Over the past four years, the Ukrainian government has systematically weakened the supervision of state-owned enterprises financed by foreign aid, which resulted in corruption in Ukraine was rampant even during the war with Russia. That’s according to an investigation by The New York Times (NYT) based on documents and interviews with about 20 Ukrainian and Western officials.
When Russian troops invaded Ukraine on February 24, 2022, Kiev’s Western allies faced a dilemma: how to provide billions of euros or dollars to support a government fighting Russia without the money ending up in the pockets of corrupt managers and civil servants. The stakes were high, as key Ukrainian war industries—electricity distribution, arms procurement, and nuclear energy— they controlled state-owned enterprises, which for many years served as treasure houses for the domestic elite, wrote the NYT.
In an effort to protect their money, the United States and European countries insisted on surveillance. They asked Ukraine to allow groups of external experts on supervisory boards to control spending, appoint managers and prevent corruption. But as the NYT investigation found, over the past four years, the Ukrainian government has systematically sabotaged this oversight, allowing corruption to flourish.
The administration of President Volodymyr Zelensky appointed loyal people to councils, left some seats vacant or blocked the process of creating these councils. Leaders in Kiev even rewrote corporate charters to limit oversight, maintain government control and allow hundreds of millions of dollars to be spent without outside oversight. At the same time, supervisory boards perform a key control function – they allow independent experts, usually from abroad, to review fundamental decisions of state-owned Ukrainian enterprises.
Currently, the supervisory boards are a central element of the corruption scandal surrounding the Zelensky government. Ukrainian anti-corruption authorities have accused people from Zelensky’s immediate surroundings of siphoning off and laundering 100 million dollars from the state-owned nuclear company Enerhoatom. The Zelenskyi administration accused the Enerhoatom supervisory board of failing to prevent corruption, but it was the government of President Zelenskyi that effectively disabled the board, the NYT found.
From documents and interviews with about 20 Western and Ukrainian officials who worked closely with or served on the oversight boards, the NYT uncovered political interference not only at Enerhoatom, but also at the state-owned power company Ukrenerho and the Army Procurement Agency. Some people spoke anonymously to describe confidential negotiations. Zelensky’s unnamed adviser refused to comment on the matter, saying that supervisory boards are not the president’s responsibility.
For years, European leaders have privately criticized but grudgingly tolerated Ukrainian corruption, arguing that supporting the fight against the Russian invasion is paramount. Therefore, money continued to flow into Ukraine, even as Ukraine undermined outside oversight. “We care about good governance, but we have to take that risk,” said Norway’s special envoy to Ukraine, Christian Syse, who represents one of Kyiv’s biggest donors. He stated that this is happening “because there is a war. Because it is in our interest to support Ukraine financially. Because Ukraine is defending Europe from Russian attacks.”
The interference with Enerhoatom’s supervisory board is a prime example of how Ukrainian leaders have obstructed efforts to prevent corruption. Zelenskyi’s administration delayed the creation of the council, and when it was finally created, the government left one seat unfilled – thereby hampering its ability to make decisions. Under normal circumstances, the council might have prevented what authorities now describe as widespread corruption: project contractors had to pay kickbacks to Enerhoatom of up to 15 percent of the contract amount, according to investigators.
Zelenskyj was also elected in 2019 as a person who wants to fight corruption. But after the Russian invasion in 2022, he relaxed anti-corruption rules to speed up arms purchases and protect military secrets. Zelensky also then began to cooperate with politicians and businessmen, whom until then he called criminals.
The scandal surrounding Enerhoatom weakens Zelensky politically and calls into question his efforts to achieve Ukraine’s entry into the European Union and NATO – of two institutions that are reluctant to accept a country marked by corruption. Zelensky considers both of these memberships to be crucial for the country’s future. If Kyiv does not curb corruption, it may not even get the hundreds of billions needed for post-war reconstruction. “There will be more hesitation to provide large funds,” explained Arvid Tuerkner, who works as the director for Ukraine at the European Bank for Reconstruction and Development.
In the aforementioned corruption case, known as Mindičgate, eight people face charges of several crimes, including embezzlement, money laundering and illegal enrichment. Among them is Zelenský’s former business partner Timur Mindič. Zelensky’s “right hand” Andrij Jermak resigned after his house was searched. He has not yet been charged. Former Deputy Prime Minister Oleksij Černyšov is accused of having paid more than 1.3 million dollars as a bribe.
