Corruption is eternal. Why there were, are and will be violations in food procurement for AFU

Catering at the Defense Ministry is a very profitable business for suppliers, as hundreds of thousands of people need to be fed, and payments are guaranteed - many billions a year. But the Defense Ministry will not have market prices, as there are no market rules for participating in tenders.

But each ministry has turned into an independent feudal principality, with its own very complicated rules, so that the head of the ministry is the sole administrator of funds and the money goes to whomever the minister wants to pay. That is why there is a paradox that the large Ministry of Defense buys food more expensive than the much smaller State Border Guard Service.

“Each ministry has turned into an independent feudal principality, with its own very complicated rules, so that the head of the ministry is the sole administrator of funds and the money goes to whomever the minister wants to pay.”

By definition, market prices and market quality of food products in the Ministry of Defense cannot exist. Because market prices and market quality require real competition and access to tenders by powerful market operators - large production enterprises and large retail chains. But there is no competition, even the largest manufacturers and retail chains do not participate in corrupt tenders. That's why tenders worth tens of billions of hryvnias are won by companies with a charter capital of a thousand hryvnias that are created specifically to win a contract with the Defense Ministry and service it. This is because it is easier for officials to dictate their will, and entrepreneurs run minimal risks if the new minister starts redistributing the supply market again.

How can the food supply and other ones be ensured at market prices in a time of war?

To do this, you need to adjust the requirements for holding competitions to the rules for holding competitions in business in order to set a goal of attracting large networks.

“The largest manufacturers with supply chains, large retail chains such as ATB, Metro, Silpo, Novus, and others would be happy to participate in such lucrative tenders, set up their own subsidiaries for this purpose, and provide their own infrastructure and management. But Defense Ministry officials do not cooperate with them.”

The largest manufacturers with supply chains, large retail chains such as ATB, Metro, Silpo, Novus, and others would be happy to participate in such lucrative tenders, set up their own subsidiaries for this purpose, and provide their own infrastructure and management. But Defense Ministry officials do not cooperate with them. Defense Minister Reznikov is doing nothing to rely on large networks that have an extensive network, logistics, and suppliers that can provide both market prices and market quality.

Because the ministry itself benefits from working with temporary offices with a symbolic authorized capital, which are completely dependent on the goodwill of Minister Reznikov and the head of the Presidential Office, Andriy Yermak, who appointed Reznikov. Tens of billions are going into the pockets of the right people.

And even if they reduce prices to market ones, these temporary offices will not provide market quality food, because they need to make a profit, they need to give kickbacks to all the officials of the Ministry of Defense on whom they depend, they need to constantly spend money on urgent logistics and procurement costs, because they do not have their own network of warehouses and logistics, everything is rented, everything is temporary, and they save on everything.

Therefore, if we want corruption in procurement to be eliminated in the country, we need to demand market rules of operation from officials, not market prices and market quality.

Source

About the author: Yurii Butusov, journalist, soldier with Ukraine's Armed Forces. 

The editors do not always share the opinions expressed by the authors of the blogs.