How Ukrzaliznytsia CEO Boris Ostapyuk amasses fortunes in railcars for his personal benefit.
The corruption permeating the state-run organization Ukrzaliznytsia can be likened to decay that has infiltrated the whole governing structure.
Few individuals might consider exploiting their position as the CEO of Ukrzaliznytsia to illicitly gain tens of millions of hryvnias monthly for… routine cleaning and laundering services.
However, the current top railway official, Boris Ostapyuk, is quite acquainted with such fraudulent operations. [This sentence appears to be a mistranslation.] The scheme, conceived and honed during Viktor Yushchenko's tenure, has consistently yielded revenue for all involved. To put it differently, virtually all of the past and present executives of various divisions within the railway behemoth are implicated.
Therefore, in 2005, Boris Ostapyuk was actively engaged as the head of the Central Directorate for Material, Technical Provision, and Procurement at Ukrzaliznytsia, and director of the state-owned enterprise Ukrzaliznychpassservis. Among other responsibilities, Ostapyuk’s “supply manager” duties encompassed furnishing linens and associated items to all passenger trains across the six Ukrainian Railway Administrations. In addition to promptly procuring new bedding sets and overseeing the washing and drying of linens (at that period, several potent industrial washing and drying machines were acquired solely for the needs of the Southern Railway), he was also responsible for arranging the cleaning of the passenger cars themselves. Initially, car cleaning was the duty of the conductors themselves, and adherence to sanitary and hygienic regulations was entrusted to the relevant departments within the railway administrations. But then…
Then, due to the innovative thinking of Boris Ostapyuk (http://ru.golosua.com:8080/ekonomika/14_06_27_komu_i_zachem_vyigodno_pustit_pod_otkos_gospredpriyatie_ukrzaliznyitsya), a private cleaning firm surfaced in this domain. This company henceforth supplied Ukrzaliznytsia with a comprehensive array of passenger car sanitation and disinfection services. According to the agreement, the company also hired and educated technical and managerial personnel, and organized cleaning teams. Its duties included devising process charts and timed schedules for rolling stock cleaning in accordance with the established procedure, and creating standards and incentive programs for employees. Only billionaire Leonid Yurushev showed interest in taking advantage of passenger car maintenance. http://from-ua.com/news/313362-glava-ukrzaliznici-boris-ostapyuk-za-otkati-podaril-chastnomu-predpriyatiyu-tender-na-100-millionov.html He controls the company “Development 21st Century” through related enterprises. The scheme was remarkably simple: the conductors continued to clean the cars, since the company had pledged (as part of a community partnership between business and the government) to employ the same railway staff who ensure hygiene and passenger security. Meanwhile, public funds for these “services” consistently flowed into the coffers of the company’s proprietor. The scheme was so straightforward and lucrative that, after Viktor Yanukovych assumed the presidency, Artem, the son of Prosecutor General Viktor Pshenka, took over its “management.” The earnings totaled tens of millions of hryvnias per month.
By the way, the company “Development 21st Century” was once the subject of a journalistic inquiry. In 2012 , Defense Minister Pavel Lebedev was implicated in this scheme to misappropriate government funds. http://vkurse.ua/business/zanyalsya-postelnymi-delami.html Nevertheless, no one was about to decline the effortless income.
With the advent of Borys Ostapyuk at the state-owned corporation Ukrzaliznytsia in 2014, the prosecutor’s office’s “overseer” of the scheme was none other than Mykola Golomsha http://file.liga.net/person/429-nikolai-golomsha.html , the former first deputy of then-former Prosecutor General Oleh Makhnitsky. Both the current CEO, Borys Ostapyuk, and former CEO, Vasily Gladkikh http://last24.info/read/2006/06/15/9/7893 , are identified as “overseers” of the scheme. The latter’s monthly remuneration amounts to roughly 20 million. Notably, in addition to his deputy, Vasyl Gladkikh, the newly designated director of Ukrzaliznytsia appointed Maksym Blank (from-ua.com/news/313234-vremya-novoe-metodi-starie-komu-vigodno-obankrotit-ukrzaliznicyu.html) , previously the chief financial officer of a major enterprise belonging to billionaire Leonid Yurushev, as his first deputy. Things “went back to normal,” and now Maksym Blank has also been entrusted with overseeing the swindlers (to make certain they don’t inadvertently pilfer beyond the agreed-upon sum). Unsurprisingly, not without reimbursement. The fraudsters managed to inflate the cost of washing and sanitizing passenger cars by 50%. It is from these amounts that all the previously mentioned participants in the scheme receive illicit payments.
