You can find dozens of videos and photos online in which the head of the Ministry of Digital Development, Mikhail Fedorov, and the former head of the State Special Communications Service, Yuri Shchigol, boast about the transfer of drones to the Armed Forces of Ukraine. In particular, in October 2023, almost two thousand EVO MAX 4T UAVs produced by Autel were transferred to the front from the “Army of Drones”.
It was on the purchase of these drones that the state, according to hromadske estimates, lost about 600 million hryvnia. hromadske tells how this happened.
Prices are twice as high as market prices
The Krion-M company, according to YouControl, has an authorized capital of 765 hryvnia. Specializes in the trade of furniture, carpets, lamps and the like. And the office is located in the private sector in the vicinity of Krivoy Rog.
The director and beneficiary of the company is a certain 43-year-old Maxim Sazhnev. The man has a registered individual entrepreneur under the KVED “Activities in the field of architecture”, as well as the company “TERRA NOVA KR”, which specializes in real estate rental.
But unexpectedly, last year Krion-M began selling drones to the State Service for Special Communications and Information Protection. There was no direct and transparent tender - that is, proposals were provided by those companies that were invited by the State Special Communications Service itself. These deliveries took place as part of the “Army of Drones” project, jointly with the Ministry of Digital Transformation.
Since July 2023 alone, Krion-M has sold almost 3,900 drones to the state. For about one and a half billion hryvnia.
Initially, one drone purchased from Krion-M cost the State Service for Special Communications almost 500 thousand hryvnia, although at that time the same model could be bought at half the price (more on that later).
However, the exorbitant prices of Krion-M did not prevent the State Special Communications Agency from concluding two contracts with it. According to the first one, signed in May 2023, the company delivered 1074 drones. According to the second, signed in August of the same year, the state received 1912 “birds”.
Meanwhile, in July 2023, the government adopted a decree that allowed manufacturers to include up to 25% of profits in contracts with the state. In addition to the fact that Krion-M is not a manufacturer, there is another nuance: this 25% of the profit should have been included in the cost of the drones. And the markups of all participants in this supply chain clearly exceed 25%.
Perhaps someone suspected something was wrong, or the State Service for Special Communications decided to somehow hide the inflated prices and adjust the figures to the decree of 25%.
However, there is a fact: under the first contract, Krion-M delivered 1074 drones at exorbitant prices, and later delivered another 402 drones at reduced prices. Additional delivery took place under an additional agreement concluded in February 2024. Therefore, the average contract price from UAH 498,071 per drone dropped to UAH 359,631.
As part of the second contract, 1,488 drones were delivered at full cost, and later 488 were added at a reduced price. Therefore, the average cost dropped from 494,029 to 393,576 hryvnia. This additional delivery took place under an additional agreement concluded in November 2023.
But where Krion-M got the drones at a reduced cost and what it actually was is unknown.
Whatever the price of Krion-M we start from - about 500 thousand hryvnia at first or 359 thousand and 393 thousand later, taking into account reduced prices - this is still a lot.
The company explained that the prices are such, in particular, due to the packaging: along with the drone and battery, the kit included another additional battery (note that such batteries are sold at retail for about 15 thousand hryvnia).
The volunteer “Sergei Pritula Foundation” bought such drones complete with one battery for 280 thousand hryvnia in June 2023. In August - for only 212 thousand apiece.
Even government agencies bought the same Autel much cheaper in 2023. Zhytomyr City Council - at a price of 287 thousand per piece. One of the Lviv utility companies - for 269 thousand hryvnia. Not 359 thousand, as after the price reduction for Krion-M, and especially not 500 thousand, as it was initially.
The icing on the cake is the Ukrainian company Flytechnology, which directly cooperates with the manufacturer Autel, in the fall of 2023 it itself offered the State Special Communications Service wholesale quantities of the same drones at 212.5 thousand hryvnia per piece. The company had the same price in June 2023. However, for some reason a contract was not concluded with them.
The Ukrainian company Flytechnology itself offered the State Special Communications Service wholesale quantities of the same drones at 212.5 thousand hryvnia per piece
You can compare the prices of “Krion-M” with market prices for a long time, but the essence is simple. They are taller. We suggest calculating how much.
