Petr Bagriy: Tender scams of the "pharmacy" mafia
This man is directly responsible for the exorbitant cost of treatment in Ukrainian hospitals. As one of the leading figures in Ukraine's so-called pharmaceutical mafia, Petro Bahriy profited for years from speculation in medicines, not hesitating to fleece not only the state budget but also the pockets of seriously ill Ukrainians. Having started his business under Kuchma, he continues it today under Poroshenko, successfully carrying out his dealings under every government, ignoring revolutions and proving that successive governments are no different from each other, taking up the baton of corruption from their predecessors.
Petr Bagriy. From Cauldrons to Farmak
Born on July 8, 1966, in the village of Galayki in the Tetiiv district of the Kyiv region, Petr Ivanovich Bagriy never imagined he would one day make a multi-million dollar fortune in pharmaceuticals. Instead, he was drawn to technology, and a specific kind at that: in 1983, he enrolled in the heat and power engineering department of the Kyiv Polytechnic Institute, graduating in 1989 with a degree in mechanical engineering specializing in boiler installations and heat exchangers. He then took a job at Kyiv's Special Department No. 23 "Kotlomontazh" of the Promtekhmontazh-2 trust, where within five years he rose to the position of deputy head of the department.
But already in 1991, not content with his salary, Petro Bagriy and two friends created Ganza LLC, which carried out construction and repair work at Kyiv enterprises. They raised about $20, bought equipment and tools, and hired several workers. One of their first clients was the Lomonosov Kyiv Chemical and Pharmaceutical Plant, where Filya Zhebrovskaya, Pavel Zhebrivsky's older sister, worked as chief accountant.Read more about them in The Zhebrovskys-Zhebrivskys. Medicine, drugs, politics). In the same year 1991, according to data Skelet.OrgFilya Zhebrovskaya arranged the privatization of her factory by a "work collective," resulting in the creation of JSC Farmak, and she took the position of its director of economics. As with most enterprises subject to similar privatization, Farmak reached the brink of bankruptcy between 1992 and 94, prompting its unpaid workers to sell their shares. Zhebrovskaya soon became the owner of 45% of the company (her brother acquired another 15%) and its general director. The privatization of Farmak, as well as the Darnitsa pharmaceutical association (which included the Borshahiv Pharmaceutical Plant and the Kyiv Vitamin Plant), was overseen by then-Minister of Health Yuriy Spizhenko (1950-2010). His daughter, Natalia Spizhenko, now controls 11,5% of the Borshahiv plant and Farmak through Panacea-1997 CJSC (their surname is telling, isn't it?).
Filya Zhebrovskaya
In the early 90s, barter was the dominant method of payment for Ukrainian businesses, so Ganza LLC soon needed a warehouse for sugar, Kyiv champagne, Mayak tape recorders, and Farmak medications. All of this then had to be sold or bartered. Thus, in February 1994, Ganza Trading House was founded, with Petr Bagriy as its director. It turned out he had a much greater talent for commercial transactions than for repairing boiler equipment. He soon switched entirely to trade. By the end of 1994, Bagriy had determined the primary focus of his business: the sale to Russia of medical products manufactured by Kyiv pharmaceutical factories (Farmak, Darnitsa), as well as those from Hungary and Slovakia (for which purpose, the Vipeks joint venture was created).
According to Bagriy himself, how he found out skelet.org He profited from these sales, making up to 100-200% of the purchase price of the drugs, and payments were made in hard currency—and in the 90s, foreign currency exporters were kings of the Ukrainian economy. However, Bagriy never disclosed the size of his earnings or the names of his "protectors," without whom the successful business of yesterday's boiler engineer would have been impossible. In 1998, Ganza LLC was re-registered as a closed joint-stock company, owned by Petro Bagriy and his partner, Mikhail Kuchirko, often referred to as the brains behind their prolific business duo.
