2nd October 2018, Kyiv – On Tuesday, October 2, the Independent Defence Anti-Corruption Committee presented its new report, Poor governance and corruption in Ukraine’s defence housing system: Risks and Recommendations, and called for systemic changes in how servicemen and women are housed. There are 47 thousand families of servicemen currently waiting for homes. According to a preliminary calculation by NAKO, under the current model, it would take more than 600 years to house them all.
NAKO identified ineffective management and corruption risks, including that a few individuals have the power to make decisions with few controls and little oversight. Interviewees reported that servicemen are required to pay bribes to get a place in the queue for houses, even as some are provided with multiple homes.
And poor oversight means that companies that fail to deliver on the buildings they’ve committed to are not held to account; in one instance, the director of a company that failed to build the homes it was contracted to was even put in the position of overseeing the body ensuring that military properties are built.
The report also identified that poor planning by the MOD leads to unbuilt homes and drained budgets, even as thousands wait for homes. In one building alone, researchers found that the Ministry paid more than $300,000 US dollars over what the Ministry of Regional Development estimated the cost should be.
NAKO Co-Chair James Wasserstrom stated: “It is high time for the MOD to find a realistic way to make good on unrealistic Soviet promises. This is going to require a major change that won’t be easy. It will require political courage to make decisions in the long-terms interests of Ukraine’s military, rather than sticking to commitments that the Ministry is unable to deliver.”
NAKOs New Committee Member, Former NATO Vice Chief fo Staff, SHAPE, LTG Michel Yekovleff, stressed the need for Ukraine to keep its Euro/Atlantic promises: “Being with the EU and NATO means following their principles and procedures”.
In terms of defence housing, it means that Ukraine is expected to follow the best examples of the Euroatlantic contries providing the decent housing to the servicemen in a transparent and non-prone to corruption way”.
NAKO recommends that the Ministry of Defence:
1. Abolish the housing queue. Instead of promising homes that the Ministry cannot deliver, it should move to a model of transparent, fair monetary compensation for personnel, which is not only more realistic, but also puts decision-making in the hands of service families.
2. Conduct an audit of existing homes and the queue of those waiting for homes. This can be used to make the Maino-Zhytlo software, which tracks the queue and available homes, more effective.
3. Adopt capability-based planning, so that housing projects that the MOD embarks on are based on the real needs of its troops.
NAKO conducted the research on housing corruption at the request of Defence Minister Poltorak. The Committee has offered to advise and support the Ministry on the implementation of the recommendations for systemic reform.
NOTES TO THE EDITOR
The Independent Defence Anti-Corruption Committee (NAKO) aims to reduce corruption and increase accountability in the Ukrainian defence sector. It is a joint initiative of Transparency International Defence and Security (TI-DSP) and Transparency International Україна (ТІ Ukraine). NAKO’s vision is that Ukraine’s defence and security sector that is accountable, efficient, and has a low level of corruption. Its mission is to minimize opportunities for corruption through strong research, effective advocacy, and increased public awareness, in order to strengthen the Ukrainian defence and security sector.
The Committee consists of six members: Editor in Chief of ‘Ukrayinska Pravda’ Sevgil Musaieva, Former Minister of Foreign Affairs of Ukraine, Former First Deputy Secretary Defence and Security Council of Ukraine Volodymyr Ogryzko, Chairman of Centre UA, co-initiator of Chesno Campaign Oleh Rybachuk, Chair of the OECD Working Group on Bribery and Former Anti-Corruption Commissioner in Slovenia Drago Kos, and anti-corruption expert and Former Head of Oversight of Public Utilities at the UN Mission in Kosovo James Wasserstrom. The committee is supported by a Secretariat in Kyiv, which is led by Olena Tregub.
19th June 2018, Kiev – The Independent Defence Anti-Corruption Committee (NAKO) announced on June 19th that it is in favour of the revised tender for an independent audit and strategic analysis of Ukroboronprom. It has reestablished dialogue with Ukroboronprom and intends to monitor the tendering process.
NAKO said that the process is the opportunity to bring light to inefficiencies, corruption risks and structural deficits at Ukroboronprom and will be a first step towards resolving these issues and building a state-owned defence establishment that meets the needs of the public and armed forces. The NAKO committee stated that the creation of the independent Supervisory Board, which was appointed by President Petro Poroshenko this January, was a key step towards having effective governance and will be the main customer in the upcoming tender.
