The French government has allocated technical assistance to the Ukrainian state concern Ukroboronprom in the amount of about EUR 900,000 Aivaras Abromavičius, director general of the state concern, has said.
“This is a sign of confidence in Ukraine, it is a sign of confidence in the changes that are taking place now in the Ukroboronprom concern … This is an amount close to EUR 900,000, one of the largest amounts that the French government has allocated to Ukraine,” he said at a briefing in Kyiv on Wednesday.
According to Abromavičius, this assistance will be used to fight corruption and raise corporate governance standards.
“France’s technical assistance will be directed in two main areas. This is, firstly, the anti-corruption area, and secondly, the improvement of corporate governance standards. In the area of anti-corruption policy, we plan to carry out a comprehensive criminalistics, so-called forensic, audit on some processes, contracts, which, unfortunately, the financial audit does not have the opportunity to reach,” he said.
He said that the forensic audit reveals hidden schemes and frauds that look like legitimate transactions, but are actually fraudulent, and there have been a lot historically in the concern.
Abromavičius stressed that the allocated funds would help build the best corporate governance standards in Ukroboronprom, according to Western standards.
“Within the project, we plan to develop new principles of corporate governance both at enterprises and at the concern itself. This is a large-scale project that requires time, which requires not only our efforts, but, as I said, the support of international partners. Branches of government will be involved, as well as Ukroboronprom partners themselves,” he added.
Abromavičius said that the French Embassy in Ukraine would choose a consultant company from the Big Four, and it will help find the best model for organizing a business.
“That is, we are starting to build a modern company,” he stressed.
According to Abromavičius, the forensic audit process should take four months.
“But, unfortunately, this information will be more for the leadership of the country, for the leadership of Ukroboronprom and for law enforcement agencies,” he said.
The enterprises of Ukroboronprom concern exported $908 million worth of arms and services abroad in 2019, which is 19% more than a year earlier, said Aivaras Abromavicius, the head of the Ukroboronprom state concern. “Last year, our companies exported arms and services worth $908 million. This is a 19% increase over the previous year,” the head of the concern said on the Real Politics program on Ukraine 24 TV channel on Sunday.
Abromavicius added that Ukraine is not one of the ten largest arms exporters, while U.S. and Russian exports are ten times greater than domestic, but assured that Ukroboronprom’s foreign supply will also increase in 2020.
“We see that in 2020 export growth is planned to reach 30%. And this is a very important figure, especially in anticipation of a slowdown in industrial production growth, which is taking place not only in our country, but throughout the world,” said the head of Ukroboronprom.
The enterprises of Ukroboronprom state concern reduced export volumes to $451 million a year compared to $900 million in 2013, director general of the state concern Aivaras Abromavicius has said at a meeting with Ukrainian President Volodymyr Zelensky in Kharkiv. “The most important reform we have already launched is the reform of exporters … We are reducing the number of exporters from six to two at the initial stage,” he said.
He specified that in order to rectify the situation, “movement veteran” Mykhailo Morozov was appointed to this direction. He has led ISTIL Group for more than ten years and has significant experience in managing special exporters, in particular, Progress state enterprise.
The director general of Ukroboronprom noted that 1,500 people are engaged in exports in the state concern, while in a Turkish company with export of $300 million per year some 80 people.
“People are sitting in the center of Kyiv, it is not clear what they are doing. We’ll motivate those people who will stay with us to work, because every time you go abroad, you have to blush,” Abromavicius described the current situation and plans.
As an example, he cited his recent trip to Peru and retold criticism from colleagues from South American countries.
“Guys, it’s hard to pronounce your names: Ukroboronprom, Spetstechnoexport, Ukrspecexport … You all run around, each with two agents, lower prices for your manufacturers,” they said.
The Ukroboronprom director emphasized that such a lack of culture and coordination within the concern should cease.
Baker Tilly Ukraine LLC from the Baker Tilly international audit network, has won a tender to select an auditor of consolidated statements of the Ukroboronprom state concern.
According to the ProZorro platform, where the auction was held on Thursday, Baker Tilly initially offered UAH 29.988 million for its services, while Ernst & Young LLC, its only rival, offered UAH 32.5 million, which corresponded to the starting price, and the total price amounted to UAH 29.336 million.
“This will be the first consolidated audit of the concern in the entire history of its existence,” the Ukroboronprom said in a statement.
The state concern said that earlier international audits were carried out only at individual enterprises –members of the concern. In particular, Baker Tilly Ukraine has already conducted an independent financial audit of the state-owned company for the export and import of military and special-purpose products and services Ukrspecexport, which is the largest Ukrainian special exporter and part of the Ukroboronprom group of companies.
Ukroboronprom recalled that the search for an auditor has been ongoing since 2017 and was unlocked in the summer of 2019, when Ukrainian President Volodymyr Zelensky reshuffled the concern’s supervisory board.
Ukraine’s President Volodymyr Zelensky has signed a decree appointing Aivaras Abromavicius director general of the Ukroboronprom state concern, according to a document posted on the presidential site. “Aivaras Abromavicius is appointed general director of the state concern Ukroboronprom,” according to decree No. 641/2019 published on the Ukrainian presidential website on Friday evening.
Before that, the Ukrainian president issued decree No. 640/2019 relieving Pavlo Bukin of his duties as head of Ukroboronprom.
Abromavicius was Ukraine’s economy minister between December 2014 and April 2016.
The former deputy head of the Presidential Administration under ex-President Viktor Yanukovych, Andriy Portnov, has said Ukraine’s State Bureau of Investigations (SBI) has opened a criminal case to probe facts of embezzling funds from state-run Concern Ukroboronprom and siphoning them off into offshore accounts, and suspects in the case “could include dozens of ex-President Poroshenko’s allies.”
“Let me inform you about a new criminal case, which can incriminate dozens of people among Poroshenko’s associates. The SBI yesterday officially registered the case and began its investigation,” Portnov said on Facebook on Thursday.
Portnov said Poroshenko gave direct instructions to ex-National Bank of Ukraine Chairwoman Valeriya Gontareva, and the NBU board on January 19, 2016, revoked NBU decisions on hard currency control involving foreign economic activities, establishing that payments of Ukroboronprom to offshore accounts could be used for making prepayments without NBU hard currency controls and limits.
“This enabled the theft of several billion hryvnias from Ukraine’s army, hiding behind official decisions made by the NBU,” Portnov said.
Interfax-Ukraine has not received confirmation from the SBI regarding Portnov’s statements.