But that same year, the Russian default put an end to this business. Having lost the Russian market, Ganza began to develop the Ukrainian one, but the crisis swept through it as well. Then, Bagriy and his partners' business survived thanks to a successful marketing ploy called "social pharmacies." Behind the advertising of special pharmacies for low-income Ukrainians with medications at "below-market" prices was the following: while the average profit margin on medications in regular Ukrainian pharmacies was 55-65%, Bagriy reduced it to 20-25% in his "social pharmacies." He still remained profitable, while also gaining the image of a "benefactor," and his "social pharmacies" were flocked by perpetually ill and perpetually impoverished pensioners. Furthermore, his manufacturing partners focused on producing medications at the lowest possible cost, including generics (copies of old foreign drugs with expired patents) and outright counterfeits. In the "social pharmacies" they didn't pay much attention to the labels.
From Yanukovych to Tymoshenko
In 2002, Andriy Pidaev, who had previously headed the Crimean Ministry of Health since 1995 and had an extremely corrupt reputation, became the new Minister of Health of Ukraine in Viktor Yanukovych's government. His appointment was lobbied for by numerous influential friends and business partners, including Lev Mirimsky, Vasyl Khmelnytsky (Read more about it in Vasyl Khmelnytsky: the planted oligarch) and Nikolai Kuzma, the owner of about 20 pharmaceutical and commercial firms. The latter simply "rode the roost" under Pidaev, controlling up to 60% of all pharmaceutical tenders awarded by the Ministry of Health. However, in 2003, Ganza also squeezed into this niche. Its owners, Bagriy and Kuchirko, had ties to Mykhailo Pasichnyk, the owner of the Falbi pharmacy chain and president of PharmUkraine, who was appointed Chairman of the State Service for Medicines in February 2003. This service was created specifically for Pasichnyk, whose patron was Tatyana Zasukha, the wife of Kyiv Governor Anatoly Zasukha and a friend of Lyudmila Kuchma.
Mikhail Pasichnik
There's another version of Ganza's successful entry into the tender business: in 2003, Bagriy and Kuchirko formed a business alliance with another "pharmacist," Andriy Lirnik, owner of L-Contact LLC and Pharmaceutical Preparations of the Regions LLC. A few months earlier, Lirnik had hired Maksym Beregovoy, a former SBU representative at the Ministry of Health who oversaw the "preservation of national interests" in tender procurement, as his deputy. Beregovoy was so mired in corruption that he was ousted from his lucrative position by his less-than-scrupulous superiors, but he retained the extensive connections that had led Lirnik to recruit him.
Between 2003 and 2004, Bagriy and his associates consistently won tenders for the procurement of medications for cancer patients, with sums amounting to tens of millions of hryvnias. Even then, they were accused of inflating the selling price of the medications by 1.5 to 2 times. To create the appearance of fair competition, Bagriy submitted his companies, Ganza, Sky Pharm, Pharmadis, Matrix, Alter-Ego, and several other shell companies, to the tenders. In addition to Pidaev, the Ministry of Health's participants in these shell schemes included Andrei Safronov, head of the procurement department, and Yulia Chalova, secretary of the tender committee.
The first Maidan and the change of government (Pidaev, Pasechnik, and Safronov were dismissed) only temporarily perplexed Ukraine's pharmaceutical mafia: it quickly reorganized its ranks and continued its diligent work on mastering budget funds.
Here, too, Bagriy benefited from well-timed connections. He became close to former Minister Pidaev when he offered him substantial kickbacks for tenders for oncology clinics, and Pidaev recruited him to help him siphon off 300 million hryvnias allocated by Kuchma for the elite Feofaniya Hospital. During this process, Bagriy met the new director of Feofaniya, Zinoviy Mytnyk, and allegedly through him, Olga Bogomolets, who had been the head physician of the dermatology and cosmetology clinic since 2003 and, in the fall of 2004, became Viktor Yushchenko's personal physician—literally saving the new president's face. This connection was so useful that it soon became stronger: Bagriy and Bogomolets became godfathers! In addition, Bogomolets is also the godmother of Irena Kilchytska, the closest associate of the Kyiv mayor (2006-2012) Leonid Chernovetsky (Read more about it in How "Lenya Kosmos" robbed Kyiv and moved to Georgia).
