Oleksii Mykolaiovych Lyubchenko
Biography
Ukrainian economist and civil servant. Head of the State Tax Service from April 29, 2020 to May 20, 2021. First Vice Prime Minister of Ukraine — Minister of Economy of Ukraine from May 20, 2021 to November 3, 2021. Member of the National Security and Defense Council of Ukraine (June 4, 2021 — November 5, 2021.
Education
In 1993, he graduated with honors from Kyiv State Economic University with a degree in Economic and Social Planning. Doctor of Economics.
In 2007, he completed his doctoral studies at the Council for the Study of Productive Forces of the National Academy of Sciences of Ukraine.
Fluent in German.
Career
- From June 1987 to July 1987, he worked as an auxiliary worker at the experimental section of the Smelyansky Machine-Building Plant in Cherkasy region.
- From July 1993 to 1994, he worked as an expert in the Macroeconomics program at the Center for Market Reforms.
- In 1994-1995 — Senior Economist at the Smila City Council of Cherkasy Oblast.
- In 1995-1997 — Head of the Department of Municipal Property and Entrepreneurship of the Smila City Council of Cherkasy Oblast. He worked as Head of the
- Department of Municipal Property Management of the Department of Economics and City Property of the Executive Committee of the City Council.
- In early 1998, he was appointed Head of the Department of Economics and Property of the Cherkasy Regional State Administration. He held the position of Deputy Mayor for the activities of the council bodies and was a member of the executive committee.
From September 1998 to February 1999, he was Deputy Head of the Department of Economics of the Cherkasy Regional State Administration. - In February 1999, he was appointed Deputy Head of the State Tax Administration in Kirovograd Oblast, and in May 1999, he became First Deputy Head of the Administration in Kirovograd Oblast.
- From February 2003 to 2005 — Head of the State Tax Administration in Cherkasy region.
- From February 2005 to 2009 — Assistant to the Head of the Patronage Service, Deputy Head of the Kirovograd Regional State Administration.
- From September 2009 to June 2011 — Deputy Head of the State Tax Administration of Ukraine.
- From June 2011 to February 2012 — Director of the Department of Taxation of Legal Entities of the State Tax Service of Ukraine.
- In 2012-2014, he was an assistant to Viktor Tymoshenko, Member of Parliament of the VII convocation.
- From February 2012 to July 2014 — First Vice President of PJSC “Ukragrokhimholding”.
- From July 2014 to 2015 — Advisor to the Head of the Division of Advisors of the Department for Supporting the Activities of the State Fiscal Service of Ukraine.
- Since October 2015 — First Vice President of PJSC “Ukragrokhimholding”.
- On April 29, 2020, he was appointed Chairman of the State Tax Service of Ukraine by the Cabinet of Ministers of Ukraine.
- On April 14, 2021, the Cabinet of Ministers reappointed Oleksiy Lyubchenko as the Head of the State Tax Service. According to the government’s decision, Oleksiy Lyubchenko will hold the position of the Head of the State Tax Service for another 5 years.
On May 20, 2021, the Verkhovna Rada of Ukraine appointed Oleksiy Lyubchenko as First Vice Prime Minister, Minister of Economy of Ukraine.
Declaration
- According to his 2019 declaration, Oleksiy Lyubchenko and his wife Oksana own four apartments (two in Kyiv, two in Cherkasy and the region) and a 4.4-hectare land plot near Kropyvnytskyi.
- The family has two cars: Land Rover Evoque (2013) and Nissan Micra (2007) and two boats: Bombardier utopia 205 and Buster Magnum.
Lyubchenko keeps $35,200, €48.8, and 265,400 UAH on his PrivatBank accounts, and another $12,000 and €14,000 in cash.
Family
His wife is Oksana Lyubchenko. She works at PJSC “Ukragrokhimholding”. Oleksiy Lyubchenko’s declaration states that his wife is engaged in renting out property. Oleksii and Oksana have a son, Andrii, born in 1994.
Unofficial biography
As the journalists of the Slidstvo.Info project found out, the son of Oleksiy Lyubchenko, the head of the State Tax Service, Andriy Lyubchenko, as of May 2020, owned property whose origin he could not explain. In particular, since 2013, he has owned an apartment of more than 100 square meters, as well as a parking space in one of the new buildings in the center of Kyiv. At the time of the purchase, Liubchenko Jr. was 18 years old. According to journalists’ estimates, this property could be worth at least $215,000.
In a commentary to journalists, he said that he did not remember where he got the money to buy the apartment and parking space. When asked if his parents helped him, he replied: “Probably”.
Also in early 2020, Lyubchenko Jr. purchased a 2019 Porsche Macan. On the automaker’s official website, the price for such a car starts at $72 thousand.
