The National Police are investigating "budget embezzlement" during the reconstruction of the Dehtyarivskyi overpass

The National Police is investigating potential embezzlement and misappropriation of budgetary funds during the reconstruction of the Dehtyarivskyi overpass in the capital.

Preliminary investigations by the detectives have revealed that at least UAH 301.7 million out of UAH 920 million, which the contractor for these works, LLC "Rostdorstroy" (one of the largest Ukrainian companies in this field, owned by businessmen from Odesa), was supposed to receive, were allocated for the purchase of various materials at inflated prices. In particular, about 20% is believed to have been overpaid for concrete, and 33-42% for rebar steel. According to law enforcement, part of the financial resources received from the city budget also ended up in the accounts of companies showing signs of fictitiousness – for further cash conversion. Furthermore, it was also discovered that officials from "Kyivavtodor" Corporation (the client of the reconstruction) directly "ordered" the contractor which companies should supply all necessary materials for the works.

Currently, law enforcement in the capital, within the framework of criminal proceedings №12024100000000260, is investigating possible "budget dissections" during the implementation of the Dehtyarivskyi overpass reconstruction.

This investigation was initiated by the Main Department of the National Police of Kyiv at the beginning of 2024 – on February 28. The individuals involved in this case are preliminarily being charged with a crime stipulated by part 4 of article 191 of the Criminal Code (CC) of Ukraine – appropriation, embezzlement, or possession of property through abuse of official position, committed on a large scale or under martial law or a state of emergency.

What this is about

On June 1, 2023, a contract was signed between "Kyivavtodor" Corporation and LLC "Rostdorstroy" for the reconstruction of the overpass as part of the transport interchange at the intersection of Dehtyarivska Street and Oleksandr Dovzhenko Street. The total cost of the works under this agreement was supposed to be UAH 920 million. The contractor for the reconstruction "Rostdorstroy" was selected without a competition since there were no other willing competitors. According to the expert report published at that time regarding the project documentation review, the total estimated cost of the reconstruction at that time amounted to UAH 1.27 billion.

During the investigation, law enforcement established that during the implementation of the said contract, officials from LLC "Rostdorstroy" implemented a mechanism for misappropriating funds by purchasing various building materials at inflated prices and further transferring the difference from the funds received from "Kyivavtodor" to the accounts of business entities showing signs of fictitiousness – for further cash conversion and appropriation. Additionally, some funds were transferred by the contractor to such fictitious "entities" for allegedly obtained goods, works, or services, which were in fact not delivered or performed.

According to the investigation, all of this was done in the interests of officials from "Kyivavtodor" Corporation – supposedly, it was the officials of this municipal corporation who gave instructions to the head of LLC "Rostdorstroy" regarding the purchase of materials and equipment from specific companies, the list of which was predetermined.

In particular, "Rostdorstroy" transferred approximately UAH 301.7 million to three unnamed LLCs in court rulings as payment for the purchase of various goods at inflated prices, which were used in construction. Including UAH 249.7 million thus was transferred for asphalt concrete, and another UAH 44.2 million – for the repair mix "Sika", among others.

During the monitoring of prices for "asphalt concrete of brand 1 on BMP bitumen," law enforcement discovered that the price pointed out by LLC "Rostdorstroy" for this material turned out to be 20% higher than prices for similar asphalt in other regions. Detectives paid attention to the distance from asphalt concrete manufacturers to crushed stone quarries, from which raw materials are brought for asphalt production. That is, it implies that logically and mathematically, the asphalt concrete purchased by "Rostdorstroy" should have been cheaper, since less money was spent on its production and delivery to the construction site of the Dehtyarivskyi overpass.

The police also found that UAH 29 million was spent by "Rostdorstroy" on hot-rolled periodic profile rebar steel of class A-III and smooth rebar steel of class A-1 of different diameters at the same price – UAH 63.4 thousand per ton. However, as the law enforcement learned, the same day the Mykolaiv Region Recovery Service ordered road repairs from the same "Rostdorstroy," including such steel at a cost of UAH 35.4-42.1 thousand per ton in their budget, which is 33% cheaper than the steel the company purchased for the Dehtiarivska overpass reconstruction. Additionally, detectives found an advertisement from one of the companies engaged in building protection structures from "Shaheds," in which the prices for such rebar were accounted for at UAH 36.5 thousand, 42% cheaper.

It is worth noting that the court rulings do not clarify whether the expenses on rebar steel were included in the funds transferred to the three unnamed companies referred to earlier.

Screenshot of the court ruling on this investigation dated October 17, 2024

"Thus, it has been determined that during the cost formation for procurement to perform repair works, officials of the municipal corporation intentionally overstated the scope and cost of works when calculating the expected procurement cost, resulting in potential contractor organizations signing contracts at prices significantly higher than market prices during the tender for the procurement of goods and services. Then, after the contract is concluded for work execution, acts of completed works are signed, which were not actually performed, and the cost of materials during their execution is significantly higher than average market prices," stated in the court rulings on this case.

