Public attention to the construction of fortifications first fueled the May offensive of the Russians in the Kharkov region. When it first became clear that some fortifications existed only on paper, and the state had already spent 38 billion hryvnia on fortifications and a significant part of these funds went to the accounts of newly created companies with signs of fictitiousness.
Now the Russians are actively advancing in the Donetsk region, and from there there are similar complaints about “complete show and imitation of activity” in the construction of fortifications. The publication BusinessCensor looked into who is responsible for construction and why all estimates are kept secret. And contractors are involved in criminal proceedings on suspicion of embezzlement of 20 billion UAH.
Against the backdrop of scandals with missing fortifications in the Kharkiv region, back in May, parliamentarians created a Temporary Special Commission for the targeted use of funds for the construction of fortifications and the purchase of drones.
Deputy of the Servant of the People party Nikolai Zadorozhny, a former showman and event organizer who worked at the Kvartal 95 event agency, was appointed chairman of the commission. And recently I received suspicion from NABU of extorting UAH 3.4 million in bribes for “not interfering with repair work” in the Sumy region.
His deputy was Mikhail Tsymbalyuk from the Batkivshchyna faction. The commission also included 13 people’s deputies.
In particular, Mikhail Bondar, a member of the European Solidarity faction, became the secretary of the commission.
At the beginning of the commission’s activities, Bondar told how, on the eve of the invasion of the Kharkov region, Vladimir Zelensky and deputies came to the same fortification site, which was made by local authorities “as a demonstration.” In other places they built something in a hurry to report, but in other places they did nothing at all.
“The guys said that when they had to get to the line where the fortification was supposed to be, they ended up in holes, or immediately started digging something, because there was a bare place,” Bondar said.
At the same time, he promised that if abuses were found, members of the commission from opposition groups would insist on the transition of the special commission to an investigative commission.
According to him, in May the authorities agreed only to the creation of a special commission. And because of this uncertain status, its activities are significantly limited. The conclusions of the special commission will be of a recommendatory nature; it can develop proposals for the government, but at the same time it has limited access to certain documents.
Since its creation, the Temporary Special Commission has held three meetings, but has not gotten to the specifics - contracts and contractors for the construction of fortifications.
The meeting of the VSK was attended not by the “first” persons of the regional administrations, but by other employees who could not answer questions either on procurement for the construction of fortifications or on contractors.
The meeting, which was supposed to take place on July 19, was canceled by VSK Chairman Nikolai Zadorozhny without giving a reason.
In addition, allegedly due to security issues, all materials from criminal proceedings and contracts for the purchase of fortifications that VSK is investigating have been classified as “secret” or “for official use only.” Therefore, formally, members of the commission cannot disclose information from these materials, including to the media, even if facts of abuse were recorded there, Mikhail Bondar told BusinessCensor.
According to him, it is unlikely that the fortification commission will meet before August 20, when the next plenary meeting of the Verkhovna Rada will take place.
“The chairman of the VSK was given the command to do nothing and delay the process. Nikolai Zadorozhny now simply ignores all messages in the VSK group on WhatsApp,” Bondar said.
Construction of fortifications: how does it work in Ukraine?
At the end of April, Prime Minister Denis Shmyhal said that since the beginning of 2024, almost 38 billion UAH have been allocated for strengthening. And that “by redistributing state budget expenditures” the government allocated more than 8 billion UAH for the construction of fortifications. That is, the total budget for fortifications now is almost 46 billion UAH.
According to Mikhail Bondar, the main managers of funds for the construction of fortifications in Ukraine are the structures of the Ministry of Defense, regional administrations and the State Agency for Rehabilitation and Infrastructure Development with its regional network.
The first line of fortification is handled exclusively by the Ministry of Defense. Partially the second and third lines are regional military administrations.
In the event that the administration of the region on whose territory it is necessary to build fortifications does not have enough funds for fortifications, another regional administration is attracted to build them, which has such funding and which conducts procurement for another region and attracts contractors there. “They agree among themselves who is building what, on what site. Who is responsible for what,” says Mikhail Bondar.
In any case, the customer for fortifications is always the General Staff, which must accept them from the contractor. According to Bondar, sometimes the military does not accept these facilities because of their unsatisfactory condition, then the local government, which financed the construction, transfers such fortifications to the balance sheet of its utility companies. For VSK, the regional administrations explain these facts by the alleged “lack of funds to maintain” the military fortifications.
