«Eggs for ₴17 for the military»: NABU uncovers scheme to embezzle over ₴733 million in public funds

NABU uncovered a scheme to embezzle over ₴733 million in public funds. Photo: NABU

Law enforcement officers have exposed a scheme to embezzle public funds when the Ministry of Defence procured products for the Armed Forces of Ukraine during a full-scale invasion.

This was reported by the National Anti-Corruption Bureau (NABU).

The agency did not specify the names of the suspects, but ZN.UA noted that they are the former head of the Ministry of Defence's department for the supply of the Armed Forces, Bohdan Khmelnytskyi, and the owner of related supply companies, Tetiana Hlyniana.

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In addition, two heads of the supplying companies and an individual were notified of suspicion — their names are unknown. ZN.UA writes that NABU is also investigating the role of former Deputy Defence Minister Viacheslav Shapovalov and former Defence Minister Oleksii Rieznikov.

The case is being investigated under articles on embezzlement, attempted embezzlement and money laundering.

The investigation found that in the period 2022-2023, the army was supplied with food through the purchase of food packages, which provided for the possibility of ordering food from a special catalogue that included 409 items. The main products that were frequently ordered were vegetables, cereals, meat and water, which accounted for only 10% of the total range. Other products, such as spices, gelatin or berries, were rarely ordered or not ordered at all.

The price of the kit was based on the average cost of all the products in the catalogue. This gave suppliers the opportunity to manipulate prices: to inflate them for popular products and reduce them for less popular ones or those that could not be ordered due to seasonal restrictions (for example, cherries or apricots in winter). There did not appear to be any irregularities and the price of the package remained constant. However, potatoes, which were supplied in thousands of tonnes, were sold at inflated prices, while seasonal berries and fruits, which were hardly ever ordered, were much cheaper.

As a result of these frauds, between August and December 2022, two supplying companies controlled by the same owner illegally received excess profits of over 733 million hryvnias.

Part of these funds were later withdrawn under the guise of paying dividends and providing repayable financial assistance to related companies. This money, in particular, could have been used by the owner of the companies to purchase hotels in Croatia and other real estate.

The businesswoman was assisted by an official of the Ministry of Defence of Ukraine, who «did not notice» price anomalies in the catalogue when signing the contracts.

After the pre-trial investigation was launched in January 2023 and the relevant information was disseminated in the media, including the purchase of eggs at 17 hryvnias per piece, the accomplices in the fraud reduced the prices of 11 of the most popular products. This prevented the embezzlement of budget funds in the amount of 788 million hryvnias.

As a reminder, law enforcement officers have completed an investigation into the former director of the Department for Civil Protection and Defence of the Kherson Regional State Administration, who purchased low-quality clothing for the military.