At Khreshchatyk, 36, they figured out how to complete the construction of 18 residential complexes (RCs), which at one time were built “under the flags” of the now bankrupt state company “Ukrbud”.
Last week, the Kyiv City Council agreed on the additional capitalization of PrJSC Holding Company Kievgorstroy, which is implementing these projects, in the amount of 2.56 billion hryvnia from the city budget, notes the KievVlast publication. In addition, an appeal was sent to the Cabinet of Ministers with a request to allocate another 2.28 billion from the state treasury.
The latter will probably not happen during the war, which is why Kievgorstroy will be able to explain the lack of success in the near future and ask for several billion from the capital’s treasury again. Basically, this whole story “smells bad.” “Kievgorstroy”, although it is 80% a company that belongs to the people of Kiev, does not report in detail on its activities even to the deputy corps of the Kiev City Council - in fact, it works behind closed doors.
Because of this, it is very likely that any additional funding, as often happens, will be “eaten up” by corruption. Also strange are the groans of the city authorities regarding the fact that the Cabinet of Ministers in 2020 gave this private joint-stock company the task of completing the construction of the Ukrbuda residential complex without the consent of the city leadership. The Kyiv authorities probably could not have included “tacit consent” then, which now risks becoming another “scheme”.
As it became known to the KievVlad publication, last week the capital authorities made two decisions at once aimed at solving problems with the completion of the residential complexes of the bankrupt Ukrbud by the Holding Company (HC) Kievgorstroy.
Thus, on October 31, the Kyiv City Council supported the draft decisions “On stabilizing the financial condition of PrJSC HC Kievgorstroy by increasing the authorized capital” (No. 08/231-1635/PR dated October 30, 2024) and “On the appeal of the Kyiv City Council to the Cabinet of Ministers of Ukraine regarding compensation of PJSC “HC “Kievgorstroy” for the total planned damage associated with completion of construction projects of the Ukrainian State Construction Corporation "Ukrbud" (No. 08/231-947/PR dated July 1, 2024).
The subject of the presentation of the first document was the commission of the capital's city council on issues of budget, socio-economic development and investment activity, the second - the mayor Vitaliy Klitschko. In the session hall, 77 and 72 deputies, respectively, voted for the approval of these draft decisions.
What are we talking about?
Let us recall that in June 2020, the Cabinet of Ministers of Ukraine entrusted the Kyivgorstroy Holding Company PrJSC with the task of completing the construction of 18 complexes that were previously built “under the flags” of the state corporation “Ukrbud”. This was due to the fact that by that time the latter had already virtually gone bankrupt, work on all of these sites was frozen, and about one and a half ten thousand families faced the risk of not getting their housing. The main reason for this situation was cited by investors in these residential complexes as various abuses by the persons who organized these works, including their theft of funds.
At the same time, even then it was clear that the state had almost nothing to do with these projects: in fact, in most cases, housing was built by private companies, which it is unclear on what grounds they used the brand of the state corporation "Ukrbud" and which at that time directly or indirectly belonged Maxim Mikitas, the ex-head of the said developer (2010-2016), the actual owner of the private LLC “Ukrbud Development” of almost the same name, which built most of these residential complexes, and ex-people's deputy (2016-2019).
However, Kievgorstroy was not destined to complete all these projects for various reasons. In recent years, this company has repeatedly complained that work was first hampered by the coronavirus quarantine, and then by a full-scale war: due to the economic crisis, people began to buy fewer apartments, there was less labor on the market, it became more difficult to import building materials, and so on. similar.
But the main reason, both the management of this developer and the top “managerial cadres” of the capital, said that the Cabinet of Ministers, having transferred these residential complexes to Kievgorstroy, did not coordinate its decision with the Kyiv City Council, although it is the main shareholder of this PrJSC (80% are in municipal ownership ), and did not back it up with “money”. At the same time, Kievgorstroy complained that the construction financing funds were supposedly depleted - FC Zhitlo-Capital LLC, which “collected money” for the construction of “Ukrbudovsky” residential complexes, was in no hurry to transfer funds to the new developer. That is, supposedly “there was almost no money at all, and no one understood in which winter jacket to look for such a stash.”
Therefore, there have been repeated calls from different sides that the state should “pay for this banquet.” However, for four years, “Kievgorstroy” seemed to appeal to the Cabinet of Ministers on this issue, but received a response in the spirit of “no money, get out of it yourself.”
