Ukrainian Corruption Beats Records: $11 Billion in 2008-2009

KYIV, Ukraine, January 28, 2011 - The results of the 2010 audit conducted by the State financial
inspection (SFI) of Ukraine, revealed fiscal violations of 90 billion
Ukrainian hryvnia (approx. $11 billion). The misuse of public funds takes up
to one-third of all identified violations, according to Petro Andreyev, head
of the State financial inspection of Ukraine.

Petro Andreyev said the embezzlement of 15 bln. Ukrainian
hryvnia (UAH) (approx. $2 billion) took place in the area of state
procurement of goods and services. The Ministry of Economy of Ukraine (MoE)
played the key role in such embezzlements, according to Andreyev.

In 2008-2009, the Cabinet of Ministers of Ukraine issued 60
orders, enabling customers to avoid using mandatory procurement procedures.
In most cases, the ordinances were initiated by the MoE.

MoE has given its consent to the Ministry of Defense to
purchase overpriced fuel worth almost 52 mln. UAH (approx. $6 million),
hurting the country's economy by more than 1 million UAH. The former Minister
of Economy issued the letters to the Ministry of Emergency Situations
approving the purchase of fire engines and ambulance vehicles totaling about
$32 million, which let MES avoid issuing a tender on the premises of "absence
of competition." Afterward, Ministry of Emergency Situations purchased 27
ambulance vehicles, causing losses to the state budget in the amount of
approximately $2 million.

Andreyev noted that similar violations took place on multiple
occasions including the one in the city of Shostka during the repairs of the
public heat supply system, and in Kyiv during the construction of the
security data processing center for EURO 2012, as well as during installation
of auxiliary subsystems including video surveillance, traffic moving
detectors, automatic traffic control system, etc.

The State financial inspection has transferred more than 6
thousand audit cases, which indicate the losses incurred by the state, to the
law enforcement agencies. About 1.5 thousand of these cases have already
served as evidence for multiple ongoing criminal investigations.

Bohdan Danylyshyn occupied the position of the Minister of
Economy of Ukraine since December 18, 2007 till March 11, 2010.

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

For more information, please contact Oleg Voloshyn, Director, Information Policy Department, MFA of Ukraine +380442381529 press at mfa.gov.ua