Ukrainian mass media have recently published 87 pages sent by Prosecutor General’s Office of Ukraine (the PGO) to the National Anti-Corruption Bureau of Ukraine (the NABU) in March 2017. In this regard, we want to clarify the context and the key points of their content in order to prevent manipulation and distortion of information.
The main part of the correspondence in those 87 pages concerns investigations as of the facts of illegal activities of companies controlled by two Members of Parliament of Ukraine (MPs). They deal with the facts of embezzlement of over 300 million cubic meters of natural gas (criminal proceedings No. 52016000000000479 dated 12.12.2016) and one of the episodes of public funds embezzlement of PJSC “Ukrzaliznytsia” (No. 52016000000000089 dated March 31, 2016).
In the first case, the officials and informal curators of the LLC “Enerhiya-Novyj Rozdil” and the LLC “Enerhia-Novoyavorivsk” are brought to criminal responsibility. The beneficiaries of the mentioned companies are two Members of Parliament (one of them is the Chairman of the Transport Committee of Verkhovna Rada). The pre-trial investigation in this case is completed, the defence had been granted access to the materials, after that they will be sent to court. The established amount of losses - 1.4 billion UAH. In this proceeding, two combined heat and power (CHP) plants, de facto owned by the Members of Parliament and used by their subordinates to commit a crime, were seized. The CHPs plants were handed over of the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (the ARMA).
In the second criminal proceeding (as of the facts of public funds embezzlement of PJSC “Ukrzaliznytsia”), the case as of two persons was sent to court.
In total, the NABU Detectives within these two criminal proceedings prosecuted 15 people. The total amount of damage due to the corruption exposed by the NABU Detectives within these investigations exceeds 1.5 billion UAH.
No. 52016000000000479 dated 12.12.2016 — criminal proceeding as of the facts of embezzlement of over 300 million cubic meters of natural gas of National Joint-Stock Company (NJSC) “Naftogaz of Ukraine”. The investigation revealed that during 2013-2015 illegal actions of the officials of the LLC “Enerhiya-Novyj Rozdil” and the LLC “Enerhia-Novoyavorivsk” caused 1.4 billion UAH losses to the “Naftogaz of Ukraine”. Part 5 of Article 191 of the Criminal Code of Ukraine stipulates the punishment for this crime.
The beneficiaries of the LLC “Enerhiya-Novyj Rozdil” and the LLC “Enerhia-Novoyavorivsk” are two Members of Parliament. As the NABU Detectives established, more than 90% of the funds received from the sale of illegally obtained preferential natural gas were transferred in the form of payment for goods (works, services), and were not actually deposited on the accounts of the LLC “Corporation KRT”, whose beneficiary owners are the mentioned MPs (who are also close relatives). Later the funds from the accounts of the LLC “Corporation KRT” were transferred to the accounts of a number of firms with signs of fictitiousness.
No. 52016000000000089 dated 31.03.2016 — criminal proceeding as of the facts of embezzlement of public funds of the PJSC “Ukrzaliznytsia” in particularly large amounts by officials of the LLC “Corporation KRT”, the LLC “Argo", the LLC “Exposition” by abuse of office and prior conspiracy with the employees of the PJSC “Ukrzaliznytsia”. Part 5 of Article 191 and part 2 of Article 364 of the Criminal Code of Ukraine, stipulates the punishment for this crime.
As established by the NABU Detectives, the LLC “Expozytsia” together with artificially created technical competitor, PE “Euroosnova-SM”, were used by their supervisors to actually promote the products of the LLC “Corporation KRT” in open competitive bidding at the PJSC “Ukrzaliznytsia” at substantially inflated prices. Thus, these related bidders violated law- prohibited manipulation of competition on public procurement, which distorted the auction results. In addition, the role of the LLC “Argo” was established. Its owner is referred to in correspondence as “Edik”. The LLC suppled products to the PJSC “Ukrzaliznytsia” at inflated prices, which were not manufactured by the LLC “Corporation KRT”. They used a similar illegal mechanism with artificial competition, distortion of bidding, discriminatory conditions and abuse of office.
What actually happened?