On October 17, 2024, the Holosiivskyi District Court of Kyiv granted law enforcement access to documents stored in the office of LLC "Rostdorstroy" – project-estimate documentation for the works mentioned above, defect acts, acts of completed works, etc.

History and details

Recall, the Dehtyarivskyi overpass was built in 1963. In the 90s, its condition was assessed as pre-emergency, and by 2017-2021 – as non-operational. Due to this, the city authorities decided to reconstruct it, but in fact, it was about constructing a new structure without using elements of the existing bridge. Due to the emergency state of the overpass before the reconstruction "Kyivavtodor" had to even temporarily reinforce it with additional supports and dismantle part of the beams. The new bridge, by the way, was planned to be "bigger" – the project determined its width should be 40 meters (12 meters wider than the current one). As part of the reconstruction, as noted by "Kyivavtodor" in 2023, they also planned to update the pavement of Dehtyarivska, Olena Teliha, and Oleksandr Dovzhenko streets at the interchange area.

And already in the fall of 2023, during the execution of the reconstruction, an extraordinary event occurred: on September 30, the span structure of the overpass collapsed. According to eyewitnesses, during the installation of the seventh beam, it broke, and falling caused a domino effect and collapsed all previously installed beams. As a result, the entire span structure "lay" on the road.

Dehtyarivskyi overpass after the collapse

A few hours later, the Kyiv City State Administration (KCSA) officially confirmed the collapse of the overpass structures. The message assured the absence of victims or injured and dryly stated that emergency rescue services and specialists were working on the site to determine the causes of the incident. That same evening, the city authorities followed up with additional information, citing the work client – "Kyivavtodor" Corporation – stating that the responsibility for conducting work at the facility lies exclusively with the contractor.

In the "Rostdorstroy" group, which includes the same-name contractor, confirmed the officials’ statement – the work executors "verbally" assumed responsibility, noting that for these types of works, payment was not made, and no damage was dealt to the city budget. The contractor did not comment on what led to the collapse, pointing to the necessity of conducting an examination.

At the same time, "Rostdorstroy" confirmed rumors that they had used an experimental type of beam measuring 36 meters long, which had previously been used in Ukraine only once (during the reconstruction of a destroyed bridge near Borodyanka in Kyiv region.- Media). They also assured that the reconstruction would be completed on time, although on the collapse day, it was reported about the postponement of commissioning the interchange "due to the need to fix shortcomings."

Nevertheless, various versions circulated in the social sphere regarding what led to this accident. Particularly, some activists expressed doubts about the quality of the beams and concrete used. In response to such accusations, Daniil Vakhovskyi, a spokesperson for JSC "Svitlana Kovalska Reinforced Concrete Structures Plant", which manufactures beams for this overpass, stated that beams of this type have been produced at their facilities before and have passed all necessary examinations. He also noticed that LLC "Rostdorstroy", which installs the beams, accepted them without comments, so there can be no claims against them.

Another possible cause was suggested by the Armed Forces of Ukraine serviceman, Kyiv volunteer and activist Oleh Symoroz. According to him, "Kyivavtodor" demanded from LLC "Rostdorstroy" to open the overpass for traffic as of October 5 this year. Likely, as he assumes, because of this, the contractor may have deviated from technology without securing the already installed beams.

Law enforcement has taken on the task of determining the true causes of such an event – immediately after the collapse, the capital’s prosecutor’s office initiated a pre-trial investigation into the violation of safety rules during works on an object of increased danger at the overpass construction site in the Shevchenkivskyi district of the capital, which resulted in grave consequences (part 2, article 272 of the CC of Ukraine). However, to this day, law enforcers have not reported any investigation results, at least intermediate ones.

On December 20, Kyiv mayor Vitaliy Klychko opened the traffic on the Dehtyarivskyi overpass for vehicles and trams on new tracks. Then at KCSA, it was announced that all planned works were intended to be completed in the spring of 2024. The interchange was finally opened on May 24.

And already immediately after the opening of the criminal case regarding the alleged embezzlement and misappropriation of funds during the reconstruction of the Dehtyarivskyi overpass, the city authorities were quick to deny any violations of the law. So, on March 4, 2024, KCSA, referencing "Kyivavtodor" Corporation, reported that tender procedures in ordering these works were conducted transparently and in accordance with the law, and the information spread by some media regarding price inflation during the reconstruction "contains prejudiced conclusions that do not take into account the current market situation."

Meanwhile, in "Kyivavtodor," they also threatened the media that "in case of spreading false, inaccurate information that disparages the image and business reputation, the corporation will be forced to demand in legal order a refutation of such information and compensation for the damage to their reputation." Interestingly, the National Police also reported about possible price inflation, but the capital municipal "road workers" did not "attack" the law enforcement.

Who is behind the contractor

According to the YouControl analytical system, Odesa’s LLC "Rostdorstroy" was registered in August 2005. Its director is noted as Oleksiy Andryushyn, the founder as the Austrian company "Yuttem AG GmbH," and the ultimate beneficiaries are Odesa residents Yevhen Konovalov and Yuriy Shumakher (pictured left).