In the end, the municipal developer, together with officials of the capital’s mayor’s office and city council deputies, found “working” solutions to the problems. Thus, the decision on stabilizing the financial condition of Kyivgorstroy dated October 32, 2024 stipulates that this private joint stock company must carry out an additional issue of shares (that is, the issue of shares) in the amount of no more than 2.56 billion hryvnia, which will later be purchased by the capital’s community.
Thanks to this, the company’s authorized capital will be increased by the above-mentioned amount, which should subsequently be spent on completing the construction of 18 “Ukrbuda residential complex”. As for the appeal to the Cabinet of Ministers, the city authorities asked the government to compensate Kievgorstroy 2.28 billion hryvnia from the state budget for the completion of these houses. Thus, the total “cost” of these two decisions, that is, the total amount of funds that this private joint-stock company can receive, is 4.84 billion hryvnia. But the hope for funding from the state budget is, of course, still illusory.
According to the leadership of Kyiv, the need for an additional 4.84 billion hryvnia for the completion of the Ukrbuda residential complex was calculated by the auditing company Ernst & Young as part of its audit of Kievgorstroy as a base scenario.
It is worth noting that at one time there were not too many people willing to take on the completion of the “Ukrbudovsky” residential complexes, but there was still an alternative to “Kievgorstroy”. Thus, a number of private developers have directly or behind the scenes declared their readiness to complete these works, apparently tempted by the hypothetical opportunity to receive government funding for this, which in the future could, among other things, be “funded” or used for the construction of their own complexes.
But the choice still fell on Kievgorstroy. At the “semi-official” level, this was explained, among other things, by the relative “reliability” of this developer - he “creaked” his projects with scandals, but still put them into operation. Also, obviously, in this way the state tried, among other things, to reduce the degree of public discontent, using the same scheme that was used by the beneficiaries of “Ukrbudov” projects: then people allegedly transferred their funds to a state company, because this is “not a private office that can to deceive,” and now a municipal developer “with a name and history” was taking on this work. That is, it was a kind of guarantee that investors would still receive the keys to their apartments, because the city authorities allegedly “vouched” for this.
At the same time, among experts, journalists and representatives of politics at various levels there was no unanimous opinion regarding the capabilities of Kievgorstroy to implement so many new projects. Among the main reasons was that, in fact, few people had up-to-date data on the state of affairs at the Ukrbuda facilities, as well as on the financial and economic activities of Kievgorstroy, because such information was carefully hidden in this company and in the Kyiv City State Administration for years. This was usually explained by the fact that the capital’s authorities, they say, cannot interfere in its work - after all, 20% of the shares of this private joint-stock company are privately owned, thanks to which “in the right cases” this company was positioned almost as a private company, and not as a communal one.
However, it has long been known that in fact this joint-stock company does not build anything on its own: among the business entities subordinate to it, there is not yet a single company that could independently carry out construction work. Moreover, some experts pointed out that this PrJSC does not even have a single unit of equipment to carry out construction. In fact, over the past ten years or so, the holding company has been playing the role of a developer: that is, banners with the Kievgorstroy logo are “sculpted” onto the construction fences of residential complexes, but everything from pouring the foundation to finishing work in the apartments is handled by private general contractors, who receive most of the financing and income from home sales.
Let us note that there are no official reports on the activities of Kievgorstroy and information on its material and financial condition in the public domain. Therefore, sometimes you can only learn about how this 80% communal developer lives and breathes from the words of representatives of the capital’s leadership. Before voting on draft decisions that should “launch” work at the Ukrbuda facilities, the mission of publishing some data on this matter was undertaken by the Secretary of the Kyiv City Council, Vladimir Bondarenko.
According to him, one of the reasons for the impossibility of Kievgorstroy to carry out work on the Ukrbudovsky residential complexes now was that in March 2020, the State Mortgage Institution refused to buy out apartments in these complexes for a total amount of 2.1 billion hryvnia.
It also became known from his words that as of April 2024, the amount of debt under agreements for the purchase and sale of property rights and preliminary agreements for the purchase and sale of real estate in Kievgorstroy complexes was estimated at 181.7 million hryvnia, but only 4 million hryvnia is debt for which payment is already due. FC Zhitlo-Capital LLC, which “collected money” for the construction of the residential complex from Ukrbud, also has a debt to the developer. As Bondarenko noted, we are talking about 351 million hryvnia, but of these “debts” only 21 million hryvnia should have been received by Kievgorstroy.
