Ukrainian Prime Minister Volodymyr Groysman has said he would like Roman Romanov, the head of national defense industry concern Ukroboronprom, to resign.
Groysman announced he would initiate Romanov’s dismissal during the сabinet meeting on Dec. 27. Mykolaiv Shipyard run by Ukroboronprom having failed to pay its employees for months is the reason for his decision.
“I ordered (Romanov) to pay off the debts of Mykolaiv Shipyard by Dec. 25. It has not yet happened,” Groysman said. “They say they can’t do it. But I don’t understand why. So today I will sign an appeal to the president (regarding Romanov’s dismissal), and I advise the head of Ukroboronprom to resign on his own.”
Groysman hopes “a new head will find the way to pay off the debts.”
Ukroboronprom refused to comment on the Groysman’s announcement.
Romanov, 42, was appointed as the head of the concern in 2014. He initially came from business: He founded several companies in construction and automotive spheres in Kherson, where he later became a politician. His businesses are now owned by his wife, according to the electronic declaration.
Under Romanov’s command, Ukroboronprom had become profitable for the first time in a long period. In 2016, its net income amounted to more than $1 billion, and export volume grew up to 25 percent.
Nevertheless, Romanov’s achievements haven’t been praised by the industry experts. Maksym Bugriy, an analyst at the Wooden Horse Strategies think tank, thinks Ukroboronprom has been too slow to change.
“Ukroboronprom’s reformation has been an extremely slow process,” Bugriy told the Kyiv Post. The expert thinks the belated decision to perform the corporation’s strategic audit and open up the way to its restructuring and privatization are just some of the examples.
“Remarkably, Groysman fired CEO Romanov not for some alleged (corrupt) connections, but for management failures. This is a very important and overlooked angle. While some Ukroboronprom top managers are bright, others apparently couldn’t deliver.”
Viktor Plakhuta, former head of the department of defense and security at Economy Ministry, thinks Groysman’s decision “is only a first step” on the way to reform Ukroboronprom.
“Much more needs to be done to transform Ukroboronprom in a way that improves state governance, reduces corruption and eradicates criminal schemes,” Plakhuta wrote in his op-ed for the Kyiv Post.
Among the other crucial steps that have to be taken, Plakhuta lists the formation of the independent Supervisory Board of the concern, creating a clear strategy of the company’s development, and assuring transparent and open defense procurement processes.
Meanwhile, the shipyard has halted its operations and its bank accounts have been frozen. Around 100 of its employees have been rallying for the second day in a row in Mykolaiv, a city about 500 kilometers south from Kyiv, demanding their money. They haven’t been paid for months – the company owes them $2 million, or Hr 58 million, in salaries.
Mykolaiv Shipyard has been one of the Ukroboronprom companies since 2011. The shipyard constructs and repairs ships of all types weighing up to 28,000 tons.
Its parent company Ukroboronprom was established in 2010 and has now 134 military-industrial companies under its umbrella. The concern has a dominating share of the country’s military production and exports. It supplies equipment to the Ukrainian army.
The concern and some of its daughter companies are involved in the number of criminal cases.
Besides, according to a report written by the anti-corruption bureau, or NABU, and provided to media Foreign Policy on Dec. 21, assumes that Ukroboronprom officials laundered money from a $39 million contract to supply parts for Antonov AN-32 aircraft to the Iraqi defense ministry.
The documents show that the NABU was looking into two executives at Ukrspecexport, a daughter company of Ukroboronprom.
At the same time, on Dec. 26, independent anti-graft watchdog NAKO announced it would halt its cooperation with Ukroboronprom. It blamed the government and the Presidential Administration for mismanagement – reluctance in establishing the concern’s Supervisory Board. 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.