Most importantly, through Bogomolets, Bagoriy contacted Kateryna Chumachenko-Yushchenko, donating 5 million hryvnias to her "Ukraine-3000" foundation. However, Bagriy cheated here too: he allocated 4,3 million hryvnias in cash and used the remaining 700 hryvnias to supply his own medications. Considering his markups, it's safe to say he saved 300-400 hryvnias. The "investment" paid off in full: by 2006, Ganza alone had won tenders worth 31 million hryvnias. That same year, Bagriy managed to promote his partner from the Matrix company, Yuriy Konstantinov, to the post of new chairman of the State Service for Medicines. Sources Skelet.Org It was reported that Bagriy paid "only" $80 (400 hryvnias) for this position, yet it brought him multi-million dollar profits. Media outlets reported that in 2007, Bagriy and Lirnik's groups of companies "won" 90% of tenders for the "Oncology," "Tuberculosis," "Sclerosis," and "AIDS" programs, totaling approximately 450 million hryvnias! There were reports that they were assisted in this by Yuriy Feshchenko, Director of the Institute of Physiology, and Svetlana Cherenko, Chair of the HIV/AIDS Committee.
Petro Bagriy became dizzy with success and greed. In 2008, when his friend Zinoviy Mytnyk became Deputy Minister of Health, Bagriy "won" a tender worth 11,4 million hryvnias under the expanded tuberculosis program for the supply of the drug "Capreomycin" (with the help of Yuriy Feshchenko). Bagriy jacked up the price to 119,7 hryvnias ($25) per package, even though the manufacturer was charging around $2—a markup exceeding 1100%! Incidentally, today its retail price in Ukrainian pharmacies is around $5, although wholesalers (including Bagriy's companies) buy and import it for $2,8 (since 2008, the dollar has fallen slightly, and prices have increased). The "law" of a 50-60% profitability remains in effect!
But inflating the price by 12 times was too much, and in 2008, the Bagriy affair prompted the creation of a special investigative commission in the Verkhovna Rada, headed by Valeriy Konovalyuk (Party of Regions). The investigation was never completed, and since Konovalyuk also headed the commission on the legality of Ukrainian arms supplies to Georgia, this later led to claims that Bagriy was subjected to "political persecution by pro-Russian forces." The SBU's parallel investigation into the "pharmacists' case" (Bagriy, Lirnik, and Kuzma) ended with an assassination attempt on Colonel Gennady Golovkov: on October 16, 2008, a homemade bomb was thrown at his feet right in the middle of the street (Tatarskaya Street, Kyiv). The intractable colonel, unwilling to close the case in exchange for a substantial donation, suffered multiple shrapnel wounds.
The most famous scandal of that period was the procurement of Tamiflu in 2009: it was called the most shameless scam during the embezzlement of the Tymoshenko government's billion-dollar appropriation allocated to combat swine flu in Ukraine.
By skillfully whipping up panic among a population that was willing to buy medications at any price, and certainly not condemning the colossal budget expenditures, the pharmaceutical mafia profited handsomely. Their deceitful cynicism was off the charts! First, why did Ministry of Health officials choose and promote Tamiflu from a wide range of imported flu medications? Because it was manufactured by the French company F. Hoffman-La Roche, whose distributor in Ukraine was Ganza, and whose business partner was the Bagria plant Lumer-Pharm, which opened in 2009 (a bottling and repackaging facility for imported medications). Second, Ganza purchased Tamiflu from F. Hoffman-La Roche for 67 hryvnias and sold it in Ukraine through a tender for 251 hryvnias! Meanwhile, Yuriy Konstantinov, who in 2009 was already listed as the head of the Department of Regulatory Policy for the Circulation of Medicines and Products at the Ministry of Health, personally staged a public comedy of lies in front of journalists. He claimed that F. Hoffman-La Roche had initially asked 340 hryvnias for a package of Tamiflu, but that, supposedly through lengthy negotiations with Ministry of Health representatives, the price was reduced to 251. And people believed him, unaware they were being told a fairy tale. (Incidentally, the well-known "Doctor" Komarovsky insists that Tamiflu is the only acceptable treatment for modern flu. This begs the question: is this Komarovsky a doctor? Perhaps he's in Bagriy's pay?)