During 2015-2017, the then First Deputy Head of the Branch "Production Support Centre" of the PJSC “Ukrzaliznytsia” (referred to in correspondence as “Edik”), together with the Member of Parliament — the Chairman of the Transport Committee of Verkhovna Rada, whom he assisted, organized a corruption scheme. Through controlled intermediary enterprises, they supplied railway products at inflated prices to the “Ukrzaliznytsia”. That caused more than 200 million UAH losses.
When the NABU Detectives began to investigate these facts actively, “Edik” got nervous and started to look for ways to “have a deal” with the NABU. At the end of 2016, “Edik” learned that his acquaintance, an employee of the Security Service of Ukraine (the SSU) (referred to in correspondence as “Dima M”), had been in contact with businessperson Andriy Rogoza (referred to as “RAN”). The latter, in turn, had friendly relations with a person allegedly having ties with the National Anti-Corruption Bureau of Ukraine (referred to as “Zhenya Shevchenko”).
“Edik” asked the SSU employee (“Dima M”) to help him establish contact with the NABU representatives, authorized to make decisions in criminal proceedings that affected the interests of “Edik” and his patron. As correspondence shows, he promised to pay well for such kind of help.
Having received the promise of generous payment for intermediary services, “Dima M” discussed details with Andriy Rogoza. After that, Rogoza went to his friend Yevhen (Zhenya) Shevchenko, and said that “Edik” got in contact with him, through third parties, representing the interests of the Member of Parliament. “Edik” sought to terminate all criminal proceedings, which involved the LCC “Corporation KRT”, the ultimate beneficiary of which is the Member of Parliament. The “price”, as can be seen in the correspondence, was as follows: 0.5-1 million USD for termination of criminal proceedings as of “Ukrzaliznytsia” (No. 52016000000000089), 2-2.5 million USD for termination of criminal proceedings as of natural gas embezzlement at two CHP plants (No. 52016000000000479).
After that, Yevhen Shevchenko turned to the NABU Detectives and reported on the proposal, which he received from “Edik”. Yevhen was convinced that it could help establish the fact of involvement of this person and the MP not only in the criminal schemes of public funds embezzlement of the PJSC “Ukrzaliznytsia”, but also a possible direct offer of improper advantage to the NABU official, which is a criminal offense (Article 369 of the Criminal Code Ukraine).
The detectives of the National Bureau decided to take advantage of this opportunity. Under the procedural guidance of the prosecutors of the Specialized Anti-Corruption Prosecutor's Office (the SAPO) they received permissions of the Kyiv Court of Appeal for conducting secret (undercover) investigatory activities. Yevhen Shevchenko was voluntarily recruited in the undercover activities in accordance with the procedure stipulated in part 1 of Article 275 of the Criminal Procedure Code of Ukraine and part 12, clause 1 of Article 17 of the Law of Ukraine “On the National Anti-Corruption Bureau of Ukraine”. They lasted for almost half a year – from November 2016 till April 2017. During this time, Yevhen Shevchenko had two meetings with “Edik”, which were properly documented. Relevant records are attached to the materials of criminal proceedings.
Andriy Rogoza and “Edik” thought that Yevhen Shevchenko was close to the NABU leadership and believed that he would be able to influence decision making. This was a legend employed by Yevhen and the NABU Detectives in the interests of the investigation to obtain facts of illegal activity.
Yevhen was informed of the well-known (publicly available) circumstances of criminal proceedings, which were of interest to “Edik”: description of the scheme of the crime, the amount of the established damage, ways of mitigating criminal liability in the case of assistance in disclosing the crime, reimbursement of damage, recognition of guilt etc. Without awareness of these issues, it would be impossible to maintain a dialogue with Edik.
During the meeting, Andriy Rogoza, who is the ultimate beneficiary of the LLC “Optimumspetsdetal”, informed Yevhen Shevchenko that his company is investigated by the NABU Detectives, among the others, as a part of investigation of criminal proceeding as of the facts of funds embezzlement of the State Enterprise “Kharkiv Armoured Plant”. He asked Yevhen Shevchenko to introduce him to one of the Detectives who investigates the case in order to give him information about the allegedly legitimate nature of his company's activities and to report “real” facts of the illegal activities of the enterprises of the State Concern “Ukroboronprom” that he was aware of. This was granted to support the legend of Yevhen Shevchenko, as well as for the sake of obtaining information from Andriy Rogoza on corruption in the activities of the enterprises of the “Ukroboronprom”.