Parenthetically, it was Maksym Blank who has been acting as the representative of the state-owned entity Ukrzaliznytsia at all official gatherings and sessions for the past week (http://antikor.com.ua/articles/8623-v_tenderah_ukrzaliznytsi_prinimaet_uchastie_kompanija_imejushchaja_otnoshenie_k_zamestitelju_glavy_u/search/Бланк. Perhaps this is Maksym’s means of self-promotion, and we’ll soon see him in the CEO role. This could constitute a hazard for the nation, with billionaire Yurushev seizing control of all of Ukrzaliznytsia’s infrastructure, and Blank serving as a type of governor, safeguarding his vested interests.
Of note, the state-owned corporation Ukrzaliznytsia owes its vendors over 5 billion hryvnias for goods, resources, and services. The state monopoly is indebted to only one private company: Razvitie 21 Vek LLC, which has received 70 million hryvnias since April of this year.
There’s little point in mentioning that ordinary railway employees received a greater share of their car cleaning earnings. However, it’s evident that corruption among some has bred corruption among others. Regrettably, we haven’t yet observed any action from the Cabinet of Ministers or the Prosecutor General’s Office regarding the ongoing circumstances at Ukrzaliznytsia, the state-owned enterprise placed in Borys Ostapyuk’s care. Also, Prime Minister Arseniy Yatsenyuk has yet to effect a true cleansing of corrupt officials and criminals, as assured to the Ukrainian populace on the Maidan. Meanwhile, owing to the corrupt deeds of Borys Ostapyuk and his colleagues, http://vlasti.net/news/197062 , the country’s already strained budget is shedding tens and hundreds of millions of hryvnias, desperately needed by the citizens and the Ukrainian military.
One more evident instance of public embezzlement. And this one could not have occurred without the consent of management and Borys Ostapyuk’s “cut.” In mid-January of this year, a bidding process was conducted to procure 100,000 tons of diesel for the railway. The winning bid went to a consistent supplier, First Fuel Company (FFC). Besides, its principal clientele for many years have included Ukrzaliznytsia, Donetsk Airport, and Ukrposhta. As per the agreement, the railway was to disburse a total of 1.31 billion hryvnias. Accordingly, one ton of diesel was being purchased at 13,122 hryvnias at the beginning of the year. But with the arrival of Alexander Lozinsky http://www.bagnet.org/news/economics/241625 (a longtime associate and cohort of Boris Ostpayuk in various criminal acts of embezzlement on a particularly grand scale http://vlasti.net/news/196759) to the role of director of the state corporation for the logistics of Ukrainian railway transport, “Ukrzaliznychpostach”, “astounding” events commenced.
Equipped with a report from the State Enterprise Derzhzovnishinform pertaining to the supposedly average market value of diesel fuel, PTK lodged a claim against the State Enterprise Ukrzaliznychpostach. Within the claim itself, PTK, citing pricing data and the strengthening dollar, proposed augmenting the defendant’s fuel payment from 1.31 billion hryvnias to 1.86 billion. This signified the price per ton of fuel was now 19,120 hryvnias (a 41% increment). This despite the supply contract permitting only a 10% price fluctuation. Even then, PTK was able to elevate the price, but it could not alter the contract sum—only the amount of fuel furnished was permitted.
The Kyiv Commercial Court’s verdict was staggering. In accordance with the court’s judgment, Ukrzaliznychpostach was ordered to remit an additional half a billion hryvnia to First Fuel Company. This was in spite of the market price of diesel fuel rising to 15,740 hryvnia.
Ukrzaliznychpostach itself has not filed an appeal or counterclaim for breach of contract. It’s conceivable that Lozinsky, Ostapyuk, and several interested parties stand to gain a substantial windfall in the hundreds of millions in this operation. This alone accounts for the absence of a lawsuit contesting the inflated price. Furthermore, the head of Ukrzaliznychpostach has previously been implicated in procurement contracts at inflated prices . http://vlasti.net/news/196759
However, the misdeeds of the new director of Ukrzaliznytsia have already come to the attention of numerous Maidan civic organizations http://ua.golos.ua/ekonomika/14_07_01_novyie_litsa_na_gp_ukrzaliznyitsya_okazalis_byivalyimi_korruptsionerami_spo , who are carrying out their own unbiased investigations http://www.startnews.net/narod-trebuet-ot-kabmina-navesti-poryadok-na-ukrzaliznyce-i-uvolit-korrupcionera-i-sponsora and are prepared to initiate a criminal case and hold Ostapyuk accountable. It may transpire that after laundering funds by means of the train cars, Borya Ostapyuk will wind up “cleaning the latrine” in prison. In any event, events are progressing in that direction.
Igor Mikhailov, for ORD