According to the son of the country’s chief tax officer, he earned money for this car by doing marketing. “Well, I’m actually working, I have a third-group individual entrepreneur, I’m engaged in social media marketing: Facebook, Instagram advertising, Google, etc. So, in principle, there is nothing very strange and, in my opinion, this car was not too expensive,” said Andriy Lyubchenko.
According to Liubchenko Jr.’s Instagram page, a few years earlier he had driven a 2013 Mercedes-Benz. In 2020, this car belonged to a private company registered in Cherkasy region, where the country’s chief tax officer is from.
Apparently, it was this car that Andriy Lyubchenko was detained by patrol police for drunken driving in 2018. The offender pleaded guilty in court. But he was not punished. As it turned out, the time limit for prosecution had expired by the time the case was considered. According to the tax officer’s son, it was a company car and he used it for work.
The head of the State Tax Service himself did not respond to calls and messages to answer questions about the origin of his family’s wealth.
Valuable personnel
Soon, the media drew attention to the tax officer’s success for the first time. In 2009, Dzerkalo Tyzhnia published a large article by journalist Yuriy Butusov about tax fraud in Yulia Tymoshenko’s government and tax schemes that were implemented under the roof of so-called “dear friends” — politicians and businessmen close to President Viktor Yushchenko.
Butusov explicitly named Lyubchenko as an appointee of Yushchenko’s political party, the National Union for National Security, and pointed out that he was in charge of VAT (value added tax) and income tax administration at the Tax Service, the main “gray” scheme of the time.
Mentor to Yanukovych’s team
After Viktor Yanukovych won the presidential election and the so-called “Donetsk clan” came to power, Oleksiy Lyubchenko retained his position as a valuable personnel, theorist and taxation practitioner. Lyubchenko’s boss was Vitaliy Zakharchenko, the future head of the Ministry of Internal Affairs and a state criminal, and his deputies and colleagues were other representatives of the “Donetsk clan” — Andriy Holovach and Oleksandr Klymenko (the same one who later headed the Super Ministry of Revenue and Duties (popularly known as Minzdokh), under whose roof he organized a system of state racketeering and had a boxing gym in his office).
Lyubchenko worked for this company for over a year and left only after he had taught the Donetsk people what he knew.
Not subject to lustration
Despite the fact that Oleksiy Lyubchenko was subject to the lustration law because he was an official during Yanukovych’s time and therefore cannot hold high positions now, the law was not paid any attention to. Thus, Oleksiy Lyubchenko joined the elite club of “unlustrated Yanukovych cadres” and joined the company of Andriy Bohdan, Petro Poroshenko and other worthies.
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Compromising evidence
Media reports say that due to the fact that Lyubchenko held a top position in the tax service under President Yanukovych, he is not eligible to hold high office under the law “On the Purification of Government.” MP Yulia Klymenko wrote about this on Facebook. She noted that the lustration period for Lyubchenko is 10 years after his previous position.
According to the press, Oleksiy’s candidacy was lobbied by the head of the Ministry of Finance, Serhiy Marchenko. Journalists also call Lyubchenko a man of Viktor Tymoshenko and Ilya Pavlyuk (the president’s friend, who is associated with customs officials).
Undeclared car
In September 2020, MP Oleksandr Dubinskyi appealed to the National Agency for the Prevention of Corruption to check the circumstances of the case of Lyubchenko’s undeclared car. It was the taxman’s Toyota Land Cruiser, which was involved in an accident in 2020.
The car fled the scene before the police arrived. The license plates were replaced.
Later it was found out that the car belonged to PJSC “Ukragrokhimholding”, but the politician did not indicate it in his declaration. The NACP responded that it would investigate this fact.
Oleksiy Lyubchenko became the new head of the Ukrainian tax service, replacing Serhiy Verlanov, who “lost the trust of people.” The candidacy of the new head of the State Tax Service was approved by the Ministry of Finance.
Due to the quarantine, the Cabinet of Ministers decided not to hold a competition after Verlanov’s dismissal. Instead, the Ministry of Finance was instructed to interview a candidate for the post of head of the State Tax Service. Finance Minister Sergiy Marchenko lobbied for Lyubchenko’s candidacy and even took him to the President’s Office for “approval.” The decision to appoint him was made today at a government meeting.
Oleksiy Lyubchenko began his career in government agencies back in the 90s and has extensive experience in the tax field. The Hroshi informant will tell you what is known about the chief tax officer.
Declaration
Liubchenko filed an income declaration as a candidate for the post of Deputy Minister of Finance.
Lyubchenko’s declaration lists three apartments in Cherkasy, Smila and Kyiv, a 4,800 m² land plot in Znamianka registered to his wife and an unfinished garage. He also declared a Blaser D-99 hunting carbine, two Breguet watches and jewelry with precious stones. The wife is registered as a Bombardier Utopia 205 water boat, Land Rover Evoque 2013 and Nissan Micra 1.2 2007. Mr. Lyubchenko himself uses a Buster Magnum water boat owned by another person.
