High Ranking Ukraine Officials Accused of Embezzling Funds Worth 62.5 Million Allocated for Humanitarian Aid During War

On August 23, 2023, Ukraine’s National Anti-Corruption Bureau (NABU) and the Specialized Anti-Corruption Prosecutor’s Office (SAPO) exposed a scheme involving the embezzlement of UAH 62.5 million during Ukrzaliznytsia’s (Ukrainian Railways) procurement of food supplies amidst the ongoing conflict with Russia.

Ukrzaliznytsia is the state-owned national railway company of Ukraine. It is one of the largest railway operators in Europe by network size and annual freight and passenger throughput.

The scheme implicates both former and current high-ranking officials.

• The first deputy minister of agrarian policy and food is under investigation.
• The former deputy minister of economics is also being probed

“In March 2022, due to the full-scale invasion by the russian federation, a need emerged to procure food products to meet the urgent needs of the country under wartime conditions,” according to the press release.

“The first deputy minister of agrarian policy and food implemented a scheme that involved the purchase of products for regional military administrations at inflated prices from a selected company (LLC 1), at Ukrzaliznytsia’s expense. This company then procured products at market prices from a foreign manufacturer (Poland) through a controlled intermediary firm linked by family ties to the head of LLC 1, while the cost per kilogram of products was artificially increased by approximately 150% (from UAH 30 to UAH 75),” according to NABU.

The high-ranking official manipulated his position to approve payment invoices and transfer the overcharged funds to LLC 1’s account. Despite being aware of the actual market value and the availability of local manufacturers, the official deliberately sidestepped these options. As a result, Ukrzaliznytsia overpaid LLC 1 by more than UAH 28.8 million, including VAT, between March and August 2022.

During the same period, a second scheme was orchestrated involving another company, LLC 2. This time, food products were procured from Turkey, also at inflated prices. A similar markup of nearly 100% per kilogram was observed. The then deputy minister of economics was also implicated for suppressing information on more economical options from other market players, including local manufacturers.

Ukrzaliznytsia ended up overpaying an additional UAH 33.7 million for these inflated procurements. The ill-gotten funds were eventually funneled to a suspicious foreign entity for alleged money laundering.

“Draft records outlining the distribution of the ill-gotten gains were discovered during a search at a scheme participant’s place,” according to NABU.

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