Pyotr Bagriy. From Mytnik to Suprun
On March 11, 2010, Zinoviy Mytnik was appointed as the new head of the Ministry of Health of Ukraine in the government Mykola AzarovThis meant that for Petro Bagriy, the change in power in the country had no impact on his position as the number one pharmaceutical tenderer. The only problem was that the tender programs no longer allocated half a billion, as before—but the sums were still impressive. By the end of 2010, Bagriy's companies had won tenders totaling 277 million hryvnias (148 for centralized procurement and 129 for individual hospitals). His business ally, Andriy Lirnyk, earned another 287 million hryvnias through tenders.
But then a burning feeling of envy arose among some representatives of the new government. And Tatyana Bakhteeva began to dig under the Minister of Health Mytnik.Read more about it in Tatyana Bakhteeva: "cured"!).
For a while, Prime Minister Mykola Azarov tried to defend the minister, claiming that "the goal of Mytnyk's enemies is to gain access to financial flows." Mykola Yanovych was 100% right about this, but he didn't mention that Mytnyk's friends wanted to keep these flows for themselves. Ultimately, not only Mytnyk but also Yuriy Konstantinovyi was removed from the Ministry of Health, and criminal cases were opened against the entire Tender Committee—and this seriously undermined Bagriy's position. Furthermore, the new minister, Ilya Yemets, hired Boris Litovskyi, an old rival of Bagriy's who had once represented Semyon Mogilevich, as an advisor. But then force majeure occurred: Litovskyi showed up at the Ministry of Health and, delighted with his own importance, began twiddling his thumbs at Andriy Ignatov, the man of Sasha the Stomatolog (Oleksandr Yanukovych) himself. As reported, Skelet.OrgThe next day, Stomatolog's personal security arrived for a "conversation" with Litovsky. The poor fellow ran recklessly across Mariinsky Park in one shoe, forever forgetting the way to the Ministry of Health, and his companies didn't participate in any tenders for two years. Yemets himself, who had stopped all the tenders, didn't last long in his post either: having somehow angered President Yanukovych, he was fired in May 2011. But his successor, Anishchenko, hastily began to make up for lost time, and this allowed Bagriy and Lirnyk's companies to earn 364 million hryvnias in tender fees in 2011.
But by the end of the year, they were being squeezed out by firms protected by Sasha Stomatolog: the Fistal family (Goral, Med-Invest), the Dzigua and Savarovskiy families (Kras), Rinat Akhmetov's A'STA, and Mykola Kuzma's Ukrmed, who had found a way to connect with the Donetsk group. But Bagriy's relationship with them and the new minister, Anishchenko, didn't go well; at the end of 2011, he even tried to challenge the tender results in the Antimonopoly Committee, after which investigators from the Prosecutor General's Office visited him. The 2012 haul was even more dire: Bagriy netted 168 million hryvnias, Lirnyk 73 million. Sources reported that Bagriy and Lirnyk made their main income through the Oncology program, assisted by Kyiv's new chief oncologist, Dmitry Osinsky, who was allegedly "hooked" by the experienced schemer Maksym Beregovoy. For example, when procuring the drug docetaxel, the Ministry of Health suddenly adopted new conditions (regarding packaging and dosage), which, for some reason, exactly matched docetaxel from Actavis, distributed by Bagriy's Ukroppostach. He won the tender, despite the fact that his Romanian-made product ultimately cost 1.5 times more than the German-made docetaxel.
