Hlynianas and Ivaniushchenkos forever: who and what prevents food reform for army
Last week, the State Logistics Operator announced a repeat tender under a shortened procedure for the purchase of food for the army. This happened after the DOT (State Logistics Operator) was forced to cancel the previous tender on February 22 following a ruling by the Sixth Administrative Court of Appeal in Kyiv.
As the launch of the new procedure continues to be accompanied by manipulative articles about the DOT allegedly trying to hold retail tenders, as well as statements that the food procurement reform could lead to soldiers going hungry, it will be necessary to explain once again why this reform has become necessary and discussed.
As you know, in early 2023, Yurii Nikolov published an article stating that the Ministry of Defence could purchase eggs for 17 hryvnias. This was the price they were listed at in the catalogue of the Active Company, a company owned by Tetiana Hlyniana's group.
As a result of public outrage, the Verkhovna Rada adopted amendments to the law, and the Defense Ministry was forced to return food procurement to Prozorro in May. Prior to that, several meetings were held with retailers, and it became clear that they would not participate in the tenders. However, as part of those discussions, an idea arose to change the supply market, which would improve the situation for both the army and the state.
It was about separate purchases of food groups (meat, cereals, milk, water, etc.) from producers and logistics services. This is the idea of the reform that will be presented in December by the State Logistics Operator, which in the spring was only an idea, as there was no Cabinet resolution on its creation.
The first food tender saved the state budget UAH 3.8 billion. In total, the introduction of defense procurement to Prozorro saved 8 billion hryvnias.
Everything seems to be going well. Well, retail didn't work out, what's up with that. The companies from Hlyniana's, Ivaniushchenko's or Adamovskyi's group remained, letting them do their own business.
But then things began to emerge that showed that this was not the best way of existence after all.
The Accounting Chamber's report showed that integrator companies did not supply goods to military units themselves (their contractors did). At the same time, the prices were much higher than the procurement prices.
For example, VT DEVELOPMENT LLC, which also belongs to the Hrynkevych family, bought a group of dairy products from MO LK OM LLC.
An audit by the Accounting Chamber found that sour cream with a 15-20% fat content was purchased at UAH 87.09 per kg and delivered at UAH 144.0 per kg, which is UAH 56.91 or 39.52% more expensive. Ultra-pasteurized milk 2.5% was purchased at 33.00 UAH/kg and delivered at 45 UAH/kg, which is 12.0 UAH/kg (26.67%) more expensive.
Let me remind you that in the spring of 2022, during the most horrific months of the war, Premium Company LLC (owned by Tetiana Hlyniana's group) and Viiskservis volonter LLC (its main competitor) raised water prices from UAH 8 to UAH 15.
Instead, at the last tender, the Ministry of Defense bought water directly from Obolon for 3.90 UAH.
Having a large margin, the supplying companies did not hesitate to avoid paying their contractors.
In January, the Public Anti-Corruption Council at the Ministry of Defense received a letter from an intermediary company to which the Hrynkevych group had not paid 5 million for the products supplied.
On February 14, the National Anti-Corruption Bureau confirmed the existence of a corruption scheme in the procurement of food by the Defense Ministry.
In January, the Public Anti-Corruption Council at the Ministry of Defence received a letter from an intermediary company to which the Hrynkevych group had not paid 5 million for the products supplied.
On 14 February, the National Anti-Corruption Bureau confirmed the existence of a corruption scheme in the Ministry of Defence's food procurement.
"The National Bureau's detectives confirmed the existence of a corruption scheme that allows for significantly inflated prices for certain categories of products. Thus, unscrupulous suppliers receive excessive profits and actually profit from the army during the full-scale aggression of Russia," the statement said.
"The use of the existing procurement system allows suppliers to abuse during the prices formation for popular product groups: eggs are sold at a premium, and salmon or blueberries, which are not seen in the military's food ration, are sold at prices several times lower than market prices," the NABU noted.
Usually, such abuses occurred at the level of writing off daily allowance for one soldier's food. Because the Ministry pays the company for a set of meals (approximately UAH 110 or 146), and then out of that UAH 146, they simply pay for a specific product. For example, tomatoes for UAH 151, which were in a direct contract with one of the companies.
