Ukraine’s state-run defense production giant, UkrOboronProm, has announced another competition to procure an independent audit of the company and its enterprises, “with the involvement of international experts.”
The Hr 32.5 million ($1.2 million) contract was put out to tender on the Prozorro public e-procurement system on July 22.
According to the announcement, the deadline for submitting tender proposals is Aug. 21, 2019, and the winner is expected to be selected by the system during an auction on Sept. 26, 2019.
The audit needs to be completed no later than Apr. 10, 2021, according to UkrOboronProm.
The tender’s announcement is the first noticeable advancement in a months-long bid to find a reputable international audit company to conduct a comprehensive inspection of the state-owned group that consists of over 130 state-owned enterprises.
Over the last few years, UkrOboronProm has been widely criticized for what critics have called significant inefficiencies and a severe lack of transparency and oversight, which has led to numerous high-profile corruption scandals.
The first attempt to carry out an audit of UkrOboronProm was made as far back as in 2017, when a Hr 130 million ($5 million) tender to procure “services for conducting strategic, operational, technological, financial, legal, forensic review and due diligence” was announced in the Prozorro e-procurement system.
Nonetheless, the bid resulted in nothing and was eventually canceled for unknown reasons.
The question of auditing UkrOboronProm was raised again by then-President Petro Poroshenko in early 2019, following another headline-grabbing corruption scandal involving Oleh Hladkovskiy, then-deputy secretary of Ukraine’s National Defense and Security Council and Poroshenko’s longtime business partner.
The Bihus.Info investigating journalism project accused the official of being involved in multimillion-dollar embezzlement in the country’s defense procurement. Hladkovskiy was eventually dismissed from office, although never prosecuted, while Poroshenko yet again vowed to initiate an independent inspection of UkrOboronProm.
During a National Security and Defense Council meeting on March 6, Poroshenko promised an audit, an assessment of the concern’s corporate management, a thorough cleaning of its supervisory board, and wider public control and transparency.
Later, on April 17, just four days before the runoff presidential elections in which he was resoundingly defeated by Volodymyr Zelensky, Poroshenko even claimed that the audit had already been started with the March 6 decree.
Nonetheless, no tender to select an international inspector was ever announced on Prozorro.
On May 15, Ukraine’s Prime Minister Volodymyr Groysman demanded that the audit be started no later than within 10 days. However, Hr 32.5 million ($1.2 million) to procure the service was only allocated by the government on June 19.
One of the audit’s foremost supporters, Aivaras Abromavičius, who criticized the Cabinet of Ministers and said it was “reluctant about rapid changes,” was eventually appointed to UkrOboronProm’s supervisory board by newly-elected President Zelensky on June 12.
Part of the Zelensky campaign, Abromavičius strongly advocated for holding an international audit involving one of the Big Four accounting firms — namely, Deloitte, PwC, Ernst & Young, or KPMG.
As the Interfax news agency noted on July 23, the new audit contract is being particularly sought after by Ernst & Young, as well as by Baker Tilly and Grant Thornton.