Thus, Bagriy managed to hold on to the tender bidding, and in 2013, under Minister Raisa Bogatyreva (Read more about it in Raisa Bogatyreva: On how the favorite of the gangster "Family" made money), even improving his result to 194 million. But ultimately, Bagriy became known as one of the biggest corrupt officials in the Ministry of Health tenders, and at the end of 2013, a journalistic investigation was conducted into him, leading to exposés in the media about the "pharmaceutical mafia."
Petr Bagriy: Tender scams of the "pharmacy" mafia
Already in the first days of the Euromaidan, Bagriy began considering a possible change of power—and sent his friend and partner, Kuchirka, to the scene. Kuchirka had been a loyal member of the Medical Hundred throughout the "revolution of dignity" and had become a volunteer, delivering several shipments of medication. But Kuchirka primarily worked closely with Oleg Musiy – in which Bagriy and Lirnik decided to invest. The investments were intended not for him, but for those who distributed seats in the new government in February 2014. As sources reported Skelet.OrgIn fact, Bagriy and Lirnik bought Musia's position as the new head of the Ministry of Health, and staged his appointment as the nomination of a "simple Maidan activist" from the barricades straight to the ministerial post, to the joyful cries of hundreds of Self-Defense forces.
Musiy effectively became Bagriy's "pet" minister. He foisted his own people on him: he reinstated Mykhailo Pasechnik, who had been rescued from mothballs, as head of the State Service for Medicines, appointed Elena Alekseyeva as his deputy, and Natalia Lisnevskaya, also a trusted confidant of the Zhebrovsky family and who strengthened Bagriy's frayed relationship with the owner of Farmak, became Musiy's deputy. Just a month after her appointment, Lisnevskaya was given command of several Ministry of Health departments responsible for tender procurement. The results were immediate: in 2014, Bagriy won 478 million hryvnias in tenders! Although, of course, the hryvnia wasn't what it used to be…
Petr Bagriy: Tender scams of the "pharmacy" mafia
Things didn't work out for Bagriy under the new minister, Oleksandr Kvintashvili. He not only fired Pasechnik and Lisnevskaya, but also initiated some large-scale reforms of Ukrainian healthcare, although he himself seemed to be unaware of their purpose. Nevertheless, his intention to remove tenders from the Ministry of Health's jurisdiction and hand them over to international "non-profit" organizations caused serious concern among the pharmaceutical mafia. This is understandable: they won't be able to buy these organizations or install their own people there. Therefore, starting in the spring of 2015, Kvintashvili began to face regular attacks from Ukrainian oligarchic pharmacists. Petro Bagriy, now chairman of the Association of Ukrainian Pharmaceutical Manufacturers, played a leading role in these attacks. And he was concerned about more than just the change in tender organizers.
By late 2014, Bagriy's face had already become prominent in the media, where he regularly appeared as the chairman of the Association of Pharmaceutical Manufacturers and constantly spoke about the need for "import substitution" in pharmaceutical tenders. The essence of his "idea" was that tenders should be won by companies offering domestically produced medications.
However, Bagriy did not admit to owning the Lumer-Pharm plant, which miraculously transforms imported products into "domestic" ones. Nor did he mention that he was lobbying for the interests of his Ukrainian colleagues and even competitors in the pharmaceutical business. That they are indeed uniting was demonstrated by the results of recent tenders, where Bagriy's company, without any bargaining, conceded a lucrative order worth 200 hryvnias to a competing firm, Fram Co. This unification is not so much against a change in the tender organizer (Ulyana Suprun, who resigned from Kvintashvili's position, continued the initiative), but against the "invasion" of Ukraine by products from foreign pharmaceutical corporations, whose interests are lobbied for by the current head of the Ministry of Health.Read more about it in Ulyana Suprun: How an American volunteer minister is destroying Ukrainian healthcare).
On the one hand, it might seem that the domestic tender corruption in the Ministry of Health, which no one will regret, is finally being replaced by those long-awaited "transparent schemes" of the global economy. But could it be that this is simply another replacement for the "cash-grabbers," and that domestic corruption, brazen and insatiable, will be replaced by Western corruption, sophisticated and ruthless?
Sergey Varis, for Skelet.Org
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