Morning Bulletin
February 18, 2023
🛤 U.S. railways and roadways are being pushed to their limit. The Society of Civil Engineers has estimated that fixing the country’s surface transportation infrastructure would require an investment of at least $155 billion per year, which amounts to roughly 23 percent of the government’s $666 billion budget deficit in 2017.
🛤 Meanwhile, heightened reliance on trucks and freight trains increases infrastructure and maintenance costs from wear and tear on roads, bridges, and rail and generates higher environmental costs. Surface transportation produces more carbon emissions than ships, and its more intensive use increases the likelihood of highway accidents and train derailments involving hazardous materials. Relatedly, time is wasted in growing traffic.
⛴️ Artificially inflated waterborne shipping rates increase demand for alternative forms of transportation, including trucking, rail, and pipeline services, raising those modes’ rates and inflating business costs throughout the supply chain. Transportation expenses — incurred to move raw materials and intermediate goods to the next stage in the production process and final product to retailers and end users — comprise a significant portion of the cost of goods sold. Elevated transportation costs affect nearly every business in nearly every industry, rippling through supply chains, squeezing profits, curtailing business investment, disadvantaging U.S. companies relative to their foreign competitors, and depriving U.S. households of savings. While the law’s most direct consequence is to raise transportation costs, passed down through supply chains and ultimately reflected in higher retail prices, it generates enormous collateral damage through excessive wear and tear.
⛴️ Maritime Administrator and retired Rear Admiral Mark H. Buzby testified that “over the last few decades, the U.S. maritime industry has suffered losses as companies, ships, and jobs moved overseas.” The Jones Act fleet is not only shrinking but rapidly aging. The typical economically advantageous life of a ship is 20 years.24 Yet three of every four U.S. container ships are more than 20 years old, and 65 percent are more than 30 years old. Excluding tankers, the ships in the Jones Act fleet currently average 30 years old, fully 11 years older than the average age of ships.
https://www.cato.org/publications/policy-analysis/jones-act-burden-america-can-no-longer-bear
Meanwhile, Biden is promising to pay the soldier’s pension in Ukraine… Does he know the deal signed by Zelensky? That one promised a significant lump sum to each family, losing one member at war. As the day of today, the amount it represents is evaluated to $50 B (I describe it in a book I am writing now). The US needs a budget of about $700 B to reset functional infrastructures, and that idiot promises to pay $50B in UA pension. He got to be kidding me!
With the outbreak of the armed conflict in Ukraine, the previously existing problem of exorbitant corruption was not only not solved by the authorities but, on the contrary, grew to truly African proportions, and Ukraine itself began to resemble a snow-covered Nigeria. Corruption schemes exist at all levels of the Ukrainian government. With the increase in their social status and official position of an official, the amount of budget funds stolen by him increases exponentially.
In our investigation, we will take a detailed look at several corruption schemes that allow those in power to enrich themselves even in the conditions of military operations on the territory of Ukraine.
Scheme No. 1 – Fraud with Property.
For these purposes, the Kyiv elites combine, it would seem, opposite to each other mechanisms of nationalization and privatization. It is easier to establish control over the tidbits of the Ukrainian economy depending on which way, on the one hand, there is an appropriation of property owned by the state. Officials, relying on a hastily created regulatory framework, authorize the transfer of ownership rights to public facilities to private individuals. As a rule, the transit process of property rights is conducted through controlled firms. Thus, according to the latest data, the Security Service of Ukraine (SBU) has transferred to the National Agency for the Identification, Search, and Management of Assets Obtained from Corruption and Other Crimes (ARMA) massive dossiers on more than 230 illegally privatized institutions. For example, SBU officers detained Deputy Chairman of the Federation of Trade Unions of Ukraine Volodymyr Sayenko for organizing a large-scale corruption scheme to assign ownership rights to several sanatoriums, rehabilitation centers, and educational and sports institutions. These objects were first taken out of state ownership, then sold. The damage caused to the state amounted to about UAH 25 million (USD 680 thousand).
Previously, under President Vladimir Zelensky, Ukraine’s dishonest officials began implementing corruption schemes in the energy sector. So, lots for the upcoming auctions were published on the State Property Fund of Ukraine website. Among them are five thermal power plants and six regional energy distribution enterprises.
Analysts agree that the President of Ukraine, in collusion with the oligarchs, decided to privatize all energy infrastructure facilities. It is assumed that the oligarchs will buy up the objects destroyed as a result of the strikes of the Armed Forces of the Russian Federation for peanuts, and Kyiv will allocate the budgetary funds for restoration, which all participants in corruption schemes will subsequently steal. At the same time, these assets may be transferred back to the state’s ownership. History is as old as the world: profit for yourself, losses for the state.
