State-owned Ukrgasbank spends millions on advertising and strange purchases

State-owned Ukrgasbank spends millions on advertising and strange purchases

State-owned UGB (formerly Ukrgasbank) held several controversial tenders, for example, it ordered an advertising video for UAH 3.65 million, which is almost $90,000. The tender was held without open bidding. The bank also ordered Oracle software support services, ready to pay UAH 25.696 million, but the bidding ended at UAH 13.4 million.

This is reported by Telegraf. It is noted that the increased attention to UGB purchases arose due to the fact that they decided to change the positioning of the brand and corporate style during a full-scale war.

"These questions are related to the fact that, firstly, the state bank for some reason decided to carry out restyling in the middle of a war, when the money could be used for more important things. Secondly, it is not known how to calculate the effect of this action. And, thirdly, it is not a fact that all the money will go to restyling, and not, excuse me, to kickbacks, as has happened more than once," the article says.

Advertising for 90 thousand dollars

One of the most suspicious tenders announced by UGB, the authors of the material say, was an order for one video clip up to 45 seconds long for UAH 3.65 million – “or almost $90,000.” Moreover, without a competitive procurement procedure.

"At one time, the famous singer Olya Polyakova complained (or maybe bragged) that the most expensive video in her career cost her 100 thousand dollars. The video for her song "The Ice Has Moved" was shot by the famous (and very expensive) video director Alan Badoev. The production cycle of the 6-minute video lasted several months, the video has a lot of computer graphics, and also involves world-class figure skating stars. As we can see, "Ukrgasbank" significantly outperformed Polyakova. The cost of a second of its advertising video is 7 times more expensive than a second of the singer’s video," the analysts noted.

It is emphasized that one cannot help but be alarmed by the fact that the Ukrgasbank tender took place as a "purchase without the use of an electronic system." That is, without open bidding.

"According to the Government’s decision, this procedure can be used to purchase services worth up to UAH 1.5 million - otherwise, only bidding is open. True, the resolution contains a stipulation that more expensive purchases without an electronic system are also possible, "when work, goods or services can be performed, delivered or provided exclusively by a certain business entity." But the same resolution provides an exhaustive list of circumstances under which the basic procedure can be violated. I wonder what could have been so special about the contractor - Tabasco Worldwide LLC (Tabasco advertising agency) - that Ukrgasbank had to order the video only from it?" - the article emphasizes.

Its authors emphasize: the possible argument about the need to protect intellectual property rights looks weak - after all, Ukrgasbank bought the intellectual property rights to the script of the video for 70 thousand UAH from the same Tabasco Worldwide LLC last year. "By the way, at the same time, he ordered this company to develop an update to his brand and communications strategy, also for a lot of money - 3.994 million UAH," they recalled.

It is noted that advertising is also unlikely to become a "work of art", for the creation of which procurement without an electronic system is also permitted. And the argument about the "lack of competition for technical reasons", according to them, is also untenable - after all, in Ukraine there are "hundreds of decent agencies capable of making high-quality advertising videos".

Moreover, it is emphasized that the prices of other companies are “not so draconian.”

"It is noteworthy that, as Nashi Groshi writes , another company belonging to the owners of Tabasco Worldwide LLC, Sigma UA, also likes to win multi-million dollar government tenders, and also through a single-participant procedure," they recalled.

Tens of millions for software support services

Another dubious tender is Oracle software support services, 42 sets of 5 different types of software. The tender is interesting because, with the expected cost declared by the bank at UAH 25.696 million, the bidding closed at UAH 13.4 million.

The winner of the aforementioned auction was LLC Intrasystems. This company is known for its participation and victories in numerous auctions announced by various state institutions and enterprises:

• "Ukrtransgaz";
• "Ukrenergo";
• NABU and others.

"Ukrgasbank also has close relations with it. According to Prozorro data, the bank has repeatedly purchased equipment, software, and services for updating it from this company. In 2023, Ukrgasbank purchased absolutely identical technical support services (updates) for the same Oracle software from Intrasystems as during the aforementioned tender in July 2024 (except that in 2023, not 42, but 33 sets were purchased)," the analysts say.

They note that the auctions are fundamentally different in that, in particular, in last year’s auctions, unlike the 2024 auctions, the purchase had the status: “without using an electronic system.”

In addition, according to the figures in the tender documentation, the money that Ukrgasbank spent on supporting one copy of the software in 2023 during a tender with one participant was on average 1.6 times higher than this year.

"Well, then simple math... shows us the difference - about UAH 6.5 million overpayment by Ukrgasbank for software in 2023. Plus the potential overpayment of another UAH 10 million, which was included by bank officials, which could have taken place this year if the bidding had not been competitive. So you have purchases "without using an electronic system", so you have a video for UAH 3.65 million from one participant," the material summarizes.

Ghost Journal

Another item of dubious spending by the state bank is UAH 7.85 million to fill the media with messages about restyling. The plans were "Napoleonic":

• 6 all-Ukrainian magazines;
• 29 regional print media;
• 9 global and 21 local TV channels;
• 109 online publications.

As a result of the auction held on February 26, 2024, the amount fell to UAH 6.398 million. And the winner was Alt Media LLC.

"The choice of some advertising platforms immediately raised questions - in particular, the list includes annual publications, the release date of which is unlikely to coincide with the peak of the restyling itself, and the online versions still present publications from last year. On the websites of some of the declared resources, information about the restyling of Ukrgasbank is presented as ordinary news - that is, without an advertising banner," the material says.

Moreover, it is emphasized that no one knows about one of the declared magazines – “Gromada”. And “Ukrgasbank” agreed to pay it almost 100 thousand UAH for publication on the last page of the cover and twice as little for “internal” publications.

"Of the three dozen colleagues interviewed, none had ever heard of it. As, apparently, the omnipresent Google has not heard of it either, which, upon request of "Gromada magazine", in various combinations, gives out anything - from a publication in Hungary to a 19th century magazine, but not a platform where Ukrgasbank could advertise its restyling. Unless it is some kind of secret publication for bankers, publication in which raises the bank’s rating to the skies. In a word - a mystery," the analysts state.

Spending on souvenirs and mystery shoppers

The author of the material also raised doubts about the bank’s spending on souvenir products. For example, the Ukrgasbank tender for "Information indicators and stickers".

"The price of the "Working Hours" signs in the finalized tender is 508 UAH, and on the market you can find quite decent ones for 300+ UAH, and this is not even wholesale. On the other hand, it seems that now it is not quite "Ukrgasbank", but "UGB eco bank", which now may not be satisfied with a plastic sign, but only a metal one with engraved letters. Or, for example, a hoodie for 777 UAH in the "Branded Clothing" tender. And on the market the price starts from 250 UAH," the analysts said.

Another interesting layer of tenders is the "somewhat excessive" Internet promotion services during a full-scale war. In particular:

• SMM services, expected cost of UAH 1.65 million.
• Services for setting up and posting information on Internet resources, for which 800 thousand UAH was offered.
• Posting information and advertising materials on the Internet, for which Ukrgasbank was willing to pay UAH 9.25 million.

"And we haven’t even mentioned the " Mystery Shopper Services " for which Ukrgasbank was ready to pay 1.45 million and the planned 450 thousand UAH for " Car Wash Services " (it ended up being cheaper, but still somewhere around 1,200 UAH per month per car)," the authors of the article summarized. Noting that a request was sent to Ukrgasbank’s management "regarding the assessment of the effectiveness of all the above services, their appropriateness during the war, as well as the incomprehensible overpayments during tenders with one participant." However, no response was received.