A Chief Road Builder of the State

I managed to find an interesting firm in Poroshenko’s field of influence. The firm used to strike road building contracts. Moreover, it has already struck deals for almost 6 billion USD! So you are about to know everything concerning the business of the chief ‘road builder’ in the state that has stood in the shadow till now.

Just recently the President’s puppet called the Security Service of Ukraine has started to conduct searches of companies dealing with road building in Western Ukraine. Similar searches have been initiated in the South of Ukraine due to the construction of the luxury road to the village Strilkove.

I will now upset you saying that the aforementioned searches are aimed at taking a commonplace revenge on competitors and taking care of us has nothing to do with them.

Road construction and repair is one of the most financially extensive industrial sectors in Ukraine. The Ministry of Infrastructure of Ukraine allocates one third of the Road Fund for roads maintenance that is 11.5 billion UAH.

A number of road building and repair companies is used in order to successfully embezzle this money and these companies win the key tenders announced by Ukravtodor (State Agency of Motor Roads of Ukraine) that used to manage principal part of budgetary funds.

A private company called ‘Avtomagistral’ is one of such firms dealing with building, repair, and reconstruction of motor roads for public or official exploitation. The company also makes products of asphalt and concrete.

The total value of tender offers accepted by Avtomagistral’ reached 5 billion UAH. The biggest contracts were concluded with the Service of Motor Roads in Kyiv Oblast and the Service of Motor Roads in Zhytomyr Oblast. Their value was 639mln UAH and 431mln UAH accordingly.

The period from 2016 till 2018 was the most profitable for Avtomagistral’ as the company won the majority of its tenders and entered into contracts amounting to 2.3 billion UAH.

You might say what a stroke of luck that was! But it was not quite like that. The company has a secure backup by the name President Poroshenko and Nina Yuzhanins, President’s personal accountant, has followed the business of this company since 2014.

Yuzhanina is the one to be in charge of the whole financial inflow to the company and she’s also covering its owner Mykola Skorostets’kyi from criminal liability.

From 2005 to 2007 Skorostets’kyi was heading the Service of Motor Roads (SMR) in Kyiv Oblast and then founded the private company Avtomagistral’.

Owing to the ‘skills’ of its ‘founder’ the company managed to win tenders for a total value of 616 mln UAH in the period from 2008 to 2013. 328mln UAH of the sum was received from the Service of Motor Roads (SMR) in Kyiv Oblast, the company he had led before.

Since 2010 a company of Poroshenko provided legal support to Avtomagistral’. That company’s name was European Audit Group and Yuzhanina was its head. However, I doubt whether the company was under Poroshenko’s full control at that time. Most probably he just provided its cover-up.

That company was caught in underpricing of VAT amounts and striking fraudulent deals even then. But, as expected, such accusations of illicit activity were easily smashed in the court.

In 2013 Avtomagistral’ was responsible for recurrent road maintenance on a stretch Dymer-Lyubymivka-Sychivka with a repair cost of 2.45mln UAH. (The highway Dymer-Bohdany leads to the Dnipro-Teteriv sanctuary where the hunting kingdom of Viktor Yanukovych called Sukholuchya is situated).

After the revolution of 2014 and the presidential elections ending with the victory of Poroshenko, Yuzhanina issued an additional agreement No.3 as of May 28, 2014 to the contract for consulting services (dd. May 31, 2010) with the private company Avtomagistral’.

Skorostets’kyi signed the contract as a representative of Avtomagistral’, even though he was assigned its director only the next day on May 29, 2014.

The additional agreement was signed with the only purpose: to provide support to the private company Avtomagistral’ in the criminal proceedings initiated by the Prosecutor General’s Office of Ukraine based on forgery, misappropriation and embezzlement of property or its acquisition by means of abuse of authority.

On June 6, 2014 Yuzhanina personally edited the inquiry to the Prosecutor General’s Office of Ukraine aimed at cancelling the decision No.40 of the deputy prosecutor in Kyiv oblast dd. 27/05/2014. The subject of that decision was the prosecution inspection of the LLC Avtomagistral’ in order to check its observance of laws.

Such a vigorous activity of Poroshenko’s personal accountant in the affairs of the road construction company was connected with the involvement of the private company Avtomagistral’ in striking illegal financial deals and applying to dummy companies that gave grounds to the prosecutor’s office to block payments by Avtomagistral’s principal client ‘SMR in Kyiv Oblast.

The level of engagement of Poroshenko’s accountant in the company’s business was at such height that on August 7, 2014 Yuzhanina dares to ask Oleg Slobodyanyk, Deputy Chief of Staff and Head of Department at the Prosecutor General’s Office, to unfreeze payments between the SMR in Kyiv Oblast and the private company Avtomagistral’.

The level of engagement of Poroshenko’s accountant in the company’s business was at such height that on August 7, 2014 Yuzhanina dares to ask Oleg Slobodyanyk, Deputy Chief of Staff and Head of Department at the Prosecutor General’s Office, to unfreeze payments between the SMR in Kyiv Oblast and the private company Avtomagistral’

Yuzhanina asked him to supervise the whole process and give her an ASAP answer. By the way, closure of the criminal cases was an indispensable condition of the request.

