The final stage of the competition for the position of head of the state-owned enterprise "Ukrspirt" will begin in early September. The future of this alcohol monopoly giant, which comprises over 40 distilleries and boasts a multi-billion-dollar annual turnover, depends on how transparent the competition is.
Headhunters didn't help
The head of Ukrspirt has been undecided since last winter. The competition was announced on January 28th, with the process promised to be as open as possible: in keeping with the times, recruiters from world-renowned companies such as Baker Tilly, MCG Recruiting, and AgriPersonnel, as well as Georgian parliament member Giorgi Vashadze, were invited to the selection committee. Under the leadership of Deputy Minister Yaroslav Krasnopolsky, the "selectors" first narrowed down two dozen candidates from nearly 30 applicants, then narrowed down to two. Their names were announced on television by the selection committee shortly before the final vote of the Cabinet Committee on Appointing Enterprises of Particular Importance to the Economy. The "lucky ones" were Anatoliy Dalibozhik, former CEO of the Pidhaichytsky and Zaluchansky distilleries, and Nina Garkava, former head of the Sumy Regional State Administration (until December 2006). And one of the candidates would inevitably take the position. Investigative journalists rushed to examine the business documents of the companies headed by both contenders, and curious facts began to emerge. The ministerial lobby pulled the "best people" from the bench, and the commission members eagerly approved them. Both had serious legal troubles, and one even had a court verdict (though his sentence was short-lived: the official was released under amnesty). But, like a bolt from the blue, Arseniy Yatsenyuk's wrath unleashed. The prime minister ordered the vote results overturned, and did so right at a Cabinet meeting, reprimanding Minister of Agrarian Policy Oleksandr Pavlenko. "They held some kind of competition and chose two 'absolutely squeaky clean people,' one with four criminal cases, the other with six," the prime minister explained. Pavlenko promised that a new competition would be held as soon as possible. The minister was indeed in a hurry—at the beginning of summer, Petro Poroshenko announced major government reshuffles for the fall. However, the commission remained the same—it was decided not to change the composition of the recruiters. As a result, on August 1, the Ministry of Agrarian Policy and Food held a "test run." Among the less prominent state-owned agricultural enterprises, the commission decided to single out Ukrspirt specifically: applicants for it would be considered separately, after more junior managers had been appointed. Initially, 37 candidates were nominated for Ukrspirt, but three were excluded due to an incomplete set of documents submitted to the commission.
The selection committee has taken past mistakes into account. The names of the candidates are being carefully concealed: they are reviewed using sequential numbers, avoiding any details. The rationale is, literally, "a reluctance to disclose information about the candidates, as their names and surnames are personal data protected by law." Advisor to Minister Pavlenko, committee member, and deputy head of the working group on privatization, Oleksiy Zubritsky, lifted the veil of secrecy. "We have several candidates who were previously under investigation. If a person has not been convicted, there can be no charges against them," he said at a press conference. Consequently, both candidates, Dalibozhik and Garkavaya, remain among the contenders, the reason Yatsenyuk rejected the results of the first competition in the spring.
TEN CRIMINAL CASES BETWEEN TWO
The careers of both candidates have been arduous. The editorial board has obtained a collective appeal from employees of the Ivano-Frankivsk Regional State Association of the Spirits, Liquor, and Vodka Industry to the president, the prime minister, the relevant minister, and the head of the Verkhovna Rada's anti-corruption committee. In it, the vodka producers disclosed biographical details of the individuals they were diligently promoting to head the state-owned enterprise "Ukrspirt." The document reveals that, while director of the Zaluchansky distillery, Dalibozhik embezzled public funds and concealed the state-owned enterprise's profits (a total of 8 million hryvnias). He also employed a "common" vodka market scheme by creating his own company, "Agro," which supplied the state-owned company with raw materials at prices twice as inflated. Dalibozhik's track record includes illegal alcohol production (another common market scam, allowing state funds to be siphoned off), failure to pay excise duties, illegally leasing land belonging to a state-owned enterprise, and violations of tender laws totaling 57 million hryvnias. In 2010, he was dismissed from his position and a criminal case was opened. "He evaded the investigation for some time, but was then detained in Odessa and placed in custody," the document states. "The 'semi-finalist' of the 'transparent competition' nevertheless managed to avoid a lengthy prison sentence. In 2011, Dalibozhik was convicted under Part 2 of Article 367 of the Criminal Code, but was released under an amnesty."