Lyubchenko’s family receives its salary from Ukragrokhimholding, in which he is a shareholder and which is part of the corporation JSC Ukragrokhimholding. The company is one of Ukraine’s largest companies engaged in the production of complex phosphorus-containing mineral and eco-friendly organomineral fertilizers, plastic containers for liquid and paste-like pharmaceutical and chemical products. According to the YouControl analytical system, the founders of Ukragrokhimholding LLC are offshore.
The family also earns income from bank deposits and leasing property. According to the declaration, the family keeps 84,874 dollars, 48,800 euros and 717,982 hryvnias in banks. The spouses declared no cash: 12,000 dollars, 90,000 hryvnias and 14,000 euros.
Among Lyubchenko’s advantages are his extensive experience in the tax service and his inside knowledge of the SFS. In addition, he is not directly affiliated with any political force, which also plays into his hands. An obvious disadvantage is his lack of experience in business structures.
Following the Cabinet’s decision, a contract will be signed with Oleksiy Lyubchenko, after which he will take on new responsibilities. Yevhen Oleynikov has been appointed his deputy.
Continuation of the scandal with the repair of the “emergency” building of the Tax Service. The State Tax Service wants to spend another UAH 120 million on a server room
Yevhen Oleynikov, a reliable colleague and protégé of the current Vice Prime Minister Oleksiy Lyubchenko (former head of the State Tax Service), is enthusiastically continuing the work of his former boss as head of the State Tax Service.
This includes cunning schemes to renovate the basement of the STS headquarters at 9 Lvivska Square in Kyiv.
They began on August 4, 2020, when a tender for repairs worth UAH 55 million was announced. Back then, Liubchenko was still the head of the State Tax Service, and he launched a negotiation procedure for this procurement in order to choose the contractor he wanted.
The formal reason for the negotiation procedure was the allegedly emergency condition of the basement of the STS building, where water penetrated during precipitation. Allegedly, due to the fact that the main electrical installation is located in the basement, this could cause a short circuit and failure of the Tax Service’s server equipment.
This is what was written in the justification for the tender:
“In the basement premises, there are power plants that ensure uninterrupted operation, including server equipment. Due to the violation of the surface waterproofing, water leaks into these rooms and emergency power outages occur.
This leads to the failure of server equipment, the engineering infrastructure of server rooms, short circuits in power plants, possible complete shutdown of the server room and loss of taxpayer archival data for all previous years. Stopping the operation of server equipment will make it impossible to fulfill the tasks assigned to the State Tax Service of Ukraine.”
Of course, many people were not satisfied with the scheme. However, after long disputes with the State Audit Service and challenging its decision in court, Oleksiy Lyubchenko’s contractor has started to use the multimillion-dollar budget. This is confirmed by the State Tax Service’s notification dated December 29, 2020:
“The State Tax Service of Ukraine informs that on 28.12.2020, the Kyiv District Administrative Court filed a claim against the State Audit Service of Ukraine to declare unlawful and cancel the conclusion of 14.12.2020 on the results of monitoring the procurement procedure No. UA-2020-08-04-007667-a. We will inform you additionally about the opening of the proceedings within the next business day from the date of receipt of information about the opening of such proceedings and its number.”
And in September 2021, an additional agreement was signed, according to which the overhaul of the emergency building of the Tax Service in Kyiv should be completed in November 2021.
It would seem that the story of the money siphoning could have been completed this fall. However, it turned out to be just the tip of the iceberg. It turned out that an even larger amount of money was going to be used for repairs.
Those who thought that UAH 55 million would “make a candy” out of the emergency building of the State Tax Service on Lvivska Square and help prevent damage to the Tax Service’s server equipment were wrong.
The other day, the new head of the State Tax Service, Yevhen Oleynikov, came up with a new story about the repair work, which could cost even more money. It will be dedicated to a new idea — moving the STS server room to a new location. Namely, to the neighboring building at 6 Lvivska Square, where the State Fiscal Service used to be located.
In other words, first they repaired the old server room, and now they will build a new one.
On September 29, a new tender for a new server room for the tax authorities was announced on the ProZorro platform. The announcement states that the procurement is for the construction of a new server room. Their cost is estimated at UAH 120 million.
The deadline for submitting bids is just over two weeks, and the auction is scheduled to take place on October 18.
According to the terms of the contract, the contractor will receive an advance payment of 30% of the amount, i.e. UAH 36 million, within 90 days. The rest is to be paid upon completion of the work.
