How corruption schemes in public procurement for the Armed Forces of Ukraine have changed

After last year’s corruption scandals, procurement schemes in Ukraine’s Ministry of Defense have changed.

Journalists have uncovered details about these changes.

According to the head of a company that has participated in tenders and supplied clothing for the army many times since the beginning of the war, corruption schemes in supplies appeared almost immediately after the invasion began.

“It was almost impossible to win a tender without approval from the President’s Office and without kickbacks. A pool of ‘preferred’ companies was formed that knew in advance they would win, regardless of the products and prices they offered. Prices were inflated several times over. The kickback was between 10% and 30%, but everyone still made good money. This applied to all Ministry of Defense orders, including clothing and food for the army. Often, substandard goods were supplied. Some manufacturers who were ‘outsiders’ but managed to get orders by some miracle even raised this issue at a meeting with the Prime Minister, the Ministers of Defense and Economic Development. They requested that business representatives be included in the acceptance commission. This was supposed to help, if not lower the prices, then at least stop the flow of low-quality products being supplied to the Armed Forces of Ukraine. However, this proposal was not supported at that time,” the company head reported.

But after the scandal involving “eggs for 17,” the situation began to change, he added.

The businessman also mentioned that by then, international partners were already aware of the main procurement schemes.

“They were gathering information, and at some point, the media picked up the ‘eggs for 17’ story. I think that was not accidental,” the entrepreneur believes.

After the resonance around the eggs, he said, “new schemes started to emerge.”

“The schemes became more complex. For example, technical specifications for products are written in such a way that certain raw materials from a specific supplier or manufacturer must be used. In our case, it’s thread of a certain standard that only one company produces, and no one else has it. And the price is inflated. But we can’t use any other,” the company head explained.

He noted that the “kickbacks for everyone” system, where you could simply agree, pay, and get a government order, has disappeared. Instead, agreements with a narrow circle of raw material or component suppliers, for whose products the technical specifications are written, have appeared.

“Often these technical specifications are just absurd. You need to use fittings or materials, like thread, that simply do not suit certain products, and, accordingly, degrade their quality. For instance, the thread might be too coarse for underwear, but we still have to use it,” the businessman said.

Another scheme involves importing goods under the guise of domestic products with a significant markup.

“As for clothing and underwear for servicemen, Chinese products are being massively imported. We only produce labels here, which are then sewn on. Chinese goods either arrive without labels or with labels that are then replaced. In China, they buy them 3-4 times cheaper, and then pass them off in documents as Ukrainian-made products. Especially a lot of underwear is being imported – underpants and other items. The profits there are just insane,” the company head said.