PR and profiting: how MPs from Prykarpattia use public funds

PR and profiting: how MPs from Prykarpattia use public funds

“Thanks to the member of parliament, the school’s windows were replaced with energy-efficient ones, because quality education in comfortable conditions is a priority for the MP,” – local media are full of such and similar promotional messages.

Usually in such cases we are talking about budget funds that, among other things, also provide double promotion: both the member of parliament and local party members get publicity from the purchase. So whose money finances such a PR campaign?

This year more than 270 million hryvnias in a subvention for the socio-economic development of territories was allocated to Prykarpattia. That is roughly 100 million hryvnias more than last year. The government allocated the most funds in July and September. In September, to add money to the provinces, 85 million hryvnias were taken from servicing the state debt.

The subvention for socio-economic development of territories can finance not only reconstruction and new construction, road repairs, or energy-saving measures, but also relocation from unsafe buildings, purchase of equipment, and preparation of design and estimate documentation.

A commission was formed to prepare proposals for distributing the subvention, which includes at least half the members of the Verkhovna Rada Budget Committee. At the same time, one-third of the budget committee consists of deputies from BPP.

The list of objects and measures financed in 2017 year by the subvention according to appendix 2 of the Cabinet’s order is formed and approved by the respective local state administrations and executive bodies of local self-government. But how appendix 1 is formed is not specified. And it is there that the largest amounts are. From it one can determine which region and specific electoral district received the most funds, and which majoritarian deputies ended up benefiting.

Every year more than half of the funds from the State Fund for Regional Development are taken for the subvention popularly called the “deputy” subvention. This discretionary subvention has already exceeded in total the sum of funds from the SFRD and the subvention for development of the infrastructure of united territorial communities, writes Anatoliy Tkachuk, an expert from the Reanimation Package of Reforms.

In a comment to Chetverta Vlada, Anatoliy Tkachuk explains where the funds come from: “Deputies do not want to vote for the budget until they receive money to ‘pamper’ their district.”

According to the expert, director of the Open Society Fund Ivan Sikora, it is unlikely this subvention will disappear in the near future given the upcoming elections and the government’s desire to have at least some majority in parliament.

Schools in favor

Last year, according to monitoring by OPORA, as many as 3 districts from Ivano-Frankivsk region made the top recipients of state subventions: electoral district 86 (Anatoliy Dyriiv), electoral district 83 (Oleksandr Shevchenko) and electoral district 88 (Yuriy Tymoshenko). They received from 35 to 40 million hryvnias. This year the amounts increased.

Amount of subvention to the districts of single-mandate MPs

Electoral district No.83 (Oleksandr Shevchenko, elected from BPP, now non-affiliated) 67 million hryvniasElectoral district No.84 (Mykhailo Dovbenko, BPP) 26 million hryvniasElectoral district No.85 (Viktor Shevchenko, non-affiliated) 19 million hryvniasElectoral district No.86 (Anatoliy Dyriiv, “People’s Front”) 35 million hryvniasElectoral district No.87 (Yuriy Derevyanko, non-affiliated) 8 million hryvniasElectoral district No.88 (Yuriy Tymoshenko, “People’s Front”) 83 million hryvniasElectoral district No.89 (Yuriy Solovey, BPP) 20 million hryvnias

The most popular objects to which funds from the “deputy” subvention are directed are educational institutions. For example, within the subvention for Ivano-Frankivsk (Oleksandr Shevchenko’s district), financing for the needs of schools, kindergartens and medical institutions amounts to no less than 10%. However, practically every educational institution is allocated small funding—for repairs, landscaping, or purchase of equipment.

The largest share of subvention funds for budgetary institutions was allocated to Viktor Shevchenko’s district—more than half. These are capital repairs of schools and kindergartens, community centers, reconstruction of heating systems, roofs, or another popular trend—replacing windows and doors with energy-efficient ones.

Educational and medical institutions in Yuriy Solovey’s district were also lucky, for which almost 45% of the subvention volume is planned.

The most funds for equipment purchases were allocated in Oleksandr Shevchenko’s district—about 65% of the subvention. Most of that is for medical equipment. Subvention funds were even envisaged for purchasing a vehicle for the Ivano-Frankivsk Clinical Hospital. By the way, buying a vehicle is not unique: in Mykhailo Dovbenko’s district the subvention envisaged 2,5 million hryvnias for purchasing special equipment for one of the communal enterprises.

Yuriy Tymoshenko’s district is also active in equipment purchases. Earlier this year, according to a Cabinet order, Kolomyia was to receive 25 million hryvnias for equipping the diagnostic center of the Kolomyia polyclinic with medical equipment.

More than half of the subvention planned for Yuriy Tymoshenko’s district was intended for road repairs. In Oleksandr Shevchenko’s district about 20% of the sum was planned for road repairs, and about 18,6% in Yuriy Derevyanko’s district.