We take the final prices, which the company reduced by additional delivery of drones. We will compare with Flytechnology’s offer - 212.5 thousand per drone. Let's add up the cost of an additional battery - 15 thousand hryvnia.
It turns out that about 195 million hryvnia were made on the contract signed in May 2023 between Gosspetsvyaz and Krion-M, and about 398 million more on the contract signed in August 2023.
With these almost 600 million hryvnia, it would be possible to buy another 2,600 of these Autels with an additional battery for each. Or 2000 pickups for the Ukrainian Armed Forces. Or 4 Bayraktar. Or 70 mobile control points to strengthen air defense.
German company with Ukrainian roots
No less interesting are the supply chains of these Autel drones, because Krion-M alone is not enough here. The Ukrainian LLC bought the drones, sold to the state at an inflated price, from European companies - the Polish UMO and the German Danator.
Polish UMO has been operating in the arms market for a long time. But she really started making money during Russia’s full-scale invasion of Ukraine. In 2022, its profit increased almost 15 times compared to 2021.
On September 28, 2023, Krion-M bought 912 Autel drones from the Poles for almost 447 million hryvnia. That is, the price of one set reached almost 490 thousand hryvnia at the then exchange rate.
For comparison: the official European distributor of Autel in September 2023 sold the same drones for 280.5 thousand hryvnia. In addition, these are retail prices, which are usually slightly higher than wholesale prices.
We tried to contact representatives of the UMO company to find out where the difference of 200 thousand hryvnia actually came from. They did not respond to our requests. At the same time, Krion-M, which bought drones from the Poles, claims that they did not disclose to them either the supply chain or the primary cost of the goods.
But the second company from which Krion-M bought drones - the German Danator - deserves special attention, because there is not so much German there. The company was registered in 2023 in the small German town of Kirchber. The founder is Ukrainian Sergei Velichuk, who still runs the company to this day.
Until 2020, Velichuk worked at the state enterprise Spetstekhnoexport, which specializes in the export and import of goods of the military-industrial complex. And before that he was an employee of the Kyiv prosecutor's office. Even earlier, at least since 2010, he worked at the Ministry of Internal Affairs.
Krion-M bought drones from Sergei Velichuk’s company at an already inflated cost. So, in July 2023, 532 drones were bought there for 6 million 240 thousand euros. That is, 11,730 euros per piece, which at the then exchange rate is about 487 thousand hryvnia.
The Pritula Foundation, we recall, the next month after this delivery, in August 2023, bought the same drones for 212 thousand. More than half the price.
So why did the Ukrainian-German company have such prices?
“What will I call you? What kind of kindergarten is this? — Velichuk responded to our request to name the price at which Danator purchased drones.
According to the businessman, his drones have some kind of special firmware, which is why they are expensive. Like, the firmware cost about 2 thousand. Velichuk doesn’t remember dollars or euros.
Basically, the Ukrainian military simply reflash Autel “on the knee” - and it’s free. But perhaps Sergei Velichuk invented some advanced technology that simply has no analogues.
To figure this out, we found a drone from the batch that Danator sold for Krion-M. Here are the markings from the “Drone Army” and the corresponding serial number.
We showed this drone to a technical expert from the Pritula Foundation. According to him, his firmware is absolutely standard.
“I don’t see any manipulations being carried out with him. This is standard factory firmware. Drone on neutral system. They are usually not modified in any way. The price of 2 thousand dollars for the firmware of one drone is exorbitant, and we have never encountered anyone asking such a sum of money for such a modification,” the expert said.
In total, in July 2023, Krion-M purchased at least 1,074 Autel drones from Danator for the State Special Communications Agency. As we already know, without special software. The party cost 14 million 130 thousand dollars, or 516.5 million hryvnia.
Considering that the price of drones is twice as high, probably half of these funds ended up in the German company of the Ukrainian Sergei Velichuk or were divided between him and other participants in this chain.