As Dubinsky.ua previously wrote, the story of the emergency repairs in the State Tax Service building was deliberately exaggerated to hold a tender without any competition and further withdraw funds through a scandalous company. Which also turned out to be involved in a criminal case related to misappropriation of property. And the new works are just a continuation of the old high-profile story, but with a bigger budget.
Suspicious procurement
Lyubchenko’s Ministry of Economy was going to spend UAH 7.3 million on air travel, purchasing 376 tickets at the rate of 29 UAH/$.
Most of the airline tickets are going to be purchased to Geneva (Switzerland) and Dubai (UAE).
This is confirmed by the announcement of the procurement of transportation services published by the Ministry of Economy on July 21 on the ProZorro portal.
Bids will be accepted until August 23, and the auction is scheduled for September 28.
The contractor will have to provide tickets by December 31, 2021. The dates of these tickets/trips are not specified, meaning that they may fall within the three months remaining until the end of this year, or in 2022.
The tender application refers to the Ministry of Economy’s plan to purchase 376 tickets for flights around the world. There are 51 destinations in total: from Shanghai and Hanoi to Minsk, to which, by the way, 10 tickets will be ordered.
As mentioned above, Oleksiy Lyubchenko and his subordinates buy the most tickets to two cities — Geneva and Dubai. The top five most popular destinations from the Ministry of Economy look like this:
- Geneva (Switzerland) — 50 tickets;
- Dubai (UAE) — 46 tickets;
- Brussels (Belgium) — 43 tickets;
- Beijing (China) — 15 tickets;
- Paris (France) — 14 tickets.
It is not known what official events the officials are going to attend.
What is surprising in the terms of the procurement is the hryvnia to dollar exchange rate at which Lyubchenko’s department proposes to calculate the cost of tickets. It is 29 UAH/$.
The rate is non-market, and very far from the reality of the interbank market and the official values of the National Bank. The NBU’s official exchange rate has never reached such an average value, according to the regulator:
- 2019 — 25.8 UAH/$;
- 2020 — 26.96 UAH/$;
- 2021 — from 27.24 UAH/$ to 28.22 UAH/$.
For example, today, July 27, the NBU set the official exchange rate at 26.98 UAH/$, the interbank rate yesterday ended at 26.96-26.98 UAH/$, and cash prices on the stock exchange were in the range of 27.0-27.15 UAH/$. It is still a long way to go to the level of 29.0 UAH/$, but it is not expected to happen yet.
It is unbelievable that the Ministry of Economy does not know this. So they must be thinking of ways to make money on the budget digest. Perhaps they are playing a trick on certain service providers that could attract the attention of inspectors.
In the past, the Ministry of Economy spent less money on foreign trips. For example, in mid-2019, it purchased UAH 6.6 million worth of tickets from pilot agencies. At that time, the five most popular destinations included:
- Geneva and Bern (Switzerland) — 75 tickets;
- Dubai and Abu Dhabi (UAE) — 29 tickets; and
- Brussels (Belgium) — 28 tickets;
- Tokyo (Japan) — 29 tickets; 25 tickets;
- Munich (Germany) … 20 tickets.
For example, as of July 27, the NBU set its official exchange rate at UAH 26.98/$, the interbank market closed yesterday at UAH 26.96-26.98/$, and cash prices in exchange offices were in the range of UAH 27.0-27.15/$. The level of 29.0 UAH/$ is very far away, and nothing is yet to be seen.
It is impossible to believe that the Ministry of Economy does not know all this. Therefore, it seems that officials are deliberately letting the public procurement process go to waste. Most likely, they are playing along with a particular service provider, which should be noticed by controllers.
The Ministry of Economy used to spend less on foreign travel. For example, in mid-2019, it purchased UAH 6.6 million worth of tickets from the Pilot agency. Back then, the top five most popular destinations included:
- Geneva and Bern (Switzerland) — 75 tickets;
- Dubai and Abu Dhabi (UAE) — 29 tickets;
- Brussels (Belgium) — 28 tickets;
- Tokyo (Japan) — 29 tickets; 25 tickets;
- Munich (Germany) — 20 tickets.
There are too many questions about the current purchase of tickets by Oleksiy Lyubchenko’s Ministry of Economy, and it needs to be checked by auditors and law enforcement. The state budget may suffer losses.
The head of the State Tax Service, Oleksiy Lyubchenko, has been keeping 2,000 people in an emergency building for three months, for which he plans to spend 55 million hryvnias.
And through a company that had previously carried out fictitious work. It is quite obvious that the tax officer will get into a new scandal. This will become his specialty — to be involved in high-profile stories that defame the State Tax Service.
This is despite the fact that people are still discussing the incident when Lyubchenko was caught driving a car with “left” license plates: it was owned by PJSC Ukragrokhimholding, where he used to work, and could also be involved in the payment of illegal VAT refunds in June 2020. The amount of fraud amounted to UAH 2.7 billion. Today, law enforcement officers are checking the facts on the grounds of criminal offenses (Articles 28, 364, 366, 367 and 368 of the Criminal Code).