However, after the first meeting, “Edik” had realized that the ways of solving problems described by Yevhen Shevchenko were publicly accessible in the framework of the criminal process, and they did not meet his and the MP’s expectations to avoid criminal responsibility for the committed crimes. Therefore, he decided to push for the termination of the criminal proceedings, and according to his plan, “RAN” and “Dima M” were to find the NABU employees who were supposed to be more “constructive”.
Judging from the published correspondence, the appetites of “Edik” irritated “RAN” and “Dima M”. It provoked lively discussions between them, in which “RAN” resorted to non-existent conjectures and an arbitrary interpretation of events, in order to convince “Dima M”, as well as “Edik” and the Member of Parliament, in his own ability to achieve the desired result. Moreover, the content of the correspondence, especially the final parts, shows the fact that “RAN”, under the guise of “prepayment”, received improper advantage for himself, while informing “Dima M” that funds were transferred to representatives of the National Bureau.
However, if we compare the content of the correspondence between “RAN” and “Dima M” and between “RAN” and Yevhen Shevchenko, one can easily notice: receiving criticism from “Dima M” that “efforts are not likely to succeed” and demands to return the “advance” and agreeing with such requirements, RAN, at the same time, does not make similar claims to Yevhen. This indicates that there was no actual transfer of any improper advantage to the employees of the National Bureau.
At some point, “Edik” apparently suspected something (his previous experience of operative work at the SSU played its role) or lost his trust in the ability of Yevhen Shevchenko to “solve the problem”, so he stopped initiating them.
Information collected during the meetings between Yevhen Shevchenko and “Edik” during authorized investigative actions, has become an important part of the evidence for a number of criminal proceedings investigated by the NABU. Due to the conducted undercover activities, the NABU collected enough evidence to give a notice of suspicion to “Edik” (ex-first deputy Head of the Branch of the Center for the Provision of Production of the PJSC “Ukrzaliznytsia”). He is suspected of committing a crime under part 3 of Article 27, part 2 of Article 28, part 1 of Article 205 and parts 2,3 of Article 27, part 5 of Article 191 of the Criminal Code of Ukraine. He was detained and the court chose a preventive measure in a form of 5 million UAH bail for him.
These materials, among others, became the basis for preparing a submission to deprive of deputy’s immunity the Chairman of the Transport Committee of Verkhovna Rada (currently, the SAPO eliminates shortcomings in the submission for further re-sending it to the GPO).
Apart from “Edik”, the management of the plant producing the railway equipment, the founder-director of a fictitious company-winner of bids (the LLC “Argo”), the director of the intermediary company (the LLC “Corporation KRT”), were brought to criminal liability for the involvement in the more than 93 million UAH embezzlement.
During the meetings, Yevhen managed to find out connections of “Edik” with the following companies: the LLC “Corporation KRT”, the LLC “Argo”, the LLC “Expozytsia”, the LLC “Euroosnova-SM”, involved in criminal schemes, as well as one of the enterprises with signs of fictitiousness – the LLC “Lembud”, which received proceeds from crime.
In April 2018, the Antimonopoly Committee of Ukraine (ACU), on the basis of information received from the NABU, started its own investigation and established the fact of conspiracy in the actions of the LLC “Exposition” and private enterprise “Euroosova-SM”, which resulted in 330 million UAH damage caused to the state during public procurement at "Ukrzaliznytsia". According to the investigation, in January 2019 the ACU fined the LLC “Expozytsia” for 12.91 million UAH, and PE “Euroosnova-SM” for 980 thousand UAH.
The NABU Detectives continue to investigate a number of other episodes of corruption crimes at “Ukrzaliznytsia”, which, in particular, are related to “Edik”. With the proactive participation of the SAPO prosecutors in the pre-trial investigation, they can be sent to court with indictments against a number of involved persons.