It took Oleh Hladkovsky, a former high-level defense official, just two phone calls to get a lucrative state contract for Bohdan Motors, his automobile manufacturer. But those two calls ultimately cost the Ukrainian state over $400,000, prosecutors allege.
Hladkovsky is now charged with abuse of power and falsifying asset declarations, according to an indictment seen by the Kyiv Post. He was arrested on Oct. 17 shortly after attempting to leave the country at Kyiv Boryspil airport but being turned away by border guards. Two days later, on Oct. 19, a Kyiv court set Hladkovsky’s bail at Hr 10.6 million ($423,522) — the same amount of money he allegedly embezzled from the state.
Hladkovsky, a business partner and top ally of ex-President Petro Poroshenko, who appointed him at the top defense post, has called the charges politically motivated and his arrest illegal. He announced a hunger strike in protest.
The Hladkovsky indictment, written by the National Anti-Corruption Bureau of Ukraine and authorized by the Prosecutor General’s Office, offers a rare window into the inner workings of high-level corruption in a country struggling to overcome its legacy of political graft.
According to the document, Hladkovsky’s illegal efforts started on Feb. 14, 2017, when the Ukrainian Cabinet of Ministers approved a defense procurement plan for 2017-2019. Although the document’s passage was mentioned in the press, it was never published on the Cabinet’s website — an unsurprising decision in Ukraine’s highly secretive defense sector, where civic watchdogs and journalists have little ability to monitor how money is being spent.
According to the indictment, at the same meeting, the Cabinet directed the defense ministry to exclude a norm from the plan that would prohibit the procurement of MAZ trucks — a type of rugged vehicle originally designed in Belarus — unless over 60 percent of their production cycle occurred in Ukraine. However, the defense ministry responded with a letter suggesting keeping the norm in place.
For Hladkovsky, then the deputy head of the National Security and Defense Council, that would mean that Bohdan Motors could not sell MAZ trucks to the state, as they were only 26-percent Ukrainian-produced.
As a result, Hladkovsky allegedly called then-Defense Minister Stepan Poltorak to resolve the issue. However, Poltorak did not want to discuss it on the phone. Next, Hladkovsky reached out to the then-deputy defense minister, Ihor Pavlovsky, and convinced him to help solve the problem.
According to the indictment, on March 7, 2017, Pavlovsky contacted Deputy Economy Minister Yuriy Brovchenko to inquire how to include Bohdan Motors’ MAZ trucks in the procurement plan. Brovcheko said the defense ministry must rescind its letter on maintaining the 60-percent localization requirement. That same day, the letter was recalled.
Hladkovsky would allegedly go on to use his influence to sell 100 MAZ-6317 trucks to the economy ministry for Hr 1.3 million (roughly $52,000) each.
But according to the indictment, the violations didn’t end there.
By the end of May 2017, the Ukrainian state had already paid Bohdan Motors over Hr 94.8 million ($3.78 million) for the trucks. Then, just months later in December, Bohdan Motors and a defense ministry official allegedly altered the contract twice, despite a direct ban on alterations of the price being written into the document. The change increased the price of each truck to roughly Hr 1.44 million ($57,400).
That unjustifiably raised the overall price of the trucks by Hr 10.6 million, the indictment alleges.
Brovchenko and Pavlovsky, who allegedly helped Hladkovsky get the contract, weren’t immediately available for comment.
Former Deputy Defense Minister Pavlovsky and the head of the ministry’s procurement department, Volodymyr Hulevych, are slated to appear before the High Anti-Corruption Court next month as defendants in a different corruption case. They stand accused of embezzling Hr 58 million ($2.3 million) through the purchase of fuel for the ministry at an inflated price in collusion with a supplier company. The total damage from that scheme was estimated to be nearly three times larger, at Hr 149 million ($5.9 million).
Pavlovsky was arrested in October 2017 and released under his personal recognizance.
In the second part of the indictment, Hladkovsky is charged with falsifying his electronic income and asset declaration for three years in a row.
According to the document, he did not declare the income his wife Yulia earned from renting out a luxury apartment in central Kyiv with a monthly price tag of $5,500. The income amounted to $164,500 over the course of 2016-2018.