Volodymyr Ohryzko, NAKO Co-Chair, stated:
The Supervisory Board of Ukroboronprom is responsible for reforming the institution so that it meets the interests of the public and the Ukrainian state. This audit, in line with international standards, will aid the Supervisory Board in carrying out their responsibility and raising the company to meet international standards of governance.
The call for tender includes three parts: 1) an assessment of the corporate governance of Ukroboronprom and its members, 2) a legal review, diagnosis and consultation of Ukroboronprom and its member companies, 3) an independent financial audit of Ukroboronprom and its member companies.
The original tender did not include some of these components, including the independent financial audit. The NAKO provided recommendations to Ukroboronprom’s Supervisory Board about what should be included in the tender, and the Supervisory Board revised it in line with these recommendations. Following those amendments, the tender process is currently underway. The deadline has been extended from June 18th to September 28th in order to give a broader range of companies the opportunity to bid.
Drago Kos, NAKO Co-Chair said:
We hope to see a strong pool of auditing firms bidding for this. It is undoubtedly complex – but if it can be reformed, the impact on Ukraine and its future will be historic.
Olena Tregub, NAKO Secretary General confirmed that:
The NAKO continues to monitor this tender; our aim is to ensure that the reform of Ukroboronprom is provided with clear advice on the corporate structure and management, and that a full financial audit will identify financial black holes in the company – and will facilitate an evidence-based reform programme.
More details on the tender can be found here.
The Independent Defence Anti–Corruption Committee (NAKO) is a joint initiative to fight corruption in the Ukrainian defence sector run by Transparency International Defence and Security Program – Great Britain (TI-DSP) and Transparency International Україна (ТІ Ukraine).
The Committee consists of six members: Editor in Chief of online media ‘Ukrayinska Pravda’ Sevgil Musaieva–Borovyk, Former Minister of Foreign Affairs of Ukraine, Former First Deputy Secretary Defence and Security Council of Ukraine Volodymyr Ogryzko, Chairman of Centre UA, co–initiator of Chesno Campaign Oleh Rybachuk, Lieutenant–General of the British Army and Former Commander of the NATO Allied Rapid Reaction Corps Timothy Evans, Former Anti–Corruption Commissioner in Slovenia Drago Kos and Former Head of Oversight of Public Utilities at the UN Mission in Kosovo James Wasserstrom.
The goal for the NAKO is to reduce corruption risks in defence and security sector of Ukraine by means of monitoring, evaluation and analysis of anti-corruption reforms and providing the corresponding recommendations.
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On Saturday, 12 May, the state-owned defence company Ukroboronprom posted an updated tender for a consultant on the e-procurement platform Prozorro. Ukroboronprom is now bound to an independent financial audit in line with international standards. The move follows the re-establishing of the functioning Supervisory Board of Ukroboronprom and extensive input from the Independent Defence Anti-Corruption Committee (NAKO) together with international partners.
The previous version of the Statement of Work excluded a fully independent financial audit. The new edition of the tender includes three components: (1) assessment of corporate governance and strategic consulting of Ukroboronprom and its members in accordance with OECD standards; (2) legal due diligence and legal consulting of Ukroboronprom and its members; and (3) an independent financial audit of Ukroboronprom and its members in accordance with international standards.
NAKO provided recommendations relating to this independent financial audit as well as assessment of corporate governance and they were duly implemented by the Tendering Committee in the final version of the call for tender. NAKO will provide external monitoring of this procurement process.
Volodymyr Ohryzko, NAKO Co-Chair said:
A full and independent financial audit, conducted in accordance with international standards by a recognized auditing firm, will gain trust not only from the Ukrainian people, but also among Western partners and investors’.
The success of the audit depends on multiple factors including: a strict adherence to International Auditing Standards by the auditor; the auditor’s ability to access all necessary information, taking relevant laws on state secrecy into account; the auditor’s independence, impartiality, and; the implementation of audit recommendations.
Olena Tregub, NAKO Secretary General said:
“Ukroboronprom’s willingness to amend the Statement of Work though including the services of independent audit is a positive step which will open the company up to greater scrutiny. It is the first step towards transforming the company. NAKO is expecting to see reputable international auditing firms among the bidders,”
The deadline for companies to bid is 18 June 2018.
