National Police investigates another "budget cuts" in Kyivzelenbud

"Kyivzelenbud continues to collect criminal proceedings on alleged corruption offences. Thus, the National Police is studying the circumstances of the possible misappropriation of budget funds by officials of this organization during the purchase in 2022 of trucks with loader cranes with a total cost of almost 23 million hryvnia.

In particular, the investigators have already established that the supplier of these vehicles, Rino Trucks Trade LLC, was "preparing" for the relevant tender long before it was held and that each truck was overpaid by about UAH 1.5-2 million compared to the prices of official dealers. In addition, law enforcement officers found out that part of the UAH 8.1 million received from Kyivzelenbud was transferred by the aforementioned company to the accounts of business entities with signs of fictitiousness. Such stories are not new for this department - last year, a case was brought to court regarding the misappropriation of over UAH 115 million during the purchase of special equipment, which was later used for housing construction in Italy.

Law enforcement officials are investigating possible corruption offences by officials of the Kyivzelenbud municipal association and one of its suppliers of specialised machinery.

The relevant investigation is being carried out within the framework of criminal proceedings No. 12023000000000200 dated 21 March 2023, which was opened by the Main Investigation Department of the National Police of Ukraine. The preliminary legal classification of the crimes under investigation is Part 5 of Article 191 of the Criminal Code of Ukraine (misappropriation, embezzlement or seizure of property through abuse of office, committed on a large scale or by an organised group)

What interested investigators?

On 15 November 2022, Kyivzelenbud and Rino Trucks Trade LLC signed a contract for the purchase of special equipment - five VARZ-RTT-K1 flatbed trucks with a Fassi crane based on the Dongfeng DFA 1090 chassis. According to the agreement, the cost of these vehicles was to be UAH 22.9 million.

Subsequently, on 12 December of the same year, the parties signed an additional agreement to the contract of 5 November, according to which they agreed to partially change the make and model of the cranes to be installed on these specialised vehicles. The agreement stipulated that two of the five trucks were to be equipped with Palfinger cranes, and the remaining three were to be equipped with the aforementioned Fassi cranes. Subsequently, Rino Trucks Trade LLC received all the funds stipulated by the contract from Kyivzelenbud - UAH 22.9 million.

During the investigation, law enforcement officers found that the relevant tender, which resulted in the aforementioned contract for the supply of specialised equipment, was conducted by "prior agreement and collusion with officials of Kyivzelenbud". Investigators learned that during the procurement, the cost of the vehicles was overstated, and the "extra" funds were misappropriated by Kyivzelenbud officials in prior collusion with officials of Rino Trucks Trade LLC. Law enforcement officers came to these conclusions based on several important circumstances.

For example, the National Police found out that Rino Trucks Trade had ordered the chassis for the specified special equipment long before the tender was announced - their supplier for UAH 7 million was Golex LLC, which is the official dealer of the Chinese truck manufacturer Dongfeng in Ukraine. In addition, the supplier of Kyivzelenbud had purchased cranes for these vehicles before the tender was held. Thus, Rino Trucks Trade LLC paid UAH 2.56 million to Spetstehservice LLC for 2 Palfinger cranes and UAH 2.53 million to Modus Import LLC for 3 Fassi cranes. Subsequently, according to the investigation, all this purchased equipment was used to equip VARZ-RTT-K1 trucks manufactured by Verkhnodniprovskyi Auto Repair Plant LLC.

According to the aforementioned agreement, the cost of one such vehicle supplied by Rino Trucks Trade to Kyivzelenbud was UAH 4.5 million. At the same time, the investigators found that similar trucks of the same make and model, with the same technical characteristics and equipment, cost between UAH 2.55 million and UAH 3 million on the specialised machinery market, if purchased from authorised dealers. Accordingly, the amount of the "overpayment" for each vehicle was between UAH 1.5 million and UAH 2 million.

Law enforcement also learned that Rino Trucks Trade LLC, after receiving the funds from Kyivzelenbud, transferred a portion of them in the amount of UAH 8.1 million to the accounts of companies that, according to investigators, have signs of fictitiousness. In particular, UAH 7.5 million was transferred to STV Group LLC allegedly for services for "consulting on foreign economic activity, providing advice on setting marketing goals, etc.", and another UAH 548.7 thousand was received from Reno Trucks Trade to Top Accounts LLC for "consulting on marketing, auditing financial accounts, accounting services", etc.

On 21 March 2023, the Pechersk District Court of Kyiv, at the request of law enforcement officers, seized the funds that Rino Trucks Trade LLC and STV Group Company LLC kept in their bank accounts. Subsequently, representatives of these companies tried to appeal against this decision of the judges, but were unsuccessful - on 10 April 2024, the Kyiv Court of Appeal dismissed their appeal. The reason was that, in the opinion of the panel of judges, these funds have the value of material evidence in this criminal proceeding, "since they contain information and can be used as evidence of a fact or circumstance established during the investigation".

Screenshot of the court ruling on this proceeding dated April 10, 2024

It is worth noting that at least until the end of last year, law enforcement officers were investigating completely different crimes in this case, and Kievzelenstroy came to the epicenter of investigators’ attention a little later. In particular, the National Police studied facts of violations of the law, in which persons related to the above-mentioned STV Group LLC may be involved.

