Zelenskyy’s government sabotaged work of supervisory boards, contributing to growing corruption – The New York Times
The New York Times has published an investigation revealing how the Ukrainian government spent years obstructing the work of independent supervisory boards at state-owned enterprises, enabling corruption to flourish.
This was reported by Censor.NET with reference to ZN.ua.
Government interference in state-owned enterprises
When Russian forces invaded Ukraine, Kyiv’s Western partners faced a dilemma: how to invest billions in supporting the country while ensuring the funds would not be siphoned off by corrupt officials and executives of state-owned companies. The risks were high, as key sectors, energy supply, weapons procurement and nuclear power, were controlled by state enterprises long considered a source of enrichment for powerful insiders.
To safeguard financing, the United States and European countries required oversight. They compelled Ukraine to allow independent supervisory boards, groups of external experts responsible for monitoring spending, appointing executives and preventing corruption, NYT reporters note.
The reporters add that President Volodymyr Zelenskyy’s administration filled supervisory boards with loyal appointees and left several seats vacant. Kyiv’s leadership even amended company charters to limit oversight, preserving government control and allowing hundreds of millions of dollars to be spent without external scrutiny.
Supervisory boards serve a crucial oversight role, enabling independent experts, often from other countries, to thoroughly examine key decisions made by Ukrainian state-owned enterprises.
They also play a central role in the corruption scandal engulfing Zelenskyy’s administration. Anti-corruption agencies have accused members of his inner circle of embezzling and laundering $100 million from the state-owned nuclear power company Energoatom.
Zelenskyy’s administration blamed Energoatom’s supervisory board for failing to stop the corruption. But according to the newspaper, it was Zelenskyy’s own government that stripped the board of its powers.
In documents and interviews with about 20 Western and Ukrainian officials who either worked closely with company boards or served on them, the NYT uncovered political interference not only in Energoatom but also in the national energy operator Ukrenergo and the Ukrainian Defense Procurement Agency. Some sources spoke on condition of anonymity to discuss confidential matters.
A senior adviser to Zelenskyy declined to comment, saying supervisory boards fall outside the president’s mandate.
"European leaders privately criticised but reluctantly tolerated corruption in Ukraine for years, believing that supporting the fight against Russia’s invasion was paramount. So even as Ukraine undermined external oversight, European funds continued to flow," the reporters add.
Political interference in Energoatom’s supervisory board serves as an example of how Ukrainian leaders obstruct anti-corruption efforts. Zelenskyy’s administration delayed forming the board, and once it was finally created, the government left one seat vacant — limiting the board’s ability to act.
Had the supervisory board been functioning properly, it could have constrained what authorities now describe as widespread corruption. According to investigators, contractors working on Energoatom projects were required to pay kickbacks of up to 15%.
The scandal surrounding Energoatom has politically damaged Zelenskyy and weakened his arguments for Ukraine’s accession to the European Union and NATO, two institutions wary of admitting a new member plagued by corruption issues.
If Ukraine fails to curb corruption, Kyiv may also be denied the hundreds of billions needed for post-war reconstruction.
How the government asserted control over management
Volodymyr Kudrytskyi, former CEO of Ukrenergo, said Zelenskyy’s administration began interfering in the company’s operations several months before the full-scale invasion.
He recalled that in late 2021 he began receiving calls from Herman Halushchenko, then Ukraine’s energy minister. Halushchenko wanted Kudrytskyi to appoint individuals with limited energy-sector experience to senior positions.
"He started insisting. He began aggressively pushing me to appoint them," Kudrytskyi said.
Budgets of state companies like Ukrenergo have historically been prime targets for corrupt politicians, so Kudrytskyi suspected something was wrong. He said he managed to resist the pressure because he had the backing of the supervisory board.
Ukrenergo’s supervisory board consists of seven members who oversee key projects and senior appointments. The government formally establishes the board, but four of its members are selected from lists submitted by the EU and Western banks. The remaining three seats are held by representatives of the Ukrainian authorities. The principle is simple: independent oversight should outweigh government influence.
By late 2021, the term of Ukrenergo’s supervisory board was expiring. European and Ukrainian officials began meeting to determine the new composition. According to European officials now, they did not yet realise that the Ukrainian government had effectively seized control of the board, creating a model it would later apply to other state-owned companies.
The first signs that something was wrong appeared after the European Union, the World Bank and the European Bank for Reconstruction and Development submitted their lists of candidates.
Instead of selecting exclusively from these lists, Ukraine’s Ministry of Energy, led by Halushchenko, insisted that one seat be given to Roman Pionkovskyi, a Polish energy expert who had worked on consulting projects in Ukraine. Two officials said Pionkovskyi had undergone an interview for the position but scored too low to make the official shortlist.
Western officials were surprised but accepted Pionkovskyi’s candidacy as one of the four foreign experts. The new board was approved in December 2021.
Then Russia invaded. Ukrenergo soon came under relentless attacks targeting the energy grid.
"Under Kudrytskyi’s leadership, Ukrenergo carried out round-the-clock repairs, enabling the country to maintain power supply. The company also became a reliable partner for Western donors, who provided $1.7 billion in loans and grants during the first years of the war," the reporters note.