But despite the demands of MPs to dismiss Lyubchenko, he continues to head the State Tax Service. And he has even come up with a new criminal scheme, which will allow him to withdraw more than UAH 54 million from the budget. Its essence is to withdraw money under the guise of emergency repairs to one of the premises of the STS headquarters.
On August 4, 2020, the tender committee of the State Tax Service announced a tender for the overhaul of the administrative building of the SFS headquarters in Kyiv (8 Lvivska Square). The expected cost is UAH 54.7 million.
Despite the fact that the tender was announced on August 4, the winner was determined on the same day. The winner was selected through a negotiation procedure. Without any competition, at exactly the expected cost of UAH 54.7 million.
The question immediately arises: how did an obscure company get a solid order so quickly?
To make it happen, Lyubchenko’s people falsified the tender documents. They used an intricate procedure that has no logical explanation.
The grounds for applying the negotiation procedure were formulated very cunningly — “the emergence of special economic circumstances with immediate liquidation of the consequences of emergencies”.
Thus, the State Tax Service simply referred to the provision of the Law “On Public Procurement” (Article 40(2)(3)), which gives grounds for applying the negotiation procedure. However, for some reason, they deleted a part of the text from this paragraph:
“The emergence of special economic or social circumstances related to the immediate elimination of the consequences of emergencies that make it impossible for the customer to comply with the deadlines for holding a tender.”
It turns out that there was an emergency at the central office of the State Tax Service that no one knew about. And people continued to work there and put their lives in danger. At the same time, Lyubchenko wished not to focus on the conditions for applying this provision of the law, namely, he removed the phrase “making it impossible for the customer to meet the deadlines for the tender”.
What happened to the premises at 8 Lvivska Square?
According to the official version, which is described on ProZorro:
“As of today, the basement of the administrative building of the State Tax Service at 8 Lvivska Square, Kyiv, which employs more than 2000 people and houses the server equipment of the State Tax Service, is in a state unsuitable for normal operation, with some structural bearing elements classified as level 4 — “emergency”. Due to the termination of the restoration work in 2019, the building’s foundations remain open and unprotected from the negative impact of natural forces, in particular precipitation, during seasonal low temperatures, which leads to its destruction due to temperature changes, water leaks and rupture of reinforcing joints and concrete elements of the supporting structures.
The basement premises are home to power plants that ensure uninterrupted operation, including server equipment. Due to a breach in the surface waterproofing, water leaks into these rooms and causes emergency power outages.
This leads to failure of server equipment, engineering infrastructure of server rooms, short circuit in power plants, possible complete shutdown of the server room and loss of taxpayer archival data for all previous years. The termination of server equipment operation will make it impossible to fulfill the tasks assigned to the State Tax Service of Ukraine.
The Standing Committee on Technogenic and Environmental Safety and Emergencies of the Executive Body of the Kyiv City Council (Kyiv City State Administration) (hereinafter — the Committee) assessed the technical condition of the load-bearing structures, self-supporting structures of the basement of the electrical control room, the crossbar of the floor area and the section of the basement retaining wall near the ramp entrance of building No. 8 on Lvivska Square as category “4” — emergency.
With further unrepaired operation of the building, there is a potential threat of a man-made emergency, which may reach the regional level, as stated in the Commission’s Protocol of 09.06.2020 No. 36 (attached).
By letter dated 19.06.2020 No. 02 9027/161-2 (inc. STS No. 25813/5 of 22.06.2020) (attached), the State Emergency Service of Ukraine supported the decision of the Commission on the existence of a potential threat of a man-made emergency in the administrative building of the State Tax Service at 8 Lvivska Square, Kyiv, which could reach the regional level, and informed about the need to take measures to prevent its occurrence by carrying out urgent emergency repair work. These emergency repair and restoration works must be carried out in accordance with the adjusted design and estimate documentation.
Pursuant to the requirements of the Law of Ukraine “On Regulation of Urban Development Activities”, to ensure the performance of these works, it is necessary to engage organizations to conduct technical and author’s supervision in accordance with the Resolution of the Cabinet of Ministers of Ukraine No. 903 of 22.07.2007 “On Author’s and Technical Supervision during the Construction of an Architectural Object”. The Law of Ukraine “On Regulation of Urban Development Activities” requires obtaining a permit from the State Architectural and Construction Control Authority (SACC) to obtain the right to perform construction works.
In order to perform works at the Facility, the SFS obtained the Permit for construction works at the Facility dated 23.04.2019 No. KV 112191130716 (hereinafter — the Permit), issued by the Department for State Architectural and Construction Control of Kyiv City of the Executive Body of Kyiv City Council (Kyiv City State Administration). The permit is issued to the client and the general contractor. In addition, the identity of the chief architect of the project, who carries out the author’s supervision, and the person who carries out technical supervision of construction are indicated.
