repairs” line (UAH 1 billion more than in the previous year). And of these 2.29 billion UAH “for construction”, almost half - 1.1 billion - went only to the veterans’ hospital in Pushcha.

Another comparison: almost the same amount, UAH 1.09 billion, the Kyiv City Council was going to spend on the “Defender of Kyiv” program as of June last year. But then the “Money for the Armed Forces” campaigns began - and under public pressure, local authorities significantly increased defense spending.

What's in the hospital now?

The hospital is located far from the center of Kyiv, surrounded by forest and air. This is a large building (12 floors, 34 thousand sq. m) from the 1980s: poor heating and ventilation, lack of amenities for people with limited mobility. In recent years, the institution has often changed managers, and there have been problems filling beds.

The hospital has rehabilitation, neurological, orthopedic, surgical and palliative departments. As the chief physician assured us, rehabilitation takes place in all modern areas, which is confirmed by a contract with the National Health Institution. The institution is also a clinical base for two departments of the Academy. P.L. Shupik - Therapy and Geriatrics and the Department of Medical Rehabilitation, Physiotherapy and Sports Medicine.

Currently, the contract with the National Health Institution provides for rehabilitation with 120 beds; after repairs, the bed capacity will increase to 350 beds. The head of the institution cannot estimate how many patients there will be per year. “You understand that different cases require very different rehabilitation times and, accordingly, hospital stays. Plus, we offer outpatient treatment. Therefore, we do not measure patients by bed days per year,” noted Boris Borisov.

When asked by LB.ua what exactly was the plan for renovating the hospital, whether there was some kind of concept that would determine exactly this level of costs for major repairs, the chief doctor vaguely noted that “of course, there was a medical plan,” but did not offer to get acquainted with it.

If you look at the track record of Mr. Borisov himself, it is noticeable that his experience concerns mainly the management of sanatorium institutions. In particular, he has managed the city sanatoriums “Yolochka” and “Salut” in Pushcha (in a state of termination) and the regional sanatorium “Polyana”. Back in 2020, Borisov proposed a development program for the Salyut sanatorium, and already at the beginning of 2022 he headed the veterans hospital.

How to give a billion to “whoever needs it”

So why has the renovation of the veterans hospital become so unprecedentedly expensive for the city budget? The recipe is this: one “reliable” service provider for all ten hospital tenders (data in the infographic), non-publication of estimate documentation in the tender materials, bidding with one participant, who became the winner.

When now, after the scandal, the chief physician of the Borisov hospital is asked why the purchases are so expensive and why they happened this way, he just shrugs: “What do I have to do with it, all the questions are for the Prozorro system.”

Table of all tenders for hospital renovations:

Analysts of the “Our Money” project, who were the first to draw attention to suspicious tenders, have a clearer explanation for the procurement anomalies of this customer.

“At first, the hospital hired Engineeringbud Ltd. LLC to produce design documentation without open tenders. Previously, this company was called “Absolute Service Ltd” and its co-owner was Vyacheslav Berezovsky.

Therefore, it was not surprising when the only company that showed up for an open auction for the renovation of the hospital was “Absolute-Climate” of the same Berezovsky. At the same time, the hospital did not make public its design and estimate documentation in the tender documentation, on the basis of which construction organizations could develop their proposals.

The customer promised to show it only to the winner of the tender only five days after the conclusion of the contract,” journalists said in early October last year.

It was impossible to find out the estimated prices of specific items of consumables from the tender documentation (as is usually the case), and there is also no description of the purchase on the customer’s website. The customer himself explained this fact in his response to the State Audit Service by the fact that the KNP “Kiev City Clinical Hospital of War Veterans” is not a budgetary institution and is not a manager of budgetary funds, therefore it is not one of the entities that are obliged to publish on the official website the justification for the technical and quality characteristics of the subject of procurement.

This is such a rather masterful casuistry, because a communal non-profit enterprise is really not a budgetary institution, it is an autonomous institution. However, the money spent on repairs by the KNP is completely budgetary and should be spent transparently.

Analysts were able to find out the estimate for the overhaul project only upon request from a people’s deputy - the numbers amazed them: according to NG, the cost of building materials for the renovation of the hospital was inflated by 2.4 times. And construction materials account for UAH 629 million of the total cost of the project.

How did it happen that the bidding for such a tidbit of the budget took place with only one participant, without competition? It turns out that war helps: during martial law, the main procurement procedure is open bidding with special features. They are faster, simpler and even with one participant, they explained to us in the Dozorro government procurement monitoring project.

It was the bidding with one participant that was used in all tenders of the veterans hospital. In addition, the customer had some specific requirements for the bidder: “Required a number of ISO certificates in the field of ecology, labor protection, anti-corruption and certification of engineers, which may limit competition. This is not a violation, but may be the reason why other participants did not apply for the tender. In general, when such requirements do not suit one of the participants, they can be appealed to the AMCU,” explained Dozorro analyst Yaroslav Pilipenko.