Soon after, government officials accused Kudrytskyi of failing to protect the energy infrastructure. Although he still had support from European partners, he faced pressure from Halushchenko, who sought to dismiss him.
This time, Kudrytskyi had no protection from the board. One foreign member resigned for personal reasons, and the government did not fill the vacancy, resulting in an even split between foreign experts and Ukrainian representatives.
Ordinarily, this balance would have been enough to shield Kudrytskyi from dismissal. But Pionkovskyi, the Polish expert, sided with the Ukrainian representatives and voted for his removal.
Pionkovskyi defended his independence, saying he had not followed instructions from Kyiv. He said he voted for the dismissal because Kudrytskyi had repeatedly misled management, though he provided no specifics.
Two other foreign board members resigned in protest, issuing a statement calling the dismissal "politically motivated."
But European donors, banks, national governments and international institutions financing Ukraine, did little in response. The Reconstruction Bank froze new payments to Ukrenergo but continued fulfilling existing commitments.
According to four European officials, no capital wanted to pull financial support and risk creating the impression that Europe was turning its back on Ukraine.
Kudrytskyi argued that none of this had anything to do with energy policy. He said the Ministry of Energy simply sought to make corruption easier and consequence-free.
Behind the scenes of the scandal
While Halushchenko was trying to assert control over Ukrenergo, he simultaneously pushed forward a major spending plan at Energoatom.
He sought to purchase two old, Russian-designed nuclear reactors from Bulgaria. Halushchenko wanted to transport them to a nuclear plant in western Ukraine, restore them, and connect them to the grid.
Energoatom expected Western partners to help finance this $600 million project.
Western donors and anti-corruption groups immediately criticised the proposal. In their view, the project bore all the hallmarks of wasteful spending at one of Ukraine’s most notoriously corruption-prone state companies.
The reactor deal was moving forward just as the Ukrainian government approved Energoatom’s first supervisory board. One of the newly appointed board members, British businessman Tim Stone, who had a background in finance and nuclear energy, planned to carry out an inspection of the reactors.
However, the Ukrainian government blocked the board’s contracts. Kyiv blamed disputes over compensation and insurance. But European officials and some Ukrainian lawmakers said they saw another motive.
"They understood that once the board began its work, they could lose control," said Oleksii Movchan, an MP from Zelenskyy’s party who advocated for independent supervisory boards.
While Energoatom’s board remained inactive, Ukrainian officials organised a kickback scheme inside the company worth $100 million, according to anti-corruption investigators.
On 12 December 2024, about a year after the board was supposed to begin work, ambassadors of Ukraine’s key allies — including the United States and the United Kingdom, urged the government to finally form the board.
"This is especially important as Energoatom considers major long-term financial investments and commitments," the letter obtained by the newspaper reads.
Before the supervisory board was fully formed, Stone decided to step down.
When Ukraine finally approved the board’s composition in January, Stone’s seat remained vacant, leaving the board evenly split — two foreign experts and two Ukrainian government representatives.
The reactor deal is currently frozen and is not part of the corruption investigation. But the board’s composition effectively left Energoatom powerless to prevent corruption: the company could not replace top managers, one of whom had been suspended as part of the bribery probe.
Rewriting the rules for defence procurement
More than a year into the war, following a scandal over inflated defence contracts, donors forced Kyiv to establish an independent agency to bring order to the arms procurement process.
However, since its launch in January 2024, the Defence Procurement Agency has spent at least $1 billion in European funds either with an incomplete supervisory board or with none at all.
Maryna Bezrukova, the agency’s first director, said the absence of a board during her first year in office left her vulnerable to pressure from Zelenskyy’s administration. According to her, the Ministry of Defence pushed her to approve questionable contracts, including with a state-owned weapons plant that was unable to effectively produce mortar rounds.
Under pressure, she signed the documents. Many of the shells failed to function, sparking public outrage in autumn 2024.
The Ministry of Defence blamed Bezrukova for failing to deliver weapons to the frontline on time. But a decision on her dismissal was to be made by the supervisory board, which finally convened in December last year.
Ahead of the board’s first meeting, the Ministry of Defence rewrote the agency’s statute, granting itself the authority to appoint and dismiss the agency’s director. The board protested the interference and extended Bezrukova’s contract for another year.
Zelenskyy’s administration did not stop there. When a foreign expert stepped down, leaving two foreign and two government-appointed members on the board, officials seized the moment. Two government representatives were dismissed, depriving the board of a quorum.
Authority was transferred to the Ministry of Defence, and Bezrukova was removed earlier this year.
"Supervisory boards are just a façade. They are not real," she said in an interview.
The government's move against the Defence Procurement Agency coincided with Donald Trump’s return to power and Washington’s gradual pullback from the war. This shift, European officials said, emboldened Ukrainian authorities to roll back anti-corruption safeguards.
Zelenskyy’s administration quietly consolidated control by rewriting the statutes of state-owned companies, including Ukrenergo, to grant itself new powers or change voting procedures. The government also attempted, unsuccessfully, to strip anti-corruption bodies of their authority when they were investigating Energoatom.
With the United States stepping back, Europe has been forced to confront corruption in Kyiv on its own. A spokesperson for the European Union said officials had been pressing Ukraine to reform its state-owned enterprises. She added that there was no evidence EU funds had been misused.
