Old scheme under a new sign: how firms involved in criminal cases in Vinnytsia region continue to use budget funds

At the end of March 2022, the Road Service in Vinnytsia region signed a contract worth more than UAH 14 million with the company Spetsbudstroymontazh, which was involved in schemes to siphon off budget funds, which law enforcement officers were interested in at one time, UNN writes. 

Details

In order to understand the schemes and those behind them, let's go back a few years, when Spetsbudstroymontazh LLC did not exist, but there was Mix Light LLC, one of the founders of which was Dmytro Volodymyrovych Kistion, the son of Volodymyr Kistion, who was a deputy prime minister in the government of Volodymyr Groysman, and before that he had been in charge of Vinnytsiaoblvodokanal for many years. Interestingly, Mix Light was registered in Vinnytsia in the premises at 55 Hliba Uspenskoho Street, part of which is on the balance sheet of Vinnytsiaoblvodokanal. 

Mix Light was founded in November 2016 and won almost one and a half million hryvnias worth of tenders the following year. In 2018, it won more than fifty million hryvnias. In August 2018, Dmytro Kistion withdrew from the founders of Mix Light LLC, and two months earlier, the Investigation Department of the Main Department of the National Police of Ukraine in Vinnytsia Oblast initiated criminal proceedings against officials of Mix Light LLC and Vinnytsiaoblvodokanal under Part 3 of Article 191 of the Criminal Code of Ukraine "Misappropriation, embezzlement or seizure of property by abuse of office committed repeatedly or by prior conspiracy by a group of persons."

The court ruling of September 25, 2018 states that  in 2018, a contract for the amount of UAH 1 372,690.04 was concluded between Vinnytsiaoblvodokanal and Mix Light LLC .  The subject of the contract was the reconstruction of a section of the pressure sewer.

Investigators found that officials of Mix Light LLC forged official  documents  on the basis of which the reconstruction was carried out and failed to fulfill contractual obligations, taking possession of the funds. In addition, an analysis of a number of public procurements conducted by Vinnytsiaoblvodokanal in 2017-2018 found that the only participant and winner was Mix Light LLC, whose ultimate beneficial owner is the same officials of the utility. 

And two months after the opening of the criminal proceedings, instead of Dmytro Kistion, Valeriy Chobanu from Odesa region became the co-owner of Mix Light. 

And the company, despite being involved in criminal proceedings, continues to participate and win tenders.

However, in 2019, another criminal proceeding was launched to investigate the illegal activities of officials of the same Vinnytsia water utility, Mix Light, and the municipal enterprise Misksvitlo. The case is being investigated by the Security Service of Ukraine. At that time, the press service of the agencies reported that law enforcement officers had documented the embezzlement and misappropriation of state budget funds in Vinnytsia region by local officials with the assistance of one of the deputy prime ministers. Later, the press service removed the reference to the deputy prime minister, and the rulings in the criminal proceedings referred to an "unidentified member of the Cabinet of Ministers of Ukraine." However, the media then confidently stated that it was Volodymyr Kistion. Of course, he denied any involvement.

The scheme that interested law enforcement officers was quite simple and at the same time audacious: a tender was held (mostly for the repair of sewer networks, construction of collectors, as well as installation and maintenance of street lighting systems), which was won by one of the companies controlled by the official of the water utility or Misksvitla, and then all the work was performed by employees of utility companies for their salaries, which they received from the local budget.

Interestingly, in addition to Mix Light, the court materials of this criminal proceeding also included its subsidiary Mix Light-2. It was headed by Vadym Olehovych Bondar, who was then and is now the head of the company. This person is the son of Volodymyr Kistion's sister Valentyna Bondar. Valentyna Bondar herself appeared in Dmytro Kistion's declaration - he lived in an apartment owned by her.

In February 2020, Mix Light LLC changed its name to... Spetsbudstroymontazh and continued to participate in tenders. Over the years, the company has concluded 114 contracts worth more than UAH 246 million after winning tenders. The largest number of contracts was concluded with the Department of Municipal Economy of Vinnytsia City Council - 29 agreements worth over UAH 79.7 million, with the State Enterprise "Financing of Infrastructure Facilities" - 19 agreements worth UAH 49.3 million, and with the Infrastructure Restoration Service in Vinnytsia region - 7 agreements worth UAH 46.9 million. Interestingly, the involvement in the alleged siphoning of funds from the local budget did not hinder the company's success.

Just like other companies. For example, Misksvitlo is run by Vadym Kondratskyi, who is a co-owner of Podil Energy Networks and its subsidiary PEM-2. Both of these companies are involved in investigations of schemes to siphon off funds from the local budget, along with the companies already mentioned in this article. Nevertheless, Podilsky Energy Networks regularly wins tenders in Vinnytsia and the region, for example, for the development of various kinds of design and estimate documentation. Interestingly, the co-owner of Podil Energy Networks used to be Oleksandr Chernyatynskyi, who headed the same water utility after Kistion Sr. It was Chernyatynsky who had Kistion Jr. as his deputy. And it is Chernyatynskyi who is the head of the Vinnytsia water utility whom NABU suspects of involvement in the embezzlement of more than UAH 10 million of budget funds.

"The investigation has established that the former head, in collusion with the head of the capital construction department, secured a contract for the repair of sewage in Vinnytsia. The contractor purchased the equipment necessary for the repair through a controlled company with an artificially inflated price by almost 2.6 times. At the same time, the price was agreed upon in violation of the price determination procedure and without proper justification," the statement said.

As a result, the utility company paid UAH 10.3 million more than the real market value of such services for sewerage repairs. The suspects' actions were classified under Part 5 of Article 191 of the Criminal Code of Ukraine.

But if you dig deeper, it becomes clear that the proceedings in which the Chernyatyn High Anti-Corruption Court recently imposed a bail of UAH 6 million on Chernyatynskyi is part of the same story of misappropriation of budget funds, which involved companies associated with the Kistions.

It is interesting that the criminal proceedings against Chernyatynskyi involve Podilski Budiveli, which also continues to win tenders in Vinnytsia region.

The question of Chernyatynskyi's fate remains open - will his high-powered patrons save him? Or is it enough that the criminal proceedings do not mention them and their children, and that the old schemes of parasitizing on the local budget are preserved?

And as we can see, returning to where we started, the old schemes are being preserved. The tender, which was won by Spetsbudstroymontazh LLC (formerly Mix Light), stipulates that the company will be engaged in the operational maintenance of national roads within Vinnytsia Oblast, namely, the maintenance of outdoor lighting facilities. As you may recall, one of the activities that once caught the eye of law enforcement officers was related to outdoor lighting. We would like to add that after the conclusion of the main agreement under this tender, an additional agreement was concluded between the customer and the contractor, which actually provides for the possibility of increasing the funding of the contractor's services.