The lack of estimates in the public domain, certain requirements for the contractor’s documents - these and other things are referred to by purchasers as “sharpening”: creating conditions for a specific participant to win. In our case, it was an already verified contractor of the KSCA Health Department - Absolut-climate LLC. The company, which in 2018-2020 won tenders for a modest 160-200 million UAH per year, in 2023 reached the level of 1.6 billion UAH of received contracts - and all within the framework of projects of the Kiev Health Department.

In addition to the veterans hospital, the company also won the overhaul of emergency hospitals on Bogatyrskaya and Bratislavskaya, the Center for Disaster Medicine and the Center for Nephrology and Dialysis. That is, all 1.8 billion UAH that the Department of Health earmarked for capital construction in 2023 went without alternative to the only “verified” contractor, Absolut-Climate.

True, in the same 2023, the Department of Internal Financial Control and Audit of the Kyiv City State Administration drew attention to the largest project that the Absolut-Climate company did in 2019-2022 - the renovation of the Nephrology and Dialysis Center, and found significant violations there.

Auditors discovered losses of budget funds amounting to UAH 9 million and ineffective use of funds amounting to UAH 14 million. In this project, Absolut-Climate also worked in tandem with the design organization Engineeringbud Ltd., as in the veterans hospital. But who cares about violations - customers from the Department of Health again and again give contracts to “tested and reliable” contractors.

In our story with the hospital, these contractors are still carrying out work on repairing floors under all tenders, but the largest deal - for 504 million UAH, repairs of facades and roofs of the main building - was terminated in January 2024 by agreement of the parties. True, the “consent of the parties” was preceded by monitoring by the State Audit Service, which identified violations of tender procedures and obliged the customer to terminate the agreement.

And how to find this billion

There is another murky side to this unfortunately typical story of cunning and opaque budget procurement. Namely: where did the extra billion hryvnia come from for such a luxurious renovation? Because any budget expenditure goes through many rounds of design, inclusion in programs, coordination of commissions and various departments. In the situation with funds for the hospital, it was clearly some kind of “bonus billion”, because no one names its origin.

In the Department of Health of the Kyiv City State Administration, where we addressed the question, at first they boldly pointed to the hospital - they say, this is an independent institution, don’t you know about the reform? They have all the income - so they have questions. But the hospital, of course, has no income, and has barely broken even in recent years. And if there were income, the institution would have been collecting this billion for probably several hundred years (and then, probably, would have spent it more rationally).

Since the department itself did not comment on the budgeting mechanism for hospital overhauls in response to the request, we can only state that at the beginning of 2023, in the “Health of Kiev Citizens” program, the “Overhauls” line had funding of 0.84 billion, and in October 2023 the figure for this line grew by exactly a billion - the same one.

Vitaliy Klitschko, in his first announcement, noted that in 2023, almost 750 million UAH were allocated from a special fund of the city budget for the Kyiv Clinical Hospital of War Veterans. And so far this is the only official information about the origin of the funds. The peculiarity of the special budget fund is that it is filled with certain special types of local taxes and fees and is also spent on specific target areas. But in the summer of 2022, during the war, a law was passed that allowed communities to more freely use the funds of the special fund in the general fund to cover urgent needs during martial law.

What does this mean for us as a community? That the manager of funds - the city government - now has another available tool to resolve critical issues. But in the case of the hospital, this also meant that the project and the amount of the capital repair budget were included in the line of the target program “on the go”, at the end of the year. The results and cost are eloquent.

In fact, it is strange, in the midst of a war and the constant increase in defense spending, to dismantle such an amazing case. The old favorite mantra of society “They steal, but they do something” looks pathetic against the background of another definition - “They make money from the war.” In addition to the fact that the budget is renovating the hospital at maximum prices, this is already accompanied by criminal proceedings and delays in completion. Instead of Klitschko’s stated completion of the facility in the fall of 2023, the head physician is now calling the end of 2024 as a conditional date.

Fortunately, the hospital is open. In parallel with the roar of construction workers, the replacement of windows and ventilation in the institution, the defenders are restoring their health and... thanking the doctors. “After being wounded, I spent almost the entire year 2023 in rehabilitation institutions throughout Ukraine.

Of all the five I visited, I liked only the Kiev hospital,” says serviceman Vyacheslav, who did not want to give his last name. “I’ve been here twice, everything is done for free, the conditions are acceptable, on the renovated floors it’s much better.” And most importantly - specialists. Thanks to the rehabilitator Sergei, who actually put me back on my feet, and now I’m back to work.”