Changes in the organizations or persons specified in the Permit require additional measures to provide this information to the Department for State Architectural and Construction Control of the City of Kyiv of the Executive Body of the Kyiv City Council (Kyiv City State Administration). To ensure the possibility of performing works in accordance with the current legislation, the Department of Urban Improvement of the Executive Body of the Kyiv City Council (Kyiv City State Administration) has issued a Control Card No. 19100155-Шв for temporary disruption of the improvement and its restoration in connection with the works at the Site.
According to the design and estimate documentation, the period of work at the Site is six months. Taking into account the work performed under the agreement between the SFS and BC KBR LLC dated 07.11.2018 No. KR-1/2018, the term for the work to be performed under the design and construction documentation is up to 4 months. The term for the execution of critical works to ensure the avoidance of an emergency is 2-3 months. When the season of low temperatures sets in, the open foundations will lose a significant part of their technological characteristics, which will lead to a regional man-made emergency.
Additional measures to obtain the Permit, the Control Card, registration of the transfer of the construction site and water and electricity connections will require additional time, which is critically needed to carry out construction emergency response and restoration works at the Site. The change of the Contractor will result in a loss of time and make it impossible to complete the works at the Site this year. The funds for the above repair works were allocated from the Reserve Fund of the State Budget of Ukraine in accordance with the Order of the Cabinet of Ministers of Ukraine dated 27.07.2020 No. 928-r “On Allocation of Funds from the Reserve Fund of the State Budget” (attached).
Taking into account the above, in order to avoid irreversible economic, informational and human losses, there are grounds for conducting a negotiation procurement procedure for the subject matter: Overhaul and restoration — under the code DK 021:2015 — 45453000-7, DSTU B.D.1.1 — 1:2013 “Rules for determining the cost of construction” (Overhaul of the administrative building of the SFS central office at 8 Lvivska Square, Kyiv (complex of construction and installation works, including: engineering networks, overhaul of load-bearing structures (columns, beams, coatings, etc.) of the basement of zones A, B, C, E with waterproofing of the coating and improvement) Adjustments)”.
From the huge explanation, it is clear that 2 thousand people have been endangering their lives for a long time. But they continue to work in the emergency premises. Which, by the way, is not surprising, since it is known that earlier the head of the State Tax Service Lyubchenko proved that an entire department in the central office of the Tax Service was infected with coronavirus.
And on June 19, 2020, the State Emergency Service supported the Commission’s decision that there was a potential threat of a man-made emergency in the administrative building of the State Tax Service at 8 Lvivska Square. It stated that urgent emergency repair work was needed.
Logically, emergency work was supposed to begin in June 2020, but this did not happen. That is, Lyubchenko postponed the solution of the “urgent” issue for two months, putting people at risk. Only then, without competition, he would appoint BC KBR, which has already been working on this site since 2018, as a contractor, but, in all likelihood, to no avail. This company would not have won an objective tender. It would not even pass a preliminary inspection. There were too many questions about it. At least because it was involved in a criminal case related to misappropriation of property.
“In September 2017, BC KBR signed a contract for the overhaul of the central district library named after P. Tychyna. P. Tychyna Central District Library (Kyiv, 24 A. Sheptytskoho St.). The total cost of the works amounted to UAH 3.1 million. At the same time, during the inspection of the building and premises of the central district library named after P. Tychyna. It was found that despite the signing of the certificates of completion, the overhaul work was still ongoing. Criminal proceedings were initiated under No. 12018100040000335 of 10.01.2018 on the grounds of a criminal offense under Part 3 of Article 191 of the Criminal Code of Ukraine — misappropriation, embezzlement or seizure of property by abuse of office.
In other words, such an enterprise certainly fits Lyubchenko’s style of work. But it is definitely not suitable for working with the State Tax Service. Especially at an emergency facility.
Therefore, the newly appointed head of the State Tax Service had to sneak this company into the tender.
It is quite obvious that Lyubchenko does not care about his employees and their lives. And the situation with the emergency repairs was deliberately exaggerated in order to hold the tender without any competition and then withdraw money through the scandalous company.
Finally, the contract is to be signed on August 10, 2020. Then the criminal conspiracy will be documented, and the process will begin. And Lyubchenko will be able to withdraw almost 55 million hryvnias from the repairs.
Deputy Prime Minister Lyubchenko and his cars
Oleksiy Lyubchenko, since his time at the State Tax Service of Ukraine, has been in the habit of renting used cars made in 2007 for budgetary funds (UAH 3 million).