For example, investigators pointed out that this enterprise is involved in a scheme “conducting non-commodity transactions by entering into official documents deliberately false information on the sale of goods and services, with the aim of evading taxes and laundering proceeds from crime.” In total, according to the National Police, during 2022, STV Group Company LLC created a tax limit due to the import of goods worth more than 430 million hryvnia. At the same time, according to law enforcement officers, officials of the Main Directorate of the State Tax Service of Ukraine in the Lviv region, who registered the corresponding tax invoices, contributed to the implementation of the said illegal financial and economic activities of the said company.

Persons involved - who are they?

According to the Youcontrol analytical system, Rino Trucks Trade LLC was registered in April 2021. Since December 2023, a resident of Poltava Denys Datsenko has been listed as its director, founder and ultimate beneficiary, and before him, since February 2022, the owner and director of the company was Mykola Bolotov, a resident of Fastiv, Kyiv region.

According to the Clarity Project public procurement analytics database, Rino Trucks Trade periodically participates in tenders held by various state and municipal entities of Ukraine. In total, this company has 6 contracts totalling UAH 134.4 million. The main client of this company is National Energy Company Ukrenergo, with 4 contracts worth UAH 111.1 million. In its turn, Reno Trucks Trade cooperated with Kyivzelenbud only once - under the aforementioned agreement.

STV Group Company LLC (one of the companies to which Reno Trucks Trade transferred funds and which law enforcement officers consider to be fictitious) was registered in Kyiv in November 2005. Its director is Yuriy Pukhyr, while the founder and ultimate beneficiary is Andriy Hudinovich, a resident of the capital.

The Youcontrol system refers this company to the so-called "Sitenko family group", which unites more than three dozen business entities operating in the areas of distribution of consumer goods, construction, real estate, production of inflatable boats, as well as restaurant and hotel businesses. The key people in this group are entrepreneurs, brothers Denys and Taras Sitenko. The latter was a deputy of the Kharkiv City Council of the VII convocation (he was elected from the Samopomich party), as well as an assistant consultant to MP Roman Semenukha in the VIII convocation of the Verkhovna Rada (this MP was elected from the same political party).

Top Accounting LLC (another company that, according to the investigation, has signs of fictitiousness) was registered in March 2020 in Kovel, Volyn region. Its director, founder and ultimate beneficiary is Andriy Vinenkov from Kyiv.

As KV has repeatedly reported, the activities of Kyivzelenbud regularly raise questions from law enforcement agencies, which leads to the opening of criminal proceedings on the facts of alleged corruption offences.

For example, since September 2022, National Police investigators have been studying the cooperation between Kyivzelenbud and 7 companies in the improvement of other parks in the capital. According to the investigation, officials of the municipal association and contractors significantly "profited" from inflated prices in the implementation of these works. In particular, this included works worth more than UAH 52 million in the M. Rylsky Park and the park near the Berkovschyna Bay, which were performed by Kyivzelenbud’s "favourite" contractor, Eurotechnology Group LLC.

In addition, in 2023, law enforcement officers completed an investigation against a group of people, including former officials of Kyivzelenbud, who may have embezzled more than UAH 115 million in 2016-2018 during the procurement of special equipment by this ME. According to the National Anti-Corruption Bureau (NABU), the budget funds were misappropriated by dubiously increasing the price of the equipment after the contracts for its supply were concluded, and the defendants in this case subsequently invested these financial resources in the construction of housing in Italy. As of today, none of the current or former "management personnel" of Kyivzelenbud has been convicted.

At the same time, some of the criminal cases concerning abuses by Kyivzelenbud officials in the improvement of the capital’s green areas are currently being closed simply because of the expiry of the statute of limitations.

The auditors of the Kyiv City Hall also constantly have questions about the work of the Kyivzelenbud management. Last year, the relevant department of the Kyiv City State Administration (KCSA) completed an audit of how the Kyivzelenstroy spent budget funds on work in one park and two squares in the capital in 2018-2021. It was not possible to verify anything about the park because the "auditors" were not provided with the relevant documentation by law enforcement officers who are studying it as part of two criminal proceedings. As for the two parks in the Dniprovskyi and Desnianskyi districts of the capital, it turned out that the officials of the KO committed financial violations totalling about UAH 11.3 million, of which UAH 6.3 million were direct losses to the Kyiv city budget.

Nothing "new" was invented in this case - Kyivzelenbud transferred funds to its contractors for work that was not actually carried out and overpaid for construction materials that cost less. Based on the results of this audit, the management of Kyivzelenbud was provided with 16 recommendations to eliminate violations and prevent them in the future, but almost all of them were ignored.

Since 19 October 2023, Kyivzelenbud has been headed by Yuriy Bakhmat (pictured). Prior to him, from 1 August of the same year, Victoriya Seredina, the then first deputy director general of the municipal association, was acting as the head of this communal association. She temporarily held the position of acting CEO after the dismissal of Oleksiy Korol, who had been in charge of Kyivzelenbud from 16 July 2019 to 31 July 2023.

In its activities, Kyivzelenbud is subordinated to the Department of Environmental Protection and Climate Change Adaptation of the Kyiv City State Administration (until June 2023 - the Department of Ecology and Natural Resources), which has been headed by Oleksandr Voznyi since 11 January 2021. For a long time, the environmental sphere of the capital has been under the control of the Deputy Head of the KCSA Petro Pantelyeyev.