Bondarenko also stated that Kievgorstroy has a schedule for the use of funds that can go into its authorized capital, but it is indicative. At the same time, they say, the developer plans to raise 1.26 billion hryvnia through the sale of real estate. Thus, in 2025, Kievgorstroy plans to complete the construction of 6 residential complexes, and another 4 complexes should be completed before the 3rd quarter of 2026.
In turn, the Chairman of the Board - President of PJSC "HC Kievgorstroy" Vasily Oleynik promised that the developer would publish the budget cards of each facility so that the public could analyze their construction estimates.
At the same time, Oleynik confirmed that only six of the more than three dozen companies that are part of the Kievgorstroy holding are still engaged in at least some kind of economic activity, and only three such companies are profitable. The head of the PrJSC did not specify what exactly they are doing, but it can be assumed that private companies pay them, among other things, for the opportunity to “develop the land,” because Kievgorstroy complexes are mainly built on communal plots.
This entire discussion took place on the same wavelength: the leadership of the City Council, the majority of deputies and the head of Kievgorstroy asked other people's representatives for funds, and almost no one argued with this. Only a few deputies made some comments.
Thus, representatives of the Servant of the People faction pointed out that Ernst & Young did not actually conduct an audit of the activities of Kievgorstroy - they say it was only a market research. Obviously, this was a hint that these calculations could be very “rough”, because audits must be carried out according to a strict methodology.
These same people's representatives demanded that the funds allocated from the budget be used specifically for the completion of the Ukrbuda residential complex, and not for new projects of Kievgorstroy. In response to this, Vitaliy Klitschko announced a protocol order to fulfill such a requirement. But to whom it was addressed (“Kievgorstroy” or structural divisions of the capital’s mayor’s office, which will “recapitalize” the developer by buying out shares), the head of the city did not specify.
There were also some thoughts that the problems of individual investors-buyers of apartments should not be solved with the funds of all the capital’s taxpayers, but the city leadership and the majority in the Kyiv City Council did not pay much attention to this.
What conclusions can be drawn
The metropolitan government is now strongly complaining that it was not asked for an opinion on whether Kievgorstroy would be able to fulfill its obligations on new facilities. But there are reasonable doubts that the state has the right, with the stroke of a pen, to instruct someone to complete something, and even more so to a structure that is actually under the control of local authorities. Both the metropolitan authorities and Kievgorstroy did not even try to appeal this decision. The supervisory board of this private joint-stock company is always headed by Vitali Klitschko’s deputies in the Kyiv City State Administration - now it is Vladislav Andronov. Some opposition to the “criminal order of the government” clearly could have taken place, but nothing of the kind happened.
Thus, all this looks like, at a minimum, “tacit consent”, and at most, like another scheme. That is, both at the Kievgorstroy office and at 36 Khreshchatyk, it seems, they intended to “join” this project. Obviously, the calculation was either for further financing of the construction of these residential complexes from the state budget, or for receiving funds from the funds for financing Ukrbuda objects, or... for financing from the city budget. It can be assumed that thanks to this, in particular, it was planned to improve both the financial condition of Kievgorstroy and the financial condition of the officials who manage it and control its activities.
At the same time, the most important problem remains “where the money went.” Now they are silent about this, although earlier in Kievgorstroy they directly blamed the aforementioned LLC FC Zhitlo-Capital for everything. For example, in August 2020, the management of PrJSC indicated that 2.1 billion hryvnia was not enough to complete the construction of Ukrbuda facilities and that this happened precisely because funds from the Construction Financing Fund were “withdrawn and transferred to other companies or individuals persons."
Also, from Kievgorstroy there were claims that FC Zhitlo-Capital LLC was delaying the recalculation of these funds. Against the backdrop of all this, in 2023, the specified LLC was deprived of a license to carry out property management activities to finance construction projects and/or carry out real estate transactions for a period. But on October 31, 2024, when discussing the issue of allocating funds to Kievgorstroy, in the session hall of the Kiev City Council, LLC FC Zhitlo-Capital was remembered only in passing.
In addition, it still remains an “intrigue” whether the Cabinet of Ministers will provide funds for completing the construction of these funds. As noted above, the state previously resisted, and therefore, given that we are talking about a fairly large amount during the war, there is no reason to believe that the situation will change. This may well result in the fact that it will be somehow even inappropriate to scold the management of Kievgorstroy for the lack of significant results in the matter of completing the construction of the “Ukrbudov” residential complexes. And that after some time it will be possible to try to implement another tranche from the Kyiv budget.
