Around 500 million UAH in advance payments — and not a single completed house: how subcontractors turned the Posad-Pokrovske restoration into interest-free financing

Why take expensive bank loans when you can totally fool yourself out of millions from the state budget? It seems that private contractors, entrusted by the state with a very important task — the comprehensive restoration of the completely destroyed Posad-Pokrovske village in Kherson region — decided to do just that.

This is reported by the publication "Telegram".

Instead of immediately building housing for people who have been left homeless, a number of companies, including quite well-known ones — LLC "Autostrada South", LLC "ROSTDORSTROY", LLC "ENERGY-ROAD CONSTRUCTION", LLC "YEDBK", LLC "AUTOMAGISTRAL- WEST", LLC "BF PARITETBUILDINVEST", presumably turned state advances into free working capital. While construction sites stayed empty for months, hundreds of millions could have simply been "turned" on private company accounts.

This is the kind of "Build back better".

The experimental Posad-Pokrovske recovery project was meant to become a showcase of recovery for the whole country. This frontline village on the border of Kherson and Mykolaiv regions was almost completely destroyed by the Russians, turning several hundred of its houses, a school and utilities into ruins. After the retreat of the occupiers, only one house remained fully intact.

After the region was de-occupied, the state announced an ambitious plan: to fully revive the settlement following the leading international principle of "Build back better" — i.e., to rebuild "better than before" the war. The project became a pilot; more than 1,6 billion hryvnias were allocated, and the restoration process was monitored not only by the local community but also by residents of other frontline regions and international donors.

The reconstruction process was launched in 2023 year, and from the government’s promises it seemed that thousands of villagers would be able to return soon. But things did not turn out as expected.

Recently, in July 2026 year, Posad-Pokrovske was visited by first deputy head of the Restoration Agency Mykola Boyko, who tried to talk about the "successes" of restoration. It turned out, however, that of 234 planned houses for construction were fully completed and put into operation. The official managed to boast only that 67 houses are at the "final stage" and are planned to be handed over soon. The rest are either half-finished or at the foundation stage.

The Agency leadership presents such tempo as a great achievement. Yet they are quietly silent about the fact that under the terms of most contracts, the final deadline for turnkey delivery of objects expired in 31 December 2025 year. That is, by the time of this year’s July inspections, builders were supposed to have fully completed the construction of the entire village, the new clinic and networks, not report on a "finishing process" six months after all possible deadlines have passed.

To avoid being flippant, we will quote fragments from some contracts regarding the village reconstruction.

Here is, for example, the first page of the contract with LLC "ROSTDORSTROY" (by the way, we recently wrote about this company in connection with another high-profile scandal related to possible budget embezzlement and pollution of the Black Sea during the major repair of the Novoarkadiy highway collector) regarding the construction of the clinic in Posad-Pokrovske with the final completion date specified.

And here is a fragment of one of the contracts for the construction of housing, also with the final completion date specified. As of 31 December 2025 year, the contractor LLC "EUROPEAN ROAD-Construction Company" was supposed to hand over 52 objects: Zelena Street — 10 houses, Pokrovska Street — 12 houses, Sportyvna Street — 12 houses, Stepa Street — 1 house, Khersonska Street — 17 houses.

At the same time, writing off the failure as a classic "no money" argument is unlikely. The state provided financial resources for the project — the Restoration and Development of Infrastructure Service in Kherson region conducted 13 large-scale tenders, and for each of these contracts the Service promptly and on time transferred enormous sums of advances to private firms. Funds for procurement of materials, equipment and workers were in hand from day one. Yet millions on the accounts never transformed into walls.

It seems the idea of "rebuilding better than before" did work, but in a very specific financial sense. Instead of real walls, the contractors apparently built their own scheme, which ultimately triggered a full criminal proceeding about possible embezzlement of budget millions.

The anatomy of the "zero-interest reconstruction": how the big road builders divided the village’s money.

The case materials cover 13 scale of contracts concluded by the Restoration and Development of Infrastructure Service in Kherson region with contractors from April to July 2025 year. Investigators recorded that the state customer transferred to contractors advances totaling more than 482 million hryvnias, but instead of immediate financing of construction works these funds were effectively frozen on private bank accounts of companies.

Under the contracts, firms had a clear term — 180 days (about 6 months) to use the advance payment to purchase materials and report with acts. But none of the advances were used in full. Moreover, under some contracts, despite receiving multi-million advances, works were not carried out at all.

Meanwhile, contractor companies kept state funds almost until the maximum legally allowed time and returned unused advance payments — more than 259 million hryvnias — to the treasury just before the deadline.