Mr. Slobodenyuk immediately forwarded a letter to her (its registration number as of August 1, 2014) that had been sent from the Prosecutor General’s Office of Ukraine (PGOU) to the Treasury of Ukraine. The letter implied a request to unblock payments to the private company Avtomagistral’ due to completion of the inspection. The SMR in Kyiv Oblast received a similar letter on August 1, 2014 as well.

However, the company had to face a much bigger problem than the criminal prosecution. At that very moment the private company Avtomagistral’ was receiving no payments at all as there was no money in the Single Treasury Account.

As the President of Ukraine took part in the scheme himself and the aforementioned funds belonged not only to the company, the alternatives had to be searched for rather quickly.

Since May 2014 Yuriy Buglak had already been busy with a deputy inquiry to the Cabinet of Ministers of Ukraine. At that moment Buglak was Chief Legal Advisor of the Corporation ‘Roshen’ and headed President’s offshore company in Cyprus on a part-time basis. His inquiry implied the following information:

The private company Avtomagistral’ was going through a lot of financial hardships and had already owed wages to its employees for several months. A number of workers were ATO-participants (Anti-Terroristic Operation) and members of their families were left with no livelihood at all.

The private company Avtomagistral’ was going through a lot of financial hardships and had already owed wages to its employees for several months. A number of workers were ATO-participants (Anti-Terroristic Operation) and members of their families were left with no livelihood at all.

The private company Avtomagistral’ was going through a lot of financial hardships and had already owed wages to its employees for several months. A number of workers were ATO-participants (Anti-Terroristic Operation) and members of their families were left with no livelihood at all.

In order to solve that problem, the Roshen-interested party in the person of Buglak asked the Cabinet of Ministers of Ukraine to take concrete measures and give needed instructions to the relevant agencies including the State Treasury Service and the State Agency of Motor Road of Ukraine (Ukravtodor).

And what’s interesting the most is that the amount of arrears of wages the private company Avtomagistral’ had to pay off to its employees was not indicated in the inquiry at all, even though that clause was emphasized in the letter as a principal one. Exactly that version of the enquiry was set in motion by Nina Yuzhanina on 28 May, 2014.

And, just imagine, it took effect :)

On July 15, 2014 Nina Yuzhanina sent a letter to “M.O.” (Mykola Oleksiyuvych Skorostets’kyi) attaching the correspondence screenshots. It was told in the correspondence that the SMR in Kyiv Oblast had to prepare a register with the total payments amount of 31mln UAH. In that case the private company Avtomagistral’ could get the payments.

On July 15, 2014 Nina Yuzhanina sent a letter to “M.O.” (Mykola Oleksiyuvych Skorostets’kyi) attaching the correspondence screenshots. It was told in the correspondence that the SMR in Kyiv Oblast had to prepare a register with the total payments amount of 31mln UAH. In that case the private company Avtomagistral’ could get the payments.

The amount of a single payment didn’t have to exceed 300k UAH. So there had to be 100 payments amounting to 300k UAH each. After that the 31 payments order could be sent to the Treasury of the oblast where the payment register could be prepared. So having the audit backup, such a technique would give an opportunity to receive payments of up to 300-600k UAH a day.

I can’t but pay your attention to the fact that the yearly revenue from income tax, the private company Avtomagistral’ specified in its declaration for 2014, was 91.4mln UAH while its expenditures reached 91.6mln UAH. So only 217k UAH was subject to taxation. Taking into account the information from that declaration, it seemed that the company was barely surviving even though it had million dollar deals.

For instance, I’ve analyzed the maintenance payments by the SMR in Zhytomyr oblast that had been done at the expense of the State Treasury and here’s what I’ve found out. In August 2018 alone the private company Avtomagistral’ received 60.6mln UAH as prepayments for purchase of materials or maintenance repair!!! But according to the mutual settlement act between the private company Avtomagistral’ and the SMD in Kyiv Oblast, the total cost for services provided within the period from January 1, 2013 till March 18, 2014 reached 120mln UAH.

It’s obvious that the gap was not 200k UAH as it was specified.

In conclusion, let me add up some evidence to prove that high-ranking officials were really deciding the fate of Poroshenko’s company.

Companies that stand in the way of budgetary funds embezzlement and pose as competitors of Poroshenko’s firm are rather quickly shown where they belong.

For example, Volodymyr Groysman initiated inspections in Zhytomyr oblast after the tender offer of the private company Avtomagistral’ on the road repair H-03 Zhytomyr-Chernivtsi had been declined due to negative experience of cooperation based on poor repair of the roads P-18 Zhytomyr-Stavysche.

In the end the private company Avtomagistral’ was allowed to participate in the tender procedure and all the claims of the Tender Committee simply vanished.

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Александр Дубинский

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