“All this is empty window dressing, not tied to the terrain (...) the positions are being dug wherever it is convenient for the excavator operators,” the editor-in-chief of the publication “Censor.NET” Yuri Butusov recently spoke about the construction of fortifications in the most difficult Pokrovsky direction. “In an open field.” Concrete dugouts are sometimes installed, but they are not buried in the ground, but are placed like old pillboxes, in open areas, which are very clearly visible and are not camouflaged. These positions are not protected from drones. All these positions that are being dug there are complete window dressing and imitation. Troops do not occupy these positions, only sometimes they are occupied by enemy assault groups, when they sometimes need to escape from our fire, during the next rollover, when they go on the attack. This is a sad reality."
According to Bondar, the regional administrations have already reported to the parliamentary commission that all fortifications are at least 85% ready. Other information is from employees of the Security Service of Ukraine, who opened 30 criminal proceedings on the facts of abuses in construction. The cases indicate the probable embezzlement of about 20 billion UAH. Funds were spent for other purposes due to the purchase of materials at significantly inflated prices and the construction of facilities that took place only on paper. Under contracts with OVA, contractors usually received more than 70-80% of the cost of fortification construction in advance.
Cases disappear from the Register, prices remain inflated
In February of this year, the Security Service of Ukraine opened criminal proceedings for inflating prices when purchasing wood for the construction of fortifications in the Kharkov region. Until June, decisions in this case were publicly available in the State Register of Judicial Decisions, then they disappeared from there, notes the Kharkov Anti-Corruption Center.
The plot of the disappeared case was as follows: several contracting enterprises “controlled by one group of persons” bought wood from state enterprises, in particular from the State Enterprise “Izyum Forestry” at a price of 970 UAH per cubic meter of coniferous wood (pine) with a diameter of 15-19 cm long 3-4 m.
And they sold it to the Department of the Kharkov Regional State Administration, which was engaged in the construction of fortifications, at a price of 4100 UAH/m3.
Losses from this scheme could cost the state budget about UAH 150 million in January-March of this year alone.
However, as recent purchases from Prozorro have shown, criminal proceedings do not stop officials from buying wood for fortifications through dubious intermediaries with huge overpayments.
For example, BusinessCensor found purchases of timber in the Donetsk region that were carried out in June.
The Ocheretinsk village military administration bought round coniferous timber with a volume of 15-24 cm, length 4 m from Investinprom LLC for 6.5 thousand UAH/m3.
At the same price, the Pokrovsky City Council bought timber from Investinprom for UAH 12.89 million.
InvestInprom sold edged softwood lumber (pine) 25-30 length 3-4 m to Pokrovsk and the region in April 2024 for 11 thousand UAH/m3.
In total, Investinprom supplied timber to the Donetsk region for almost UAH 26 million. Although this is a completely new line of activity for this company, last year Investinprom specialized in renting special equipment for the Kherson City Council.
Investinprom LLC was created in Kyiv last year, registered first to a resident of Boyarka, Vladimir Vyacheslavovich Petukhovsky, who was previously prosecuted for the manufacture of narcotic drugs. In April 2024, the company was transferred to Tatyana Petrovna Sapegina, also a resident of the Kiev region.
If we return to the purchase of wood in the Kharkov region, then, according to BusinessCensor’s calculations, the Department of the Kharkov Regional State Administration recorded in the electronic system the purchase of wood for fortifications in total for more than 415 million UAH.
Of this volume, only 30.6 million UAH, or less than 10% of the total purchase amount, was ordered by the Kharkiv Regional State Administration directly from a branch of the state enterprise “Forests of Ukraine”; the lion’s share was purchased through intermediary companies with signs of fictitiousness.
For example, the Hertz Industry company, which was created a year ago, this year sold more timber to the Kharkov Regional State Administration than all state forestry enterprises - UAH 52 million. In the past, the company sold timber in the Kharkov region for UAH 57 million.
Recovery service or regional administration
Despite the fact that there are supposedly certain rules for financing procurement for the construction of fortifications, in practice, each region organizes them differently.
For example, in the Donetsk region, BusinessCensor found tenders from the local Infrastructure Rehabilitation and Development Service, which was engaged in the construction of strongholds and carried out purchases in March-April of this year for almost 474 million UAH, without indicating an estimate or contractor for the work.
