The Security Service of Ukraine and the National Police have dismantled a large-scale scheme to embezzle funds from the State Agency for Reserve Management of Ukraine.

As a result of a joint operation in Kyiv region, the former acting director general of a State Reserve plant and five of his accomplices were detained on suspicion of embezzling UAH 36 mln (USD 828,000) from the budget.

The investigation established that the perpetrators, acting in a criminal organisation, ‘earned’ money by illegally renting out warehouses belonging to the state-owned enterprise.

To operate the scheme, its organizer, who until recently held a managerial position at the plant, set up a network of controlled companies. To do this, he enlisted the help of his acquaintance as an intermediary.

After registering the newly created firms, he rented the State Reserve storage facilities to them at an artificially low price.

His accomplices then subleased the premises at market rates to commercial enterprises.

The fraudsters transferred the ‘difference’ to shadow economy through affiliated companies, cashed it out, and divided it.

In this way, the group received illegal income of between UAH 1 and 4 million per month, which they used to purchase luxury real estate and premium cars.

To conceal the scheme, its organizer and participants entered false information into the accounting and business documentation.

During the searches of the suspects’ offices and homes, the investigators seized smartphones, computer equipment, and documents with evidence of the criminal scheme.

All six detainees have been notified of suspicion under two Articles of the CCU:

• 255.1 (creation of a criminal organization, management of such an organization or its structural parts);
• 191.5 (appropriation, embezzlement, or seizing property through abuse of office, on a particularly large scale).

The investigation is ongoing. The suspects face up to 12 years in prison and confiscation of property.

The operation was carried out under the procedural supervision of the Prosecutor General’s Office.