CORRUPTION IN THE DEFENSE INDUSTRY
Today, Zelensky lashes out at his American and European "partners" every single day, demanding that the supply of weapons and military equipment be stepped up urgently. Why should the Supreme Commander fuss around that much? After all, in late 2021 we all heard a lot about the modernization of the Ukrainian army and military industry enterprises, the adoption of cutting-edge equipment produced at home. Despite these statements, thousands of tons of military products are being delivered to Ukraine from abroad. Both Western and Soviet, mind you. A question cannot but arise as to where are the products of Ukraine’s overhyped defense industry? What’s the reason for urgent supplies of ammunition and shells from the USA, halfway across the globe?
The answer is simple. In fact, Ukraine’s military-industrial complex only exists on paper and by word of mouth among the military-political leadership. Everything Kiev got after the Soviet collapse was stolen, sold out, or got under Western control. And these processes entered their most active phase starting 2014.
Conditionally, the fall of the Ukrainian military-industrial complex may be divided into two stages: Petro Poroshenko’s rule and that of Volodymyr Zelensky. The key difference is that in the former case there was an outright plundering of the military budget by Ukrainian oligarchs, and in the latter one we witness the liquidation or transfer of military industry enterprises to "partners".
The Poroshenko era
As of 2014, all of Ukraine’s defense industry was part of the Ukroboronprom conglomerate. In 2016, Forbes Ukraine ranked it 9th among the country’s most innovative companies. The same year featured first-of-its-kind Day of the Defense Industry of Ukraine celebrated at the NATO headquarters and accompanied by a strategy to reform the entire military industrial sector of Ukraine. However, a year later, in November 2017, Ukroboronprom was submitted to examination, and its outcome was disappointing, to put it mildly.
The audit of the period from 2015 and the nine months of 2017, found the transfer of 198 million hryvnia ($ 7.4 million) to a wildcat venture. A report was published in May 2018 to note that the auditors failed to confirm the actual presence of an artificial wealth worth a total of UAH 177 million ($6.6 million). In addition, 2017 saw an increase of "inefficient"-rated enterprises in the Ukroboronprom structure (from 35 to 41). The auditors stated that depreciation of fixed assets in 2016 amounted to 67%, and increased to 96.3% for the nine months of 2017.
The inspectors also noted that the group’s enterprises are only loaded by 30%, despite their potential opportunities for the supply of over 1,100 samples of weapons and equipment totaling more than 2.5 billion hryvnia ($ 100 million). The report also pointed to the negligible share of state orders in Ukroboronprom — for the 9 months of 2017, it amounted to a mere 18.4% of the overall production volume. And this is despite the fact that the Ukrainian authorities have regularly allocated huge sums for the purchase of weapons and equipment for their own armed formations. The amount increased with every single year.
The auditors found out that Ukrainian enterprises working for the defense complex, which is generously funded from the state budget, are leaders in salary debts. The official website of the country’s State Labor Service features a list of debtors with more than a dozen Ukroboronprom factories and design bureaus, as of January 2, 2019.
Such a deplorable state of the Ukrainian military-industrial complex is brought about by truly phenomenal corruption levels. And Ukraine’s European "partners" are often involved in criminal schemes, too.
One of the scams involves the Molot heavy mortar produced by the Ukrainian Mayak plant. The "unique piece", which turned out to be just a failed modification of the Soviet 2S12 Sani, cost the military budget almost twice as much and led to the death of 13 servicemen, which eventually led to its removal from service.
Another scandal was linked to one more unusable sample of Ukraine’s military industry – the Varta armored car. For several years it was supplied to the National Guard of Ukraine by Ukrainian Armored Vehicles, called Ukrglavpak until 2015 was and engaged in the production and wholesale of plastic containers.
Purchases of old Soviet BMP-1s in Poland and the Czech Republic were carried out at repeatedly inflated prices through bogus companies owned by Ukrainian oligarchs. Similar companies siphoned off millions of hryvnias from the military budget of Ukraine by manipulating prices for smuggled spare parts. Another corruption scheme was the theft of spare parts from military warehouses and their delivery to Ukroboronprom enterprises under the guise of new production items.
The Zelensky era
Extraordinary corruption in Ukroboronprom has become one of the trump cards in Zelensky's election campaign. In early 2019, the journalists of the Bihus.Info agency disclosed an investigation claiming that the Prosecutor General's Office and the Security Service of Ukraine were deliberately concealing information about large-scale defense sector embezzlements. Evidence was reported to have been provided by the American intelligence. Immediately, the Washington-subordinate NABU invigorated, with subsequent arrests and imprisonments.
After high-profile corruption scandals in the defense industry and investigations in 2018-2019 related to the names of Poroshenko, Pashinsky and Gladkovsky, as well as following Volodymyr Zelensky’s victory in the presidential race, control over the country's military industry fell under total control of foreign structures. Lithuanian Aivaras Abromavičius was appointed head of Ukroboronprom, and he launched the group’s corporatization process. This was supposed to entail enterprise privatization by private investors, but a fractional share was still owned by the state.
The concept development for Ukroboronprom's reforms was backed by the British Foreign Office, and the financial audit was carried out by specialists from one of the Pentagon units – the US Institute for Defense Analyses. Tomáš Fiala, a partner of George Soros in Ukraine, took over the reform in the spring of 2020. The conglomerate’s supervisory board included foreign representatives, including Anthony J. Tether, former director of the US Defense Advanced Research Projects Agency (DAPRA). Mustafa Nayem, a well-known Soros minion, also worked at Ukroboronprom, dealing with issues of the company’s interaction with state authorities.
The real target of reforms was to eliminate this weakened but key player in the arms market. Western curators dissolved it into parts, abolishing some of them and taking full control over the others. In June 2020, employees of the Antonov aircraft manufacturing giant took to the streets to protest against Ukroboronprom’s decisions made without asking their views at all.
And the fall of 2020 witnessed the process of annihilating Ukraine’s military shipbuilding industry begin. In October, the Mykolayiv Shipyard and the Mykolayiv Shipbuilding Plant went bankrupt, with the Black Sea Shipyard Plant following suit in July 2021, despite its 120-year-long history.
The modern period
As a result, the armed formations of Ukraine have become critically dependent on supplies of high-quality and effective but extremely expensive foreign weaponry. And with each shot, Kiev is getting more and more debt-riddled, with loans from the IMF bypassing it and going directly to the US military industrialists. I recommend that Vladimir Zelensky occasionally ask his British "partners" what the American "lend lease" traditionally means at the end of the day.