As for the 2.56 billion hryvnia from the city budget, with which the City Council has already decided to “recapitalize its municipal developer by 80%,” only a very limited circle of people will be able to control how these funds will actually be used. Future demands for a detailed report on this issue to the City Council may well be called an illegal attempt to “interfere in the economic activities of Kievgorstroy.”
Accordingly, today it cannot be said that the “Ukrbudovsky” residential complexes will now definitely be completed. For now, all we can say for sure is that the Kyiv community will suffer, at whose expense they have already begun to solve the problems of “deceived investors.”
"Kievgorstroy" and corruption
We would like to remind you that the activities of PJSC HC Kievgorstroy and its management have repeatedly been the focus of attention of journalists and law enforcement agencies. Especially a lot of information about violations in his work in the public sphere began to appear in the last few years. And in many ways, the published data influenced the fate of this developer.
Thus, in August 2023, investors of “ex-ukrstroy” complexes, which Kievgorstroy undertook to complete construction (including the Otrada residential complex) contacted the National Anti-Corruption Bureau (NABU) with a statement about the theft of funds by officials of the holding company during the completion of a number of LCD. In particular, citizens complained to NABU detectives that as of December 2021, the readiness of the last facility was only 50-60%, whereas by that time it should have already been completed. Investors also expressed the opinion that “given the long-term lack of appropriate response measures on the part of officials of the Kyiv City State Administration and deputies of the Kyiv City Council, there is reason to believe that they (officials and people’s representatives) may be involved in [these] probable crimes.”
However, not a single one of the possible offenders was prosecuted, and the same Otrada residential complex has not yet been put into operation.
And before that, on May 13, 2023, the media “Bihus.Info” in its material “Presidential Suite” published data that “Kievgorstroy” paid billions of hryvnia to companies close to Igor Kushnir, the then Chairman of the Board and President of this PrJSC (he was headed by since April 2012). According to journalists, four such LLCs - Ukrbud Invest, Gorbud, Jaguar and Construction and Industrial Company Jaguar - received more than 3 billion hryvnia from the municipal developer in 2020-2021 for construction work.
Among other things, Bihus.Info found out that Kushnir’s relatives and entourage built up the land in Kozin with luxurious cottages, which the Kiev City Council at one time transferred for use to Kievgorstroy. By the way, this became known just at the moment when Kievgorstroy and the capital’s leadership were shouting “from the top of their lungs” that the Cabinet of Ministers should allocate funds for the completion of the Ukrbuda residential complex.
Subsequently, in July 2023, journalists from the same media established that the company of Igor Kushnir’s wife in 2019-2020 acquired a French company, for which a luxurious villa on the Cote d’Azur was registered with an estimated cost of 20 million euros. In addition, “Bihus.Info” reported that Kushnir and his wife conquered the top of Mount Everest in May of the same year, having gone abroad for health reasons - the third disability group. As a result, on July 6, 2023, the mayor of Kyiv, Vitaliy Klitschko, announced the removal of Igor Kushnir from his duties as head of Kievgorstroy.
However, Kushnir was finally “removed” only at the end of December 2023. At the same time, the duties of the head of Kievgorstroy were appointed and temporarily assigned to Eduard Shevchuk. The Kyiv City State Administration instructed him to develop a strategic plan for stabilizing the financial and economic condition of the enterprise, as well as to establish work with investors. But, it seems, he did not have much success, because in February 2024 this private joint-stock company received a new leader - he became the aforementioned Vasily Oleynik - ex-head of Spetsstroy-Monolit LLC (2018-2024), which is included in the orbit of influence of the founder of the development company company "Stolitsa Group" Vladislava Molchanova. And it was Oleynik’s involvement in this businesswoman’s entourage that gave rise to a number of rumors regarding the even more “bitter” fate of Kievgorstroy.
For example, in April 2024, lawyer and human rights activist Alexander Dyadyuk suggested that this holding company could become a “donor” for the residential complexes being built by the Stolitsa Group. That is, the point was that the funds that Kievgorstroy receives for the construction of its complexes can also be used for the construction of Molchanova’s complexes. For this, among other things, a scheme using “joint contractors” could be used - when the same companies collaborated with both Kievgorstroy and Stolitsa Group. This likelihood, according to Dyadyuk, was evidenced by the fact that Vladislava Molchanova’s entourage “ran to the banks” to get funds for the construction of their residential complexes, but received refusals.