The tender is fully prescribed for a specific fleet of vehicles, which usually wins and then allegedly provides services for “Rental of passenger vehicles with a driver (transportation services).”
In this case, it will be 4 cars that are supposed to travel 120 km per day.
The tender will be held today, on October 11. The winner will be determined either immediately, if less than 2 companies apply, or technically through a negotiation procedure.
According to our information, the services will be provided by the fleet of the Cabinet of Ministers of Ukraine.
With one hand, Lyubchenko uses budget funds, and with the other hand, he easily gives an elite Mercedes to the acting head of the State Tax Service, Yevhen Oleynikov.
Business in Ukrainian
The bribed Lyubchenko volunteered to protect consumer rights, but got into a new one by buying a position for $5 million
The Cabinet of Ministers has registered draft law No. 6134 “On Consumer Protection,” with an explanatory note prepared by Deputy Prime Minister and Minister of Economy Oleksiy Lyubchenko.
It states that Ukraine was one of the first countries in the post-Soviet space to adopt a law on consumer protection. However, the consumer protection system (CPS) established in 1991 has undergone some destructive changes. This led to significant discrepancies between our protection practices and the EU rules. And attempts to harmonize the two approaches were not systemic, but situational.
Today, there are several areas where gaps in regulation lead to numerous cases of consumer rights violations. People find themselves face to face with the problems of violated rights.
For example, there are a lot of unresolved issues in the protection of consumer rights in the field of e-commerce. There is no protection against unfair trading practices, and consumer rights are not effectively protected, especially in the case of product warranty service.
The analysis of consumer complaints in the field of e-commerce revealed the following:
When purchasing products in online stores, people are provided with inaccurate information about the products, their consumer properties, and price. The consumer’s right to terminate the contract, reject the products and get a refund is violated;
There are cases when there is no information about the business entity sufficient to identify it, which makes it impossible for the State Service of Ukraine on Food Safety and Consumer Protection to control and protect consumer rights.
If the trader fails to provide reliable information on the website (name, location), it is impossible to carry out supervision in accordance with the requirements of the Law “On the Basic Principles of State Supervision (Control) in the Field of Economic Activity”. In order to restore violated consumer rights, the State Service of Ukraine on Food Safety and Consumer Protection is entitled to apply to the Internet service provider to restrict access to the website (part of the website, software). The controller has to restore access after all the data on the location of the company is available: he is obliged to submit a corresponding request to the provider within 2 days.
It is believed that this will motivate merchants to properly design their websites and publish reliable information about themselves.
The draft law also requires sellers to create a goods exchange fund, which is a costly measure for businesses.
The fund is needed to exchange low-quality goods sold for high-quality ones.
In addition, the law stipulates that the seller must pay a penalty for each day of delay in providing the consumer with a product of a similar brand (model, article, modification) and for each day of delay in eliminating defects (more than fourteen days). The amount of the penalty is 1% of the value of the goods.
To prevent a person from having to wait a long time for a replacement of the goods with the same quality (if the repair period exceeds 14 days or is impossible), a mandatory replacement requirement will be introduced. In this case, the creation of an exchange fund may be optional.
The draft law should have a positive impact on consumer protection, but it seriously unleashes the hands of the State Service of Ukraine for Food Safety and Consumer Protection, which is fully controlled by the Ministry of Economy, headed by Oleksiy Lyubchenko.
This is the same Lyubchenko who, when he was head of the State Tax Service, was regularly involved in various scandals. The one who is now accused of ineffective work in his new position. Recently, one of the telegram channels reported that he is allegedly ready to offer the authorities at least $5 million for the right to remain in his position for at least another year. There is a possibility that the correspondence will be made public, along with the phone number from which the bribe offers were sent.
Oleksiy Lyubchenko’s billion-dollar scams: all moves are recorded
Who is responsible for the most popular VAT evasion scheme and which companies are involved.
Between January and May 2021, Ukrainian entrepreneurs, with the “support” of fiscal authorities, deprived the budget of VAT revenues worth more than UAH 12 billion. At least 1,300 companies have participated in the popular scheme of “twisting” when imported goods, food, fuel and lubricants are converted into agricultural products for export according to documents. The full list of these companies and analytical reports on the amounts of “twists” and illegal VAT refunds were made available to the editorial board.
The “twist” scheme has existed for many years. Its essence is to combine the tax credit generated by the import or manufacture of goods on the shadow market (cash sales) and the tax liability incurred by taxpayers who need to legalize shadow goods. The documents for the goods sold for cash are “sold” to the “customer” of the tax credit, and often the scheme “combines” incompatible goods: for example, the sale of fuel and lubricants is opposed to the purchase of tomatoes. The “twisting” itself, i.e., the substitution of the nomenclature of goods, takes place at the so-called “transit” intermediary enterprises. However, both the “seller” and the “customer” of the tax credit are full-fledged accomplices in the crime.