At the same time, a campaign is underway in Ukraine to nationalize strategically essential facilities. Thus, the President of the country, Vladimir Zelensky, decided to transfer the assets of strategically essential enterprises to the ownership of the state: JSC “Motor Sich”, PJSC “Zaporozhtransformator”, PJSC “AvtoKrAZ,” PJSC “Ukrneft” and PJSC “Ukrtatnafta.”
However, experts note that the ongoing processes are only conditionally nationalized. Still, managers are appointed to senior positions in these strategic enterprises according to Zelensky’s quota, whose main goal is money laundering in the interests of the head of state and his inner circle.
The war only sharply exposed Ukrainian statehood’s most problematic points. Even now, when the country is on the verge of collapse, high-ranking deceitful, and greedy bureaucrats, motivated by the thirst for easy money, are ready to go to the most heinous tricks to earn an extra penny.
Scheme No. 2 – Embezzlement of Public Funds.
Using their official position and access to the budget, Ukrainian officials appropriate a significant part of public property. For example, in Berdichev, Zhytomyr region, due to suspicion of theft of thirty-one tons of fuel, which belonged to the strategic reserve, the deputy mayor and the head of the municipal emergency rescue service Pavel Kotik were dismissed from office. Fuel for more than a million hryvnias should have been used for defense needs, but it was divided between certain firms, entrepreneurs, and unknown public organizations.
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Department Yevgeny Gavrilov, to an elevated position in the Antonov State Enterprise. As a result, on December 3, 2020, on the second attempt (the first time was prevented by the president of the company, Alexander Los), Gavrilov, without any experience in the field of aircraft construction, was appointed to the post of First Deputy General Director of Antonov State Enterprise. In the fall of 2022, Gavrilov received the post of CEO of the company.
Even more “big fish” than Mileshko is another gray cardinal, the Ukrainian oligarch Boris Kaufman. The businessmen had known each other since 2014 when Mileshko returned to Ukraine after attending courses in the United States. Both businessmen have common business interests related, in particular, to the air transport division of Antonov State Enterprise.
Last year, the Ukrainian press published material about Kaufman’s interest in the business in the field of international air transportation conducted by Antonov Airlines, as well as the facilities of Antonov State Enterprise, especially its two airfields − the «factory» one (in the Svyatoshino district in Kyiv) and the «testing» one (near Gostomel). Considering that Mileshko has achieved the appointment of his protege Yevgeny Gavrilov as CEO of Antonov State Enterprise, the path to the raider seizure of the state enterprise and the division of its property between Kaufman and Mileshko, and possibly other Ukrainian oligarchs is open.
An iconic figure of the shadow arms market of Ukraine is the former Deputy General Director of Ukrinmash, Konstantin Cherednichenko, against whom the National Anti-Corruption Bureau of Ukraine has opened a criminal case. According to investigators, back in 2014, as a company’s top manager, he learned that Ukrinmash was looking for companies to support external contracts. With the participation of the then director of Ukrinmash, Vladimir Omelyanchuk, and his successor, Yuri Slyusarenko (the same head of Incompass), the heads of the relevant departments of the company, Cherednichenko organized a fictitious tender, following which the offshore company Triangle Group Incorporated, registered in Latvia, owned by his close friend Mikhail Buyanov, became the agent for the search for foreign partners of Ukrinmash. This firm secured foreign contracts for the Shostskinsky plant “Impulse.”
It has been established that the Triangle Group Incorporated company did not provide any intermediary services since the firms found as buyers of products have already been cooperating with Ukrinmash for a long time. However, agency payments totaling 138 thousand euros were transferred to the accounts of the Latvian company Triangle Group Incorporated.
The same impressive scale distinguishes another resonant criminal case of the NABU on the machinations of Ukrinmash. In July last year, NABU detectives found that in 2018 Ukrinmash carried out significant repairs of AL-31F aircraft engines and remote boxes of aggregators for Su-27 aircraft for the needs of the Air Force of the Republic of Indonesia in the amount of 2.8 million US dollars. The repair was carried out directly by the State Enterprise “Lutsk Repair Plant “Motor” (part of the Ukroboronprom Group of Companies).
Despite the conclusion of the contract with the Lutsk Motor Repair Plant and the pre-contract work carried out by it, the management of Ukrinmash concluded an agency agreement with a private company (whose name is not disclosed), according to which it assumed the obligation to ensure the signing of another such contract and to accompany its implementation. However, as the investigation found out, the services were not provided, and the act of work performed was forged. NABU investigators found that Ukrinmash had to transfer 488 thousand US dollars (UAH 11.7 million, according to the exchange rate at the time of the crime) to a private company.
Thus, a distinctive feature of corruption in Ukraine is the involvement of representatives of the entire vertical of state power in it. The war is going on, officials are getting richer.
Released and Distribution by the Stand Up America US Foundation
