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Monday, May 25, 2009

Tymoshenko Helps a Tycoon Bag a Hr. 900M Contract

Q: What does it take to cancel an open bid and instead choose a certain company as the lead contractor?

A: The Tymoshenko Cabinet.

In yet another must-read article, Ukrayinska Pravda's Mustafa Nayem continues exploring the unstoppable wheeling and dealing in the world of Ukrainian government.

As part of preparing Lviv Airport for Euro 2012, the government initially planned to award a Hr. 900M/$118M modernization contract in an open bid. To organize the bid, Transport Minister Yosyp Vinsky sent a directive to Lviv Airport Director Oleksandr Zahreva in late January.

Four companies applied.

However, on March 17, Minister Vinsky issued another directive. This time, he ordered Lviv Airport to cancel the open bid, citing orders from PM Tymoshenko.

That’s despite the fact that reversing the course put Vinsky and Tymoshenko in violation of a host of Cabinet regulations, Nayem reports.

Guess who emerged as the lead contractor? Azovintex, a company owned by Serhiy Taruta, one of the richest men in Ukraine’s rust belt and one of the two men who serve as Tymoshenko’s allies in a region otherwise controlled by the Party of Regions.

Taruta’s partner, Vitaliy Haiduk, has been a prominent figure in the Tymoshenko Cabinet, leading a staff of advisers. He reportedly owns a plant in Hungary and, last year, had a hand in a controversial decision that set sub-domestic rates for Ukraine’s electricity exports.

Such conflicts of interests raise no eyebrows from Tymoshenko and Yushchenko, except in theatrics and in rivalry. At a recent Cabinet meeting, Tymoshenko raised the roof on Defense Minister Yuriy Yekhanurov, amid allegations of fraud in the army’s food supply contracts and land management. She demanded that Yushchenko fire him. (The Defense Minister reports directly to the President. The President's response? You're the one who's corrupt.)

Both Tymoshenko and Yushchenko came to power during the Orange Revolution, after promising to separate business from government. Once in power, they soon ended up separating themselves from their promises.

They may not be aware of it, but their selective ethical compasses bode well for companies like Azovintex.

By the time Azovintex won the Lviv Airport contract, it had already won business government-wise. In November 2008, a Turkish contractor lost the Lviv Stadium contract to Azovintex, after lobbying by Economy Minister Bohdan Danylyshyn and Vice Premier Ivan Vasyunyk, the article says.

Asked about Azovintex, Lviv Mayor Andriy Sadovyi praised the contractor and said that the open bid procedure would have taken too long.

In neighboring Poland, which co-hosts Euro 2012, the public can’t wait to get corrupt officials fired or jailed. Not so in Ukraine.

In a country where the Prime Minister ducks questions about her husband’s sources of income and the President taps people like this to run his staff, it’s “business as usual.”



elmer said...

Ah, but Taras, here's the best part - as noted by one of the comments in Ukrainian Pravda -

This is "clean corruption."

To wit:

Platini came to Ukraine quite a while back, denoting all the requirements for Ukraine, as a host country, to host Euro 2012. Several times he came to Ukraine - and nothing had been done.

Soooo - the Lviv airport has to be modernized. As explained by the "good corruptionists" in the article:

- an open tender takes 70 days

- they challenge tenders in court, which delays things, and there are construction firms which engage in (gasp) racketeering

- the necessary decision to hire Azovintex as a general contractor was made in a very short time period - a matter of days

- they have the "necessary expertise" and equipment (600 ton cranes) to build/modernize an airport, because they are currently building the Lviv soccer stadium

- as such, they are without parallel in Ukraine

Where did the Hr. 887,702,000 figure come from?

Well, that's just efficient use of government funds.

Besides, not only are Taruta and Hayduk - backers of Tymoshenko with ownership interests in Azovintex.

Taruta's brother Alexander is the general director of the company.

Bohdan Danylyshyn, the economic minister who signed the deal, is a "creature" of Vitaliy Hayduk, in the Tymoshenko government.

See how "clean corruption" works, boys and girls?

This is opposed to "unclean" corruption, which Tymoshenko exposes constantly and tirelessly (well, except when she watched the Donetsk Brazilian Coalminers beat the Werder Bremen Brazilian Germans in the UEFA Cup, as to which she asked "forgiveness" of the public for taking time out from government work to cheer, laugh, scream, rejoice, and jump for joy at the great victory of Akhmetov's Donetsk Brazilian Coal Miners).

Here is Tymoshenko's short list of "unclean"corruption:

- Vanco Prykerchenska, in which she (actually, rightly)cancelled a last-second secret transfer of an oil and gas exploration license on the Black Sea shelf from Vanco Energy to an outfit owned by Akhmetov and some other mysterious persons and entities;

- eliminating (rightly so) Firtash and RosUkrEnergo from being a middleman in gas deals between Ukraine and Russia's Gazprom.

See, the thing is, Tymoshenko's corruption is "clean."

Taras said...

That’s right. Ukrainian politicians keep two sets of corruption books:

1. “Clean Corruption, My Corruption” (not for the public eye)
2. “Unclean Corruption, Not My Corruption” (for the public eye)