SMART HOLDING (CYPRUS) LTD, a shareholder of Kharkivoblenergo JSC, has revealed gross abuse and inefficient use of funds during tender procedures by the management of the energy company for a total of UAH 111.6 million. The shareholder’s representative filed 19 claims on committed grave crimes to the Main Directorate of the National Police in Kharkiv region for an appropriate response.
Kharkiv District Police Department No. 2 merged all episodes into a single case registered in the Unified Register of Pre-trial Investigations under reference No. 12021221150001032. The criminal case was registered on the grounds of suspected crimes under Part 3 of Article 191 of the Criminal Code of Ukraine (misappropriation, embezzlement or seizure of property through abuse of official position committed repeatedly or upon prior collusion by a group of persons).
Ivan Gerasimovich, Risk Management and Security Director of Smart Holding, noted:
‘We have repeatedly drawn the attention of the state authorities and the public to corruption schemes in the company, but their real scale is indeed striking. All this information has been obtained from open sources. Some facts have already become the subject of high-profile journalistic investigations. These are colossal losses for the State, which is the majority shareholder of the company. Meanwhile, the State Property Fund, authorized to represent its interests in the governing bodies of the company, continues to obstinately block the establishment of a competent independent Supervisory Board of Kharkivoblenergo. Thus, conditions are created to keep the status quo where the company is headed by the management that is indulgent to multimillion-dollar embezzlements. It gives an impression that this situation suits everyone – officials of the Fund, law enforcement agencies and, for obvious reasons, the current management of the company.’
Based on the analysis of information from open sources and a study of the commercial offer on the market, it was established that in the period from October 2020 to August 2021, the energy company made a number of purchases of equipment, materials and services at prices significantly higher than the market offer.
For example, on 20 August 2021, Kharkivoblenergo JSC signed a contract with Company Plazma LLC for the supply of vacuum circuit breakers worth UAH 69.22 million. This was reported in the Prozorro system. The vendor is supposed to supply 257 vacuum circuit breakers of various types. The tendering prices turned out to be 1.4-2.8 times higher than the prices of the manufacturer’s dealer, whose offer was rejected at the tender. Analyzing the concluded contract, it can be stated that the losses of Kharkivoblenergo JSC will be up to UAH 34 million.
In addition, in February of this year, the company purchased through a tender power cables from Yuzhkabel Plant OJSC for a total amount of UAH 252.565 million. Selective analysis and comparison of prices for the products of the same manufacturer, which were offered on the market through official dealers, showed that the cost of goods purchased by the company through this tender was overstated by more than two-fold, or by at least UAH 14 million.
In August of this year, SMART HOLDING (CYPRUS) appealed to the Office of the Prosecutor General of Ukraine (OPGU) with a request to take appropriate steps to stop the embezzlement of funds at Kharkivoblenergo JSC. Then the company’s shareholder drew the attention of law enforcement agencies to low progress of the pre-trial investigation into more than 20 criminal proceedings on the facts of abuse and misappropriation in the company. Unfortunately, the previous appeal did not receive an appropriate response, therefore, on 7 October, the Company again turned to the OPGU attaching to its letter, addressed to the Prosecutor General Iryna Venediktova, materials about the commission of grave crimes by the management of Kharkivoblenergo JSC on all episodes of the aforementioned proceedings.