At the same time, no one actually supplies the entire catalog. It simply creates a convenient framework. The most used products from the catalog are only 26 items, which is 6% of the assortment. At the same time, these 26 items account for more than 80% of the total volume of deliveries and up to 75% of the cost of the service.
But this is not all abuse.
A month ago, inspections headed by Deputy Minister Polovenko found shortages of a number of units from Trade Granit Invest worth more than UAH 10 million. The units were then transferred to other suppliers.
"And now I'll tell you the worst part: a week later, some of them began to assure us that they had already received everything," a representative of the Ministry of Defence told the author on condition of anonymity.
The fact that most money is stolen at the level of cooperation between individual units and suppliers has been reported to the Public Anti-Corruption Council under the Ministry of Defense before, but now it has also been documented by a specific SBI investigation.
For example, in the register of court decisions, one can find a ruling that refers to an investigation that revealed a criminal scheme by the head of the flight canteen of one of the military units, who, with the help of several other servicemen, misappropriated the property of the Ministry of Defense.
First, the chief instructed the cook to "issue 30% less food to the canteen than the amount indicated in the primary accounting documents."
In fact, this meant that the portion of food provided to the military in the military units became one-third smaller. The "saved" food was then sold for money.
In particular, the military sold 60 kg of sugar, 15 kg of pasta, 4 bags of frozen hake weighing almost 60 kg, 110 kg of frozen pork, almost 30 kg of broiler thighs, 20 cans of tomato paste and other products.
But later, the newly-minted businessmen, according by the case file, decided that oversupply was dangerous, so they "improved" the scheme.
As a result, the organizer of the scheme "decided to organize an illegal scheme, which consisted in their (food products - ed.) repeated accounting posting on the basis of fictitious primary accounting documents on their alleged supply to the military unit of Active Company LLC, which at that time supplied food products to military unit NUMBER_1 on the basis of the Agreement No. 286/2/22/75 of 23.12.2022 concluded with the Ministry of Defense of Ukraine," the court ruling says.
This is the same contract that originally provided for 17 eggs each.
"According to the agreement, the forged consolidated acts were to be submitted to the Ministry of Defense of Ukraine by an unidentified official of Active Company LLC for payment, and the funds illegally received by Active Company LLC in this way were to be distributed among the group members," the pre-trial investigation materials indicate.
As a result, only during June-July 2023, false expenditure and stock delivery notes were issued for the supply of Active Company LLC to a military unit for a total amount of UAH 1,393,170.89.
UAH 1.3 million in one unit, in one month.
In November, the Ministry of Defense paid Acts Company under the contract. After that, an "unidentified person" withdrew the funds from the accounts and distributed them among the members of the criminal group.
If you think that the scheme stopped after that, it did not. In July, a representative of Grand Consult LLC was involved in the scheme. Why did this happen? It was simply that Grand Consult LLC won the same region and parts that Active Company had previously served.
But that's not all, for some reason, only two companies from the Hlyniana group took part in that tender. Other companies did not apply for this lot, which makes us think that there is collusion between participants in the market of food supply for the army. As a result, Grand Consult received the highest price for the daily allowance for one soldier's food at that time - UAH 147.
And according to the investigation, between August and November 2023, UAH 4.042 million was stolen from the same unit, now through the accounts of Grand Consult LLC.
In December 2023 - January 2024, the SBI served the defendants with suspicions. They were placed under house arrest. However, the heads of Active Company and Grand Consult are currently being held as witnesses in the case.
Andrii Zhosan - Head of Grand Consult
The above seems to be enough to understand why the supply of food to the army needs to be reformed.
Some water purchases also only confirmed the correctness of this step.
In the fall, the Ministry of Agrarian Policy held a meeting with business representatives, including members of the Public Anti-Corruption Council of the Ministry of Defense, where producers literally screamed about their desire to supply the Ministry of Defense directly. First of all, bread producers.
But for some reason, the Ministry refused to make separate purchases of bread in the fall. Although even the Logistics Forces Command seemed to be okay with it.
In December, the DOT presented a draft procurement reform in the presence of Minister Rustem Umierov and the then Commander-in-Chief of the Armed Forces of Ukraine Valerii Zaluzhnyi.
But in January, it became clear that the reform would not be launched. This happened just within two meetings, the protocol of which was previously reported by Censor.NET.
