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Ukraine’s Wave of Graft Scandals Is a Healthy Sign

The sudden proliferation of corruption scandals in war-torn Ukraine is not unexpected after almost a year at war. It must, however, be viewed in context — namely the complete absence of any such revelations in Ukraine’s would-be conqueror, Russia. Against this background, the scandals are actually a sign of remarkable robustness in a country that only survives thanks to a heroic military and Western life support.

Last weekend, the well-known investigative journalist Yury Nikolov published a Defense Ministry procurement contract for purchasing food for the military at prices 50% and more above retail levels. The Defense Ministry denied wrongdoing but didn’t really dispute the specifics of Nikolov’s reporting. Since Russia invaded last February, the ministry’s procurement has been classified and thus not visible in Ukraine’s cutting edge Prozorro public tender system; ministry officials have refused to respond to legislators’ questions about contracts until the war is over. Nikolov’s demand for a return to prewar transparency likely will fall on deaf ears because of the difficult tradeoff between keeping civil society informed and giving the enemy too much information. But President Volodymyr Zelenskiy, who won election on anti-corruption promises, cannot be accused of ignoring wartime corruption and profiteering.

On Tuesday, Deputy Defense Minister Vyacheslav Shapovalov resigned in the wake of the food scandal.

On Monday, Kyrylo Tymoshenko, Zelenskiy’s deputy chief of staff, tendered his resignation; he was one of the key officials in charge of rebuilding Ukraine after the Russian attacks, and in October, he reportedly drove around in a Chevrolet truck donated to Ukraine for emergency evacuations. After the story became public, Tymoshenko handed over the truck to the emergency services. Then he was accused of using a Porsche loaned by a wealthy businessman and of cheaply renting a large mansion from a well-connected construction magnate.

At the weekend, Ukrainian law enforcement arrested Deputy Infrastructure Minister Vasily Lozinskiy in a sting operation that involved a $400,000 kickback on an equipment purchase. Lozinsky isn’t just any official, but an associate of Prime Minister Denys Shmyhal  during his days in the Lviv city government.

News of this kind was almost white noise in prewar Ukraine. When I helped set up an investigative outfit at Forbes Ukraine in 2012, our reports of corruption were often met with a tired eye roll: So what else is new? After the 2014 Revolution of Dignity, promising to fight graft became a ritual for politicians of all stripes. But while many corrupt schemes were blown up, others emerged in their place. In a recent interview, Yaroslav Zhelezniak, a top legislator in the finance, taxes and customs committee of the Ukrainian parliament, estimated that Ukraine loses 10 billion hrivnya ($271 million) a month on customs corruption alone; the numbers in peacetime were often comparable.

In wartime, however, business as usual is particularly egregious. Ukraine’s economy shrank 32.5% last year, according to the Bloomberg consensus estimate. In 2023, the country counts on more than $30 billion in international support to fund a budget shortfall projected to be 20% of GDP; the deficit is roughly as big as the planned budget revenues. Stealing under such circumstances aids the Russian invaders in many ways, not least by testing the patience of international donors. 

You could also take the view that publishing corruption revelations aids Ukraine’s enemies. 

“Daily scandals during a war and ahead of a new wave of hard fighting are no coincidence,” Oleksiy Arestovich, a former Zelenskiy aide, wrote on his Telegram channel. “A large-scale psychological operation is being conducted against us and many of us weren’t ready to face it.”

As a Russian, however, I see a striking contrast between the freely proliferating Ukrainian reports of corrupt dealings and the total absence of similar news from my country of birth. Corruption in the Russian military indisputably contributed to the failure of its blitzkrieg plan for Ukraine last year. And yet, a year into the fratricidal campaign, not even the many investigative outlets that burst into public view in the last five years have unearthed any major procurement scandals — and not, of course, because there’s nothing to see there.

Vladimir Putin has pushed the journalists writing for these publications out of the country. No matter how good your sources in Russia, it’s hard to unearth graft there from Georgia or Lithuania, and the “patriotic” press that backed or accepted the invasion and continued operating in Moscow and other Russian cities just doesn’t have the wherewithal or the motivation to dig up that kind of story. In December 2022, Putin allowed officials taking part in his “special military operation” to stop publicly declaring their incomes and fortunes, and now the parliament has put an end to legislators’ financial disclosures, too. Dare to poke your nose into officials’ affairs and you’ll find yourself living somewhere far removed from any data that would yield anything sensational.

I’ve sometimes heard from Ukrainians that Zelenskiy has turned authoritarian since the war began — impatient with advice that contradicts his own thoughts, intolerant of political opposition and independent activism. That’s not the message the corruption revelations are sending. Despite the harrowing circumstances Ukraine faces, its independent-minded press still does its best to keep officials under a magnifying glass. I have my issues with the Ukrainian media: They do follow the government line quite closely on the military action. That, however, is probably unavoidable in a country fighting for its survival, a paramount goal for journalists as much as for any other Ukrainians. It’s important, though, that awareness of the common predicament doesn’t stop reporters from obtaining and scrutinizing procurement contrasts or tracing informal ties between politicians and the business community.The former Ukrainian economics minister Tymofiy Mylovanov recently remarked on Twitter that the scandals prove one thing about his country: “Corruption is episodic but the culture shift to fight it is systemic.” Such optimism may not be entirely justified. My experience in both Russia and Ukraine tells me that a year ago, one monstrously corrupt country invaded another — and that in both, patriotism will often serve as cover for the most cynical thievery. When the fighting is over and the fog of war clears, successful profiteers will flash their cash in both countries.

There is, however, a major difference. In Russia, if its regime survives, these profiteers will be able to enjoy life without shame if the Kremlin sees them as allies. Ukraine’s grifters will never feel as secure. The country’s anarchic, justice-obsessed, grassroots-powered civil society and a media that is fundamentally allied to it will always harass the thieves even if it can’t immediately defeat them. That this feature of Ukrainian democracy has survived a year of the brutal invasion and the accompanying screw-tightening  is evidence, if not of a systemic shift, then of the same Ukrainian spirit that has denied Russia a quick military victory and may yet deny it a slow one, too.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Leonid Bershidsky, formerly Bloomberg Opinion’s Europe columnist, is a member of the Bloomberg News Automation Team. He recently published Russian translations of George Orwell’s “1984” and Franz Kafka’s “The Trial.”

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