The Independent Defence Anti-Corruption Committee, or NAKO, a Ukrainian non-government anti-graft watchdog, said on Dec. 26 it would withdraw from engagement with Ukrainian state-run defense industry concern UkrOboronProm, blaming government and Presidential Administration for reluctance in establishing the concern’s Supervisory Board.
The Kyiv Post could not reach the UkrOboronProm representatives for the comment by the moment of the publication.
The NAKO also said it was aspired to endure strategic consulting on establishing the Board, and provided the Deputy Head of the Presidential Administration Valeriy Kondratiuk with its recommendations.
“We hoped we could contribute to reducing the high corruption risk that exists in UkrOboronProm today,” the NAKO press service quoted the committee co-chairman as saying on Dec. 26. “And ensure that UkrOboronProm is overseen by an independent, effective board so that the firm could do what it should: Provide our troops with the equipment they need and use taxpayer funds wisely.”
“Unfortunately, we do not see that this Presidential Administration has the political will for real change.”
Earlier, on Nov. 13, the UkrOboronProm announced it had launched via the ProZorro e-procurement system an international tender process on rendering a complete financial and technological audit, as well as on improving a strategy of the corporate realignment, at the defense concern.
For this purpose, a world-class consulting company was to be selected to be proposed an Hr 130 million ($4.6 million) contract by the concern’s specialized Tender Committee.
However, the NAKO members say that procuring the consulting services without establishing an independent Supervisory Board at the UkrOboronProm contradicts Ukrainian legislation and would fall short of ensuring real changes. In particular, the Article No. 6 of Ukraine’s law on the management of the state-run defense assets exclusively entitles the Supervisory Board to approve the concern’s strategy of development, audit, or realignment.
According to The Organisation for Economic Co-operation and Development (OECD) principles, the boards of such nature are obliged to perform strategic management and monitoring at the state-run enterprises, and are responsible for integrity and performance of the assets, the NAKO experts say.
“Given the allegations surrounding senior political leaders’ relationship with UkrOboronProm, it is absolutely vital that the Supervisory Board is genuinely independent,” the watchdog’s press service quoted the NAKO co-chairman Drago Kos as saying. “In the time of war, the largest state-owned defense enterprise must meet the needs of the troops – (not political leaders.) The only way for this to happen is through a supervisory board that is independent and trusted by the Ukrainian public.”
Besides, the NAKO said it would cooperate with other interested parties in developing tangible recommendations on establishing an independent Supervisory Board at the UkrOboronProm in 2018 and offered Ukraine its assistance in their implementation.
The NAKO was established by the Transparency International in October 2016 as a joint initiative by Ukrainian activists, journalists, and international experts to fight corruption in Ukraine’s defense sector. It is supported by the Ministry of Foreign Affairs of the Netherlands.
Meanwhile, the UkrOboronProm now combines as many as 130 state-run defense enterprises in Ukraine, claiming a dominating share of the country’s military production and exports. Since 2014, it has seen a number of corruption scandals involving the concerns highest leadership.
