Corruption schemes in Ukrnafta and Ukrtatnafta: how one person plays for two companies

September 2024, namely its first week, was marked by a number of rapid personnel changes in the government of Ukraine.

One of the most likely candidates for resignation in the next wave, according to our sources, will be the director of PJSC Ukrnafta and JSC Ukrtatneft Sergei Koretsky. PJSC Ukrnafta, after personnel changes in the government, may be headed by the head of the Lviv OV Maxim Kozitsky.

After the nationalization of these two companies, Koretsky, it seems, tried with all his might to play the “decent manager”, and also devoted a lot of time to personal PR, allegedly ordering grandiose articles and interviews from Ukrainian media. However, it seems that in reality the official, under the guise of public service, is secretly “playing” in large-scale corruption schemes.

Sergei Koretsky is allegedly a protege of Rostislav Shurma, the already former deputy head of the Presidential Office, who remained in his position literally this week. At the same time, back in 2021, several officials in the energy industry, heads of enterprises and people’s deputies confirmed to journalists that it was Shurma who partially replaced the economic bloc of the government.

Political expert and blogger Mikhail Schneider described the chronology of how Sergei Koretsky, in his own interests, engaged in fraud, creating a conflict of interest between Ukrnafta and Ukrtatneft, as well as manipulating the companies’ profits.

In particular, Schneider recalls the legal battles between two state-owned enterprises led by Koretsky over allegedly lost oil and petroleum products.

So, in September 2023, Ukrnafta filed a lawsuit against Ukrtatnafta, demanding the return of 183 thousand tons of oil that it transferred to it for processing in 2022. After nationalization, these oil reserves mysteriously “disappeared,” and Ukrnafta, through the economic court of the Poltava region, tried to either return the raw materials or receive compensation in the amount of 6.4 billion hryvnia.

However, during the six-month trial, Ukrnafta was unable to clearly define its claims. At the same time, Ukrnafta stated that only Ukrtatnafta, having access to its reservoirs, can determine whether there is oil. For its part, Ukrtatnafta stated that it is technically impossible to clarify this issue, effectively blocking the investigation.

But the most interesting thing is that both state enterprises are headed by the same person - Sergei Koretsky, who is thereby suing himself and creating a conflict of interest.

In May 2024, the court rejected Ukrnafta’s claim, the case went to appeal, and the fate of the oil still remains unknown. Some experts suggest that in fact the oil was processed and sold by Ukrnafta back in 2023 without the appropriate documents. Therefore, the lawsuit may be an attempt to divert the attention of the State Audit Service of Ukraine (SASU), which is interested in the “missing” oil.

Another example is the lawsuit of Ukrnafta against Ukrtatnafta dated March 4, 2024. Here, Sergey Koretsky, the manager of both companies, is demanding UAH 245.4 million in damages from himself through the court, of which UAH 244.2 million is for the missing tar, and UAH 1.2 million is for the TS-1 fuel. Ukrtatnafta produced these oil products from Ukrnafta oil back in 2022, and some of them should have remained in storage. However, after nationalization, these reserves “disappeared,” although the audit did not reveal any shortage, and Ukrnafta continued to pay for their storage until September 2023.

The court ruled that Koretsky (from Ukrtatnafta) must pay Koretsky (Ukrnafta) UAH 245.4 million for the missing oil products and UAH 1.1 million in legal costs. However, the official filed an appeal, and the fate of the missing oil products remains unknown. It is possible that these oil products were sold by Koretsky without documents.

But these are not the only scandalous episodes during the work of Sergei Koretsky. Thus, already during a full-scale war with the Russian Federation, Ukrnafta entered into a contract for the purchase of methyl tert-butyl ether (MTBE) with the Swiss company AGTG SA, associated with Evgeniy Svirsky, a businessman who previously managed the Glusco gas station network for the entourage of Viktor Medvedchuk, ex- People's Deputy from the forbidden "OPZZH" and part-time godfather of the President of the Russian Federation. Political observer Alena Yakhno reported this. According to her, the contract was concluded with a large overpayment of more than 1 billion hryvnia, and this purchase was not reflected on Prozorro.

Moreover, according to Yakhno, Svirsky is a business partner of Irina Koretskaya, the wife of the head of Ukrnafta and Ukrtatnafta Sergei Koretsky.

Also, while working in the civil service, Koretsky seemed to have managed to organize a family contract at Ukrnafta. The sister of the official’s wife, Elena Moruzhko, is allegedly the owner and director of Ukrainian Fuel Standard LLC (SPS).

The nationalization of Ukrnafta and Ukrtatnafta took place in November 2022, and a month later Elena Moruzhko registered SPS LLC. Her business partner was Ekaterina Varlamova, who previously worked as an administrator at the WOG company and has close ties with Sergei Koretsky.

SPS buys petroleum products directly from Ukrnafta at favorable wholesale prices, as well as fuel coupons through its subsidiary Ukrnafta-Snab. According to open data from Prozorro, in 2023, SPS took part in tenders worth UAH 343 million and won tenders worth UAH 146 million. Among the company's main clients are state enterprises such as Forests of Ukraine, United Mining and Chemical Company, city councils, police and other government and municipal structures.

SPS receives petroleum products from Ukrnafta, as well as fuel coupons from its subsidiary Ukrnafta-Snab. With minimal assets, SPS appears to be acting as a paper trail, buying products at reduced prices and selling them at commercial prices. Despite the fact that the company does not have warehouses, production facilities or transport, it actively conducts operations and brings profit to the Koretsky-Moruzhko family.

All this seems to indicate serious problems in Ukrtatnafta and Ukrnafta, which seem to have been artificially created by Sergei Koretsky. The main ones are conflicts of interest due to the fact that one person holds several management positions, insufficient control on the part of the supervisory boards of both companies and government bodies performing the functions of shareholders, as well as opacity in the work of enterprises.