Ukroboronprom purchased Russian defense products at inflated prices during wartime

The court decision, which is published in the Unified State Register of Court Decisions, states that during 2015-2019, the state-owned concern Ukroboronprom had been buying defense products from Russia at inflated prices.

The pre-trial investigation found that the defense company through special exporters (structural units of the Ukroboronprom Group of Companies) concluded real contracts for the supply of military products or the provision of weapons repair services.

Under these agreements, the company, through special exporters, receives export earnings for the delivered products or services rendered.

At the same time, the special exporter enters into agency agreements with offshore companies on the provision of agency services to facilitate the conclusion of export contracts.

Formally, as a result of the provision of certain designated services, the agent receives a fee of 15-20% of the amount of export revenue received by the manufacturer. Such agency agreements are usually concluded earlier or before the conclusion of a real export contract, are general in nature and do not contain information about a specific contract, the conclusion and implementation of which will be ensured.

Thus, these agency agreements were used in various export contract and, as a result, funds were transferred from Ukraine to offshore jurisdictions, the pre-trial investigation said.

“Special exporters in the interests of Ukrainian defense enterprises concluded import contracts for the supply of components with foreign companies (from UAE, Czech Republic, UK, Cyprus, etc). At the same time, it was Russian military and dual-use products manufactured at sanctioned enterprises that was being supplied to Ukraine in what is commonly known as a “direct supplies evasion scheme”. At the same time, the cost of such deliveries was overstated by two to three times,” the materials emphasized.

The decision was made at the request of the SBU investigator on temporary access to documents as part of the criminal investigation No. 42019000000001937 dated September 2, 2019 on the fact of committing crimes under Part 1 of Article 111, Part 5 of Article 191 and Part 2 of Article 364 of the Criminal Code Ukraine.

As The Journalist reported, Zelensky terminated powers of member of Ukroboronprom’s supervisory board.