In the case of Nina Garkava, the amounts of abuse cited by vodka producers are much higher. After resigning as governor of Sumy Oblast (due to retirement age), the official assumed control of the Ivano-Frankivsk State Association of Alcohol and Liquor Industry (OSAI). The first incident involved the purchase of soybeans, "not supported by documentation," worth 30,6 million hryvnias. The next incident involved fictitious contracts with Max-Metal LLC, totaling 32,1 million hryvnias. Similar schemes were used for fictitious deliveries of equipment to factories (10 million hryvnias), through which the state incurred VAT liabilities from the company totaling 4,6 million hryvnias. Garkavaya carried out one of the alleged violations literally right before the New Year's tree, on December 29, 2011: she signed a contract with Varyag LLC for services to promote the Knyaginin brand. The cost in question was 170 hryvnias. Garkava's largest deal in office, according to vodka producers, was a tender for the Hercules Trading House: the state-owned company transferred UAH 127,3 million to businesses for "cattle and horse hides." Since these items are not involved in the distillery's production cycle, it's likely a fictitious export scheme (for the purpose of illegally recouping VAT). Garkava also failed to evade the law: a criminal case was opened against her for the mass dismissal of workers who had gone on strike against this policy. A second case was opened for embezzlement through abuse of office, and another for the illegal production of excisable goods. In other words, the company was caught operating under the table. All proceedings are still open, and investigative and operational activities are ongoing (including questioning of witnesses and the suspect).
WHO BENEFIT FROM THE SCANDAL
Given that the talents of both leaders have a chance to shine again under the leadership of the state-owned enterprise "Ukrspirt," the question arises: who is promoting Dalibozhik and Garkavaya in the competition, and why? Legally, they have no right to reject them, especially if the documents have already been submitted. However, nothing prevented the commission responsible for filling the vacancy from prohibiting dubious candidates from re-nomining. After all, it was precisely because of their names in the finals of the first, cancelled competition that the process had to be restarted, and their ability to "confuse their own interests with the state's" drew the Prime Minister's ire. And, of course, it was no accident that Dalibozhik and Garkavaya's candidacies were included on the list of semi-finalists. Commission members from the ministry and respected HR firms either have a vested interest in the selection of candidates themselves or are advocating for their political patrons. The desire to prevent negative publicity about previous semi-finalists is reflected in the statement by committee member Anatoly Zubritsky, who promised to interrogate all candidates "under pressure" using the Midot system.
If the assumption about the lobby's interest at the top of the ministerial ladder is correct, it's reasonable to assume that Minister Pavlenko himself or his entourage are interested in the emergence of dubious candidates. This theory takes on new meaning given that the Minister of Agrarian Policy's name is among the ministers Yatsenyuk will propose dismissing in September. In this case, the prime minister will have to either dismiss Pavlenko amid scandal (for it takes a special talent to step on the same rake twice in six months) or... overlook the appointment. The latter scenario also makes sense, as the prime minister won't want to show weakness, demonstrating that the situation in the ministry has spiraled out of control, further eroding the People's Front's dwindling approval ratings. However, there is another possibility. Someone is diligently trying to put Minister Pavlenko at the prime minister's mercy (and simultaneously wrest the ministerial seat from Samopomich, whose quota Pavlenko was seeking to enter the Cabinet). In this case, the beneficiaries of this cunning plan must be sought among the official's inner circle. It's possible that they could even be found within the commission itself.
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