That is exactly the logic of the investigation into possible non-target use of funds. It turns out that public funds were continually used as working capital for private structures. While ordinary enterprises take commercial loans at 17–21% per year, restoration favorites arranged themselves financial vacations at 0% per year. The lost opportunity calculation, even using the National Bank's policy rate of 15,5% per year, shows that such "freezing" of advances could have cost the budget almost 19 million hryvnias.

If we analyze all 13 contracts, the situation looks as follows.

Who and how much earned on the (non)reconstruction

The lion’s share of financing for the experimental project was taken by leaders of the so-called "road cartel" — large companies accustomed to receiving multi-billion state contracts:

1. LLC "Autostrada South" (ASP)

The country’s main infrastructure favorite, involved in large construction scandals. Recently the company underwent searches by the National Police, and its beneficiary Oleksandr Boiko received a suspicion of embezzling over 240 million UAH on the main water pipeline to Kryvyi Rih. In the Kherson restoration, the firm ran two contracts (¹1-ASP/25 and ¹2-ASP/25):

2. LLC "ROSTDORSTROY" (RDS)

A key ally of the Autostrade in the so-called "cartel", traditionally linked to the OD Mayor Gennady Trukhanov’s circle. The company is implicated in numerous criminal proceedings for official negligence, poor quality work and embezzlement during road construction. In Posad-Pokrovske the contractor was to perform works under three contracts, including the construction of a clinic:

3. LLC "ENERGY-ROAD CONSTRUCTION" (EDB)

The contractor led in terms of 100% freezing of facilities without any start of works. The firm ran three contracts:

4. OTHER CONTRACTORS

Currently the National Police, through courts (there are already about 10 decisions), seizes banking documents, keys to the Client-Bank system and even ATM camera photos to find out how advances were used, whether these state millions were funneled to dummy firms or private deposits during this broad pause in reconstruction.

The schemes from offices: Who turned a blind eye to empty construction sites

Today officials have a whole set of ironclad arguments why the exemplary frontline village reconstruction is stuck in place. The first excuse is bureaucratic obstacles: supposedly many residents of the destroyed village simply did not have documents for the ruined houses or land. But did the responsible officials not know this, pompously announcing the reconstruction project back in 2023 year? And after years since the project started, couldn't this issue have been resolved?

The second favorite excuse is staffing shortages among contractors. They say there are no engineers or workers ready to work under constant shelling 30 kilometers from the front line. Here the question to the contractors: if you knew all aspects of this case, why did you take it on?

However, these excuses miss the mark when it comes to budget money control. Someone was supposed to monitor where hundreds of millions of taxpayers’ money go. The main project overseers are known: Kherson Regional State Administration led by Oleksandr Prokudin, State Agency for Restoration and Development of Infrastructure, led by Serhiy Sukhomlyn (he submitted a resignation letter at the end of July), and the immediate customer of works — the Restoration and Development of Infrastructure Service in Kherson region led by Mykola Savchenko. These officials, in theory, should oversee contractors daily and alarm when state advances become someone’s free financial vacations. And if cartel firms did nothing and simply rotated state funds on their accounts interest-free, then Savchenko’s, Sukhomlyn’s and Prokudin’s teams should have forcefully demanded these millions back to redirect them to where they are really needed.

But while cabinets and courts are reassigning blame, ordinary people again end up as the victims. The main trouble of Posad-Pokrovske is not lost budget gains from frozen funds. It is hundreds of real families waiting for housing for the third year in a row. And for them the loud international slogan "Build back better" remained a beautiful fairy tale, and the hope for their own walls mutated into dry volumes of a criminal case.

It is worth noting that the failure in Posad-Pokrovske is not the only loud scandal in Kherson lately, where large money for recovery simply vanished into thin air. Local officials and clever traders have long learned to profit from ruins and infrastructure projects. For example, law enforcement is now investigating another wild scheme where regional administration officials managed to "wash" 4,6 million hryvnias on a fictitious inspection of damaged buildings caused by hostilities, which the contractor carried out in three days on paper, analyzing photos in a messenger.

And another top case of misappropriation has already ended with real prison time: the head of two construction companies received 8 years in prison for simply misappropriating over 5,8 million hryvnias of an advance allocated for the construction of the Center for Administrative Services in Nova Kakhovka, leaving the facility incomplete.

All these stories form one continuous and very sad puzzle. While the country raises funds for recovery around the world, on the ground budget millions continue to be treated as easy and interest-free gains.