More details can be found at: https://prozorro.gov.ua/tender/UA-2017-12-20-003453-c
May 24 2017 | Kyiv
International security assistance to Ukraine is not always used effectively, according to new research on corruption risks in security assistance by the Independent Defence Anti-Corruption Committee. The report identifies improvements in how assistance is monitored, but calls for improved regulation and oversight of security assistance, and greater transparency of key strategic planning documents like the State Defense Order and defence budget. The report also called on donor countries to use international aid as a leverage to push for systemic anti-corruption reform in the Ukrainian defense sector. (more…)
Joint national-international committee sets sights on increasing transparency and accountability in country’s most vital sector
25 October 2016, Kyiv – The Independent Defence Anti-Corruption Committee (Nezalezhny Antikorrupciynii Komitet z pytan oborony, or “NAKO”) held its inaugural meeting in Kyiv last week, setting forth its intention to fight corruption in the Ukrainian defence sector. The Committee comprises six members, three national – Sevgil Musaeva, Volodymyr Ogryzko, Oleh Rybachuk (co-chair) – and three international experts – Lt Gen Tim Evans, Drago Kos (co-chair), and James Wasserstrom.
“Corruption in the Ukrainian defence sector is costing lives,” said Oleh Rybachuk. “Our soldiers and citizens deserve an MOD that is efficient, accountable, and serves their interests – our aim is to help our MOD achieve those aims.”
The Committee will develop a strategy 2017-2018. Its mandate, agreed on Thursday 20th of October, includes analysing and evaluating anti-corruption efforts in the defence sector, the development of recommendations, reporting to Ukrainian authorities and the public, promoting transparency, and strengthening accountability structures. It will also, later this year, enable citizens and soldiers to anonymously report corruption concerns to the group.
As a first step, the NAKO will produce a report on lessons learned from other monitoring groups, including the Monitoring & Evaluation Committee in Afghanistan. It will also analyse corruption risks and mechanisms for monitoring security assistance and military aid. Drawing on the findings from the 2015 Government Defence Anti-Corruption Index, produced by TI Defence & Security, it will submit recommendations for inclusion in the Annual National Programme 2017.
“In Afghanistan and Iraq, I saw first-hand the impact that corruption can have on the success of military operations. Without integrity, an Army can’t function effectively – and our aim, in the long-term, is to help the Ukrainian defence forces protect its people and its country,” said Lt Gen Timothy Evans, former commander of the NATO Allied Rapid Reaction Corps.
The idea for a dedicated monitoring body is based on learning from previous efforts in Afghanistan, Guatemala and Palestine. The committee was selected by a joint board of TI Ukraine and TI Defence & Security, following a public call for nominations earlier this year.
The NAKO is a project of TI Defence & Security, based in London, and TI Ukraine, and is supported by the Ministry of Foreign Affairs of the Netherlands.
Notes to editors
Biographies of NAKO members:
Lieutenant General Timothy Evans CB CBE DSO: A 3 star General in the British Army and former Commander of the NATO Allied Rapid Reaction Corps.
Drago Kos (co-chair): Former Anti-Corruption Commissioner in Slovenia, Former Chair of GRECO, and current Chair of the OECD Working Group on Bribery. “I’ve been coming to Ukraine for 15 years and for the first time I feel the country is ready for real change – and it’s time to include the defence sector too.”
Sevgil Musaeva: Editor in Chief of Ukrainska Pravda and author of investigative reports for Reuters, Forbes Ukraine, and the Organised Crime and Corruption Reporting Project. “I understood the problems of a weak defence sector when Crimea, my region, was annexed. So for me, it’s personal—I want to make the our armed forces more transparent and effective.”
Oleh Rybachuk (co-chair): Chairman of Centre UA, co-initiator of Chesno Campaign, and former Vice Prime Minister for European Integration and Chief of Staff to the president.
Volodymyr Ogryzko: Former Minister of Foreign Affairs, First Deputy Secretary Defence and Security Council of Ukraine. “We badly need international support to fight corruption in Ukraine.”
James Wasserstrom: Former Head of Oversight of Public Utilities at the UN Mission in Kosovo, Senior Advisor on Anti-Corruption at the US Embassy Kabul, and strategy advisor and lead anti-corruption at the Special Inspector General for Afghanistan Reconstruction. “Countries in conflict are always immense opportunities for nefarious activities, especially corruption, profiteering, and egregious mismanagement. I look forward to this body tackling all of the above.”
image: flickr.com/Sasha Maksymenko cropped by TI-DSP