NABU Reveals Fraud in Food Supply for the Ministry of Defense
The National Anti-Corruption Bureau (NABU) has reported suspicions against the owner of companies that sold products to the Ministry of Defense at inflated prices in 2022-2023, including eggs priced at 17 hryvnias each.
This is reported by AgroReview
Price Inflation Scheme
Law enforcement officials uncovered that a key element of the fraud involved manipulating prices when supplying a “food package” according to an approved catalog that contained 409 items. The price of the package was formed based on the average cost of all items, allowing suppliers to inflate prices on the most sought-after products, which were supplied in large volumes, while lowering prices on less popular or seasonal goods.
Examples of Inflated Prices
According to the data, fresh table beets were priced at 24 UAH in the catalog, while the market price was 7 UAH; white cabbage was 37 UAH compared to a market price of 11 UAH; and potatoes were sold at 20 UAH with a market price of 6 UAH. Eggs, in particular, were sold for 17 UAH each. Fresh sorrel was listed at 49 UAH in the catalog, while the market price was 258 UAH, and animal fat was priced at 5 UAH against a market price of 55 UAH.
As a result of the fraud, from August to December 2022, participants in the scheme received over 733 million hryvnias in unjustified profits, part of which may have been withdrawn as dividends and financial assistance for affiliated companies. These funds were reportedly used by the owner of the companies to purchase hotels in Croatia and other real estate.
“After the publication by journalist Yuriy Nikolov in ZN.ua, who was the first to report on ‘eggs priced at 17 UAH each,’ suppliers reduced prices on 11 of the most demanded products.”
Among the suspects are also the director of the relevant department of the Ministry of Defense, heads of supplier companies, and one unnamed individual. Although the names of the suspects are not currently disclosed, it was previously reported in the media that the owner of the companies supplying products to the Armed Forces at inflated prices is Tetiana Hliiana, the leader of one of the largest business groups supplying food to the Armed Forces since 1995.
It is also worth noting that as a result of the “egg scandal,” there were personnel changes in the Ministry of Defense — the Deputy Minister for Logistics Vyacheslav Shapovalov and the head of the procurement department Bohdan Khmelnytsky lost their positions.