And the Department of the Donetsk Regional State Administration purchased only certain materials for these defensive structures. The local Department of Civil Protection, Mobilization and Defense Work purchased, in particular, a spiral security barrier of the Egoza type, or simply barbed wire, for almost 360 million UAH from the so-called Ukrbudinvest group, which is associated with the family of the former police chief at the present time occupied Donetsk by Maxim Kirindyasov.
At the same time, individual village councils held tenders for the purchase of materials for fortifications in the Donetsk region. For example, the Grodovsky Regional State Administration in the Pokrovsky District and the Ilyinovsky Village Council in the Kramatorsk District purchased barrier pyramids PZ-1 from LLC Trading House S.K.S.M. Kharkov entrepreneur and ex-people's deputy Anatoly Denisenko. 1790 - 1960 UAH/piece (Pokrovsky district purchased more expensive).
At the same time, in the Kharkov region, the local Service for the Restoration and Development of Infrastructure was not involved in the issue of fortifications at all. Its largest tenders concerned the operational maintenance of roads, which cost a total of 8.66 billion UAH of expected cost and was divided between the road favorites of the Great Construction era - Avtomagistral-Yug LLC, Avtostrada Group of Companies LLC and Rostdorstroy LLC.
In the Kharkov region, procurement for fortifications was centrally handled by the Department of Housing, Communal Services and Fuel and Energy Complex of the Kharkov Regional State Administration, which, according to an incomprehensible logic, at first did not classify its contractors for fortifications, but classified all estimates.
For example, in January, the Department of the Kharkov Regional State Administration purchased wood through Prozorro from Epicenter K LLC (in the contract the Department even indicated the actual location of the enterprise and the order of wood was supplied for fortifications on the first line) for 36.22 million UAH (in the specification for 38 million UAH ). The department classified exactly what it paid such funds for, that is, the item of purchase and the cost of a unit of goods.
Apart from the rather large contract with Epicenter in the purchase of materials for the construction of fortifications in the Kharkov region, there is a dominance of companies with signs of fictitiousness.
The situation is different in the procurement of “fortification construction”, where the Department of the Kharkov Regional State Administration recorded expenses for UAH 6.4 billion in the electronic system.
The Prozorro system lists contractors for all fortifications in the region, which allowed BusinessCensor to calculate the TOP 10 largest recipients of funds for fortifications in this region.
Rating of the largest contractors in the Kharkov region
- In first place is PJSC "Trest Zhilstroy -1" of Alexander Kharchenko, who is a member of the executive committee of the Kharkov City Council - UAH 996.80 million;
- On the second - Tech-Inkom LLC is associated with the long-time deputy mayor of Kharkov Andrey Rudenko, who was responsible for defense issues, who was fired in April 2024 - UAH 545.71 million;
- In the third place - Stroy UA LLC of Victoria Didyk from Dnepr - UAH 375.26 million;
- On the fourth - the state of emergency "Construction company "PROMTEKS", associated with the former people's deputy from Kharkov Anatoly Denisenko - UAH 333.30 million;
- In fifth place is Zhilstroy-3 LLC, owned by Kharkov residents Yuri Melnik and Alexander Maleev - UAH 303.57 million;
- On the sixth place is Project Alliance LLC, one of the owners is Andrey Kolos, former director of the Department of Economics and International Relations of the Kharkov Regional State Administration, ex-people's deputy of the City Council from the Our Land party, member of the executive committee of the Kharkov City Council - UAH 266.39 million;
- In seventh place - Business Project LLC Vitaly Kravchenko from Chuguevsky district - UAH 237.49 million;
- On the eighth is Remtekhnaladka LLC from Poltava, owned by a local entrepreneur, representative of the beauty industry, Evgenia Kornberg. Until September 2020, the owner was Alexander Yarovenko. During January-November 2021, the company was led by Vladimir Medyanik, a former deputy of the Poltava City Council - UAH 177.68 million;
- On the ninth - LLC Construction Company Alliance-Transbudservice, a company from Cherkassy, which was created in 2023, registered to Vitaly Okhota, in addition to fortifications in the Kharkov region, managed to win tenders for the construction of shelters in the Shevchenkovsky district of Kyiv - 149.98 million UAH ;
- In tenth place is ROSTDORSTROY LLC, known since the times of the Great Construction, the company of ex-deputy of the Odessa City Council Yuri Schumacher and Evgeniy Konovalov - 142.37 million UAH.