Many heads of the fiscal service, regardless of its formal name at a particular time, did not even try to eradicate these frauds. On the contrary, they have always sought to gain control over it. In fact, the scheme of documentary transformation of some goods into others is rather clumsy and one-syllable. All manipulations are visible to tax analysts. This means that this method of tax evasion worth billions of hryvnias every month cannot exist without the fiscal authorities simply turning a blind eye. Of course, not for free.
The amount of money that is circulating in this “market” and the potential amount of “commissions” that unscrupulous tax officials can take for themselves can be judged at least from public statements and available documents. For example, former Minister of Finance Ihor Umansky estimates the volume of fraud at UAH 60 billion per year. According to the report of the Verkhovna Rada’s provisional investigative commission, which assessed the activities of tax authorities and investigated, among other things, the volume of the “market” for fraud, in 2020, participants in the schemes “fraudulently” collected about UAH 27 billion. At the same time, only in the period from May to December 2020 — when the current First Deputy Prime Minister and Minister of Economy Oleksiy Lyubchenko was the head of the State Tax Service — the volume of “twists” amounted to UAH 19.6 billion, or approximately UAH 2.5 billion per month. The maximum amount recorded by the TSC was UAH 4.3 billion in November 2020.
The editorial office has obtained documents confirming that over the next five months of Lyubchenko’s tenure as head of the tax service, the situation not only did not change, but worsened. According to the data collected by analysts, the volume of transit and conversion turnover for the period from January to May 2021 amounted to UAH 12.4 billion. About 1350 companies are involved in the schemes. The largest number of such taxpayers is expected to be located in Lviv, Donetsk, Kyiv, Kharkiv, Odesa regions, as well as in Kyiv. The main commodity groups involved in the conversion are imported goods, food, cigarettes, and fuels and lubricants. The main output commodity group is agricultural products intended for further export.
Based on the lists of companies participating in conversion and “transit” schemes, the analysts made conclusions about the key beneficiaries and organizers of such processes. In particular, the document mentions a Lviv businessman who is called the “king of smuggling” by some media, although he often positions himself as a “lawyer.”
In Kyiv, the main beneficiary of the scams is Vyacheslav Strelkovsky, who also regularly appears in publications about conversion centers and “warm” relations with tax authorities. In addition, Misak Khidiryan, president of AGR Group, Sevak Chirkinian, CEO of Grainexpo EU, Yuriy Karfik, co-founder of Stolychnyi Jewelry Factory, and Ihor Stakovichenko, who has been featured in publications about conversion centers, are on the list of fraudsters in Kyiv.
In Dnipropetrovs’k region, the list of “twists and turns” involved in Lyubchenko’s schemes includes Serhiy Hrybkov, president of the Prydniprovsk hockey club, Volodymyr Tuhai, founder of Intercreditbank and a number of other businesses in Dnipro, and entrepreneurs Mykola Kononov, Andriy Kuznetsov, and Ilya Nikitin (Kombat Group).
In Kharkiv region, Serhiy Yeskov (Digma Group) was named the main schemer, and in Volyn, Serhiy Mostynets (importer of cars and spare parts). Among other regions, one of the key beneficiaries of the scams, according to analysts, is Odesa businessman Andriy Boboglo.
According to the authors of the document, the situation with the fraud is due to the inaction of the State Tax Service officials, as the tax authorities have a whole list of tools to work out and prevent the formation and distribution of a dubious tax credit. This is also confirmed by the data of the report of the PIC investigating the circumstances of the twists. In a number of regions, the commission found that more than half of the signals about the need to respond to fraud are simply ignored. For example, in Lviv region, the tax authorities “worked out” only 20% of the beneficiaries of corruption schemes, in Odesa region — 33%, in Kharkiv region — 45%.
The analysts also found a systematic approach to illegal VAT refunds from the budget. The most common schemes include VAT refunds to enterprises and organizations of public associations of people with disabilities entitled to a zero tax rate; VAT refunds for purchases of goods (both imports and in the customs territory) that are not sold; VAT refunds for court decisions in respect of which the State Tax Service did not take sufficient measures to defend the interests of the state.
Recently, the media estimated that Oleksiy Lyubchenko’s short tenure as head of the tax service cost the state and taxpayers approximately $1 billion. The schemes and companies described above are only a part of a much larger picture that has yet to be studied and properly assessed by law enforcement agencies. Especially in light of how actively the official is promoting his candidacy for the post of the future Prime Minister.
Summary
As we can see, the “old faces” under the new government continue to rob the country. On the one hand, it is strange how a person with more than one corruption scandal behind him could get into power, but on the other hand, you remember that everything is possible in Ukraine, the main thing is to be able to negotiate with the right people.