Two sides of responsibility
The head of the Ministry of Digital Development, Mikhail Fedorov, claimed that the Ministry of Defense had been unable to cope with the purchase of drones since the beginning of the full-scale invasion. Therefore, the Ministry of Digital Development and the State Special Communications Agency took up the matter.
“We had to build a drone procurement flow without those... who didn’t want to do it,” Fedorov said.
So politically Fedorov and Shchigol were responsible for the purchase of drones. Here, for example, is an end-user certificate for the supply of drones, which were purchased at an inflated cost. Here is the signature of the then head of the State Special Communications Service Yuri Shchigol, but he did not remember this in his conversation with hromadske.
In addition, Shchigol stated that he was not involved in procurement procedures at all. Even despite the fact that the only founder of the procurement department of the State Service for Special Communications and Information Protection of Ukraine is herself. State Special Communications Service, which he headed.
This is also confirmed by Mikhail Fedorov: “The State Special Communications Agency purchases for all Defense Forces. 95% of the drones that fly across Russia were purchased not by the Ministry of Defense, but by the State Special Communications Agency.”
The current head of the State Special Communications Service, Yuri Mironenko, has the same opinion.
“This is obvious to me: I am responsible for everything that happens in our system, in all the departments that exist,” the official told us.
On November 20, 2023, NABU suspected his predecessor Yuriy Shchigol of embezzling government funds worth more than 62 million hryvnia during the purchase of software. Then he was fired from his position.
Interestingly, just four days earlier, Mikhail Fedorov sent a letter to NABU about inflating prices for Autel purchases. That is, the Ministry of Digital Development allegedly noticed the problem only in November - months after the delivery of drones to the front, which, according to hromadske, started back in July 2023.
Mikhail Fedorov says that he himself learned about inflated prices in September 2023, then the Ministry of Digital Development began monitoring, and it was based on its results that an appeal was made to NABU.
“We began to receive signals from other companies back in September, perhaps in August, that we could purchase at a different price. Then, at the end of September, I received the first invoices from the front at this (inflated - ed.) price.
We requested these contracts and introduced price monitoring on the market. In November, I wrote a letter to NABU saying that there were certain problems with Autel, so we ask you to improve or deepen the monitoring of these agreements,” Fedorov said in a comment to hromadske.
Based on facts of inflated prices for drones that the State Service for Special Communications purchased from Krion-M, NABU nevertheless opened criminal proceedings. In January 2024. But so far no one has received any suspicion.
How did it happen that contracts with prices that were twice as high were even signed?
For now, Yuri Shchigol abdicates responsibility altogether. Mikhail Fedorov says that he has not monitored purchases since the founding of the Drone Army project, that is, about a year and a half. Although the Ministry of Digital Development had access to the total volume of contracts and the number of purchased drones.
“I had no control over the prices of drones or which companies sold them. For example, I learned about the Krion-M company after the fact - from invoices that journalists or military personnel sent me. Because I personally did not monitor the electronic system. This was the idea that we are not the purchaser, but we say to the purchaser: “Look, we politically (and I personally) take responsibility for the project, you purchase - and you must do it according to the law, transparently. In order to have control over you, I transfer all contracts in real time to the anti-corruption authorities,” the minister explained.
According to him, after the story with Autel, the Ministry of Digital Development drew conclusions. They expect that the system should work differently because the State Special Communications Service has a new head.
“We, as the authors of this project, are not satisfied that prices may differ. The reputation of this project should be reinforced concrete. What are my internal conclusions? Firstly, next year 50% of all purchases need to be transferred to the closed Prozorro module. Secondly, we have built a team that now controls every contract,” the minister noted.
According to him, the inflated prices for Autel should now be assessed by the investigation.
So what do we end up with? A company that previously sold carpets was allowed to take part in million-dollar contracts for the purchase of drones. The total amount of overstatements that we were able to detect reached 593 million hryvnia. Even taking into account existing additional agreements.
Meanwhile, the demand for drone supplies is growing increasingly. In 2024, the Cabinet of Ministers allocated 48 billion hryvnia for the “Army of Drones” - for delivery through the same State Special Communications Service.
Could funds from this huge budget have been misused in other purchases? Like, for example, in the story with our Autel? For now we can only guess.