The largest share of the subvention for new construction or reconstruction of existing premises was allocated in Yuriy Derevyanko’s district (63% of the total). 44% of the subvention is for Mykhailo Dovbenko’s district and slightly less for Viktor Shevchenko’s district.

In Anatoliy Dyriiv’s district almost 20% of the subvention is directed to new construction. In addition, funds were allocated here for building or restoring several bridges.

Subvention funds also finance projects that should have been implemented with private money. For example, six villages in Verkhovyna district in Yuriy Solovey’s district were to receive funds for internet connection. In total—for 1,2 million hryvnias.

In Anatoliy Dyriiv’s district almost 200 thousand hryvnias is to be directed to purchase and install a transformer to light a neighborhood. And in Ivano-Frankivsk, at state expense, the heating system and sewage in a building on Vovchynetska Street were supposed to be repaired.

How do deputies profit?

Thanks to the “deputy” subvention, more than fifty villages in Rozhniativ, Dolyna and Bohorodchany districts will receive children’s playgrounds and sports grounds for more than 3 million hryvnias. This is Anatoliy Dyriiv’s district. Interestingly, half of that amount will be spent by entrepreneur Volodymyr Polytskyi and an entrepreneur associated with him, Nataliya Vysochan.

Volodymyr Polytskyi is a relative of Mykola Polytskyi, who previously worked as an assistant to MP Anatoliy Dyriiv. Previously Anatoliy Dyriiv and Mykola Polytskyi were party members of the Front for Change and respectively headed the Rozhniativ and Kalush party branches.

“Thanks to the taxpayers of Ivano-Frankivsk for rebuilding the roads and the city’s infrastructure,” recently wrote MP Oleksandr Shevchenko on the social network Facebook.

At the same time the MP forgot to thank fellow citizens for the fact that he has the opportunity to earn well from budget funds, since the company associated with him, TOV “PBS,” wins multimillion tenders for road repairs.

The MP’s declaration indicates that last year his cohabitant lent the company “PBS” 1,2 million hryvnias.

Co-founder of the company “PBS” is Halyna Kolybabiuk, who is listed as the head of a number of other companies. In particular, TOV “Bukovel,” which is part of the group of companies “Privat” of Hennadiy Boholiubov, Ihor Kolomoisky and Oleksiy Martynov.

Ultimately, Oleksandr Shevchenko does not deny a connection with the company “PBS.”

“PBS, I do not hide that I have a relation to it, will win all tenders not because we know someone, but because we will offer the lowest price and the highest quality,” the deputy emphasized earlier.

And indeed, since 2015 the company “PBS” has won state tenders worth more than 9 billion hryvnias. Before that, in 2010 the company received approximately 1,5 million hryvnias in procurement. Recall that Oleksandr Shevchenko became an MP at the end of 2014.

In the structure of tenders won by TOV “PBS” over three years the largest number of customers are from Ivano-Frankivsk region (about 70% of tender wins). Most often the customers are the Road Service of Ivano-Frankivsk region or the respective regional state administration departments. The bulk of the tenders are for construction, current or capital repair, or maintenance of roads.

TOV “PBS” is effectively using the funds that come to Oleksandr Shevchenko’s district through the so-called deputy subvention.

For example, in August this year there was a tender for repairing Polova Street in Ivano-Frankivsk. Its winner was TOV “PBS.” At the same time, a Cabinet order dated 27 September indicates allocating more than 4 million hryvnias for repairing that street.

A similar situation occurred with the repair of the Vasyl Stefanyk Embankment. Formally the tender for the repair was won by TzOV “Construction Company ‘Treydzakhidbud’.” However, the firm signed a subcontract with TOV “PBS” to perform the works almost immediately after receiving the order. So now the embankment repair is another reason for MP Shevchenko to boast on social networks. At the same time, 8,5 million hryvnias from the deputy subvention were supposed to be allocated this year for repairing the Embankment.

The MP is aggressively conquering the market, promoting the top-quality execution of works by “PBS.” Thus, in 2015 Oleksandr Shevchenko with MPs Anatoliy Matviienko and Yuriy Derevyanko stopped repair of road H-09 Mukachevo – Lviv in Halych district.

Meanwhile the SFS in Ivano-Frankivsk region suspects the company “PBS” of inflated costs of works when repairing roads H-09 “Mukachevo – Lviv” and H-10 “Stryi – Mamalyha” in 2015–2016, which led to an overpayment of more than 25 million hryvnias.

The company also faces claims in Chernivtsi region. In particular, the Main Directorate of the National Police of the region suspects the company of not following technologies during the repair of road T-26-02 Chernivtsi – Zastavna – /M-19/. During an inspection it was allegedly found that works recorded in the acceptance-transfer act were actually not carried out, although the company received money for them. This concerns an amount of over half a million hryvnias.

Author: Oksana PILYANSKA