The YouControl system attributes this company to the "Rostdorstroy" group, which unites more than three dozen business entities engaged in road and highway construction. The key people and co-owners of this group are the aforementioned Konovalov and Shumakher. The latter, by the way, is a deputy of the Odesa City Council IV-VIII convocations. In the current cadence, he is a member of the "Trust Deeds" faction, representing the same-name party of Odesa mayor Hennadiy Trukhanov. The latter, note, on May 4, 2023, was arrested on suspicion of embezzlement when purchasing the admin building of the "Krayan" plant. However, the day after the arrest, Hennadiy Trukhanov was released from the detention center on a bail of UAH 13.4 million, which was posted for him by the Odesa deputy of the same "Trust Deeds" faction, Dmytro Tantsyura.

LLC "Rostdorstroy" is one of the largest contractors for road repairs and other infrastructure works in Ukraine. According to the Clarity Project public procurement analytics database, this company has 669 contracts to its account totaling UAH 89.7 billion. The largest customers of "Rostdorstroy" are regional Infrastructure Recovery and Development Services (formerly "regional avtodors") – Mykolaiv region (81 contracts totaling UAH 14.4 billion), Odesa region (64 contracts totaling UAH 13.1 billion), Poltava region (62 contracts totaling UAH 11 billion), and others. Concerning cooperation with "Kyivavtodor," "Rostdorstroy" has signed 5 contracts with this municipal corporation totaling UAH 1.5 billion.

Recall, companies included in the "Rostdorstroy" group have repeatedly appeared in cases regarding possible embezzlement of Kyiv city budget funds.

For instance, in 2018, the National Police opened a case on the possible misappropriation of funds during the repair of the road network of Alma-Atynska Street (DVRZ district), which the previous year was carried out by "Kyivshlyakhbud" LLC – one of the above-mentioned business group’s enterprises, which currently has 85 contracts with "Kyivavtodor" totaling UAH 4.8 billion. Law enforcement suspected that this contractor of the municipal corporation was conducting fictitious financial operations, withdrawing budget funds into cash.

Additionally, since July 2022, the National Police has been investigating other "budget dissections" involving the same subjects – "Kyivavtodor" Corporation and "Kyivshlyakhbud" LLC. Law enforcers established that during the repair of three streets in Kyiv by this contractor in 2021-2022, which cost around UAH 182 million, UAH 8.2 million might have been embezzled and misappropriated. A familiar scheme of inflating the cost of materials needed for repairs was used, as well as conducting works in a hasty manner. As a result, this year, law enforcement informed five individuals in this case about suspicions, including the general director of "Kyivavtodor" Corporation Oleksandr Fedorenko (pictured right) and the director of "Kyivshlyakhbud" LLC.

The activity of "Kyivavtodor" Corporation and the communal enterprises part of it regularly raises claims from law enforcement.

For instance, since 2020, the National Police has been studying possible appropriation of budget funds by officials from the aforementioned "Kyivavtodor," as well as the subordinated ME "Kyivavtoshlyakhmist" and some district road maintenance managements (RMM). According to the investigation, "road communal workers" inflated the cost of repair works, used poor-quality asphalt, received bribes for using municipal vehicles by private individuals, etc. Law enforcement has paid special attention to the procurement of anti-parking bollards: most of these restrictive devices, costing roughly UAH 19.5 million, did not meet State Standards and, seemingly, were purchased at inflated prices. However, for nearly four years, no individual involved in this case has been held accountable.

Also, the National Police is currently investigating a case of official negligence by the head of ME "Kyivavtoshlyakhmist" Bohdan Kobernyuk (he was informed of suspicion on March 15, 2024), due to which, according to the investigation, the city budget lost UAH 3.5 million during a series of works on bridges. Recently, the court imposed a preventive measure in the form of a personal commitment on Kobernyuk but refused law enforcement in his removal from the office. Maintaining the suspect in "his post" was justified by his lawyers by stating that a critical infrastructure enterprise like "Kyivavtoshlyakhmist" cannot operate without such a specialist.

Furthermore, law enforcement, in particular, is investigating facts of official negligence by the general director of "Kyivavtodor" Corporation Oleksandr Fedorenko (he received a suspicion this year, on February 15). Investigators found that this official did not properly control the work of the subordinated ME "RMM Solomyanskyi District," resulting in damage to the city’s territorial community amounting to UAH 278.5 million. The issue is that "road communal workers" organized an illegal landfill at the site on Kadetskyi Hai Street, even though RMM had valid contracts for the removal and disposal of their waste. As a result – soil contamination with chemical substances.

Note, the aforementioned Oleksandr Fedorenko has headed "Kyivavtodor" Corporation since May 19, 2020 (until July 5, 2022, he led the corporation as an acting general director). "Kyivavtodor" Corporation is subordinated to the Transport Infrastructure Department of KCSA, headed numerously by Ruslan Kandybor since September 1, 2021. The activity of this structural unit of the capital’s municipality has been personally controlled by Kyiv Mayor Vitaliy Klychko since November 9, 2021.

Author: Ivan Kulyk

Source: KyivVlada