After Borys Dvali left the ministry and Vitalii Polovenko became deputy minister, the "let's reform" dynamic changed to "let's be careful". In addition, at the time of the presentation of the State Logistics Operator, the faces of the representatives of the Logistics Forces Command showed that they were better off not changing anything.
As a result, by the end of January, the reformed framework for procurement by the DOT of certain food groups was curtailed, and tenders were announced under the old system with the daily allowance for one soldier's food and catalog. But with new criteria.
It is against these criteria - the availability of 15 warehouses, equipment that serves them, and a cash register or a software cash register - that the current suppliers of the Ministry of Defense rebelled.
A week before the announcement of the tender results, a massive campaign was launched on Facebook and telegram channels that the head of the DOT, Arsen Zhumadilov, had set conditions for retailers.
The Ministry did hold another meeting with retailers beforehand, and it became clear that they would not participate in the tender. This is because they do not understand the volume of orders for a particular type of product and it is difficult for them to purchase the entire range of 409 items in advance.
Instead, all the old market participants participated in the tenders. Moreover, despite the fact that they called the availability of cash registers a discriminatory condition, they received them. For example, Hlyniana's company did so on February 16.
However, on the eve of the tender opening, the Sixth Kyiv Court of Appeal recognized the qualification criteria from the DOT as discriminatory. Although the court of first instance believed that the determination of qualification criteria was the discretion of the DOT.
Who made the decision on February 21? It was Judge Volodymyr Kuzmenko, a judge of Maidan... He also appeared on Pavlo Vovk's tapes, where the former head of the Kyiv District Administrative Court called Kuzmenko "ours" in a conversation about getting the appellate judges off.
Another judge is Yaroslav Vasylenko. According to Skhemy (Schemes), Vasylenko, a judge of the Sixth Administrative Court of Appeal, has made 25 trips to Crimea since the beginning of its occupation by Russia and has undeclared apartments on the Black Sea in Sevastopol registered in his wife's name, which she has owned since 2020 using her passport as a citizen of the Russian Federation.
"At the same time, the judge does not indicate in his declaration either his wife's Crimean property or her Russian citizenship. In addition, the judge's family owns real estate in Moscow, which is also not reflected in Vasylenko's property declaration," the investigation said.
According to Slidstvo.info, the third judge in the ruling, Olena Hanechko, previously refused to disclose in her declaration the income and assets of her husband, who is a Kyiv lawyer, Ihor Parubochyi. Although his name and phone number appeared in a commercial ad for the sale of a luxury Porsche Cayenne SUV and a $300,000 house.
As a result, DOT canceled the tenders for 11 lots on the evening of February 22.
Last week, the tender was re-announced, without the criteria removed by the Sixth Court of Appeal. However, the Defense Ministry's suppliers are still dissatisfied. Now they don't like the amount of fines for undelivered products.
But that's not the worst of it. At the moment, it seems that the old suppliers have completely outplayed the leadership of the Ministry of Defense. In particular, at the expense of their people inside the Ministry of Defense.
Why? There is almost no chance that new suppliers will appear on the list. Most likely, the food suppliers will get the conditions through the courts, where they have to have one warehouse per 500 meters, and that's it. And a minimum cash deposit.
The transition to separate procurement of food groups and logistics has been postponed to the fourth quarter of 2024. And that's just as an idea.
Before that, an experiment with such a supply system will be conducted in one region. And it is likely to end with a negative result.
Currently, the key to the future of food procurement reform lies at the bottom of - whether the DOT will be allowed to collect applications from units and redistribute food itself. In this way, the DOT will be able to break down the middle-level corruption that is so difficult to catch on the ground. (Read again the materials of the criminal proceedings against Hlyniana's companies).
But now this opportunity for DOT is also under threat.
What's next? According to the author and her interlocutors, there is a high probability that the head of the DOT will be filed away in storage by the failure to procure food. This campaign is already being joined by suppliers of goods, who are also not happy with the fact that their conditions are being changed and monopolies are being destroyed.
Then, as an option, they will try to replace Zhumadilov with a more loyal to the suppliers (and publicly known person) or annihilate the DOT at all, under the excuse that it takes too much money with a dubious result.
But there is also a maximum threat that the entire team of the ministry could be fired as a result of the scandals. Right now, it is trying very hard to avoid public criticism, and in this it is very vulnerable.
Tetiana Nikolaienko, Censor. NET
