11 Billion USD in Financial Violations Uncovered - Ukrainian State Financial Inspection

KIEV, Ukraine, January 24, 2011 - The State financial inspection (SFI) of Ukraine has conducted
financial audit of governmental financial activities in 2010. According to
its findings the previous government headed by Yulia Tymoshenko is
responsible for embezzlement of funds in the amount up to 90 billion
Ukrainian hryvnia (approx. 11 billion US dollars).

Petro Andreyev, head of the State Financial Inspection of
Ukraine highlighted that violations in the area of state procurement alone
amount to 15 billion Ukrainian hryvnia (approx. 2 billion US dollars). In his
opinion, the Ministry of Economy of Ukraine, chaired by Bohdan Danylyshyn at
the time, had to play key role in such governmental activities. During the
2008-2009, the former government failed to create legible competition between
suppliers, required by Ukrainian tender legislation. On the contrary, the
Cabinet of Ministers of Ukraine has issued around 60 ordinances, enabling
customers to avoid using mandatory procurement procedures.

Among violations the SFI report mentions the cases of
procuring large amounts of overpriced fuel by the Ministry of Defense and
purchasing 250-mln hryvnia worth of special transportation vehicles by the
Ministry of Emergency Situations. On top of that, the promotional campaign,
describing the achievements of the previous government cost the state budget
17 million Ukrainian hryvnia. The transaction was authorized by ex-Minister
of Economy - Danylyshyn, stated Petro Andreyev at the "Shuster Live"
talk-show. During the show Andreyev presented a document certifying that the
publishing company that carried out the order and was contracted by Yulia
Tymoshenko's government had been established one month prior to signing the
contract. He also stressed, that the publishing house in question did not
have any publishing equipment or even a license to perform the task.

In response the ex-prime-minister's political party BYuT
dismissed the accusations, claiming that the inspection carries out
Yanukovych's political orders "aimed at defamation of the opposition and
using a so-called case-based reasoning to conduct repressions".

Andreyev refutes accusations of political repressions and of
being biased, stressing that the State financial inspection has called upon
the IMF and the EBRD to conduct their own audit on financial activities of
the previous government. He said that both organizations had refused to run
any inspections claiming they had no authority to do so.

For more information, please contact Ukrainian State financial inspection press-service +38(044)-417-51-97 press at dkrs.gov.ua