President Volodymyr Zelensky was fuming after visiting the Malyshev military plant in Kharkiv on Nov. 6.
The plant has been part of UkrOboronProm, the state defense sector monopoly, since January 2011. UkrOboronProm oversees about 130 companies with 80,000 employees, who make everything from tanks and planes to missiles — both for Ukraine and foreign clients.
Covered in a thick shroud of official state secrecy, the monopoly has long been plagued by corruption scandals. But the Nov. 6 visit was Zelensky’s first trip to a factory of UkrOboronProm, which he promised to clean up during his campaign.
Zelensky said he was shocked when he learned that the Malyshev plant had made only one tank for the Armed Forces of Ukraine in 10 years. “The statistics show that, in Soviet times, there were 900 tanks a year,” he said at a meeting about the state of the Malyshev factory.
Zelensky pointed out that some workers had not received wage arrears for up to four years. He also noted the low level of wages in general.
“For example, at the aviation plant, only Hr 3,500 ($142). How can a person respect himself and work for the state? How can he even call himself a person in these conditions?” Zelensky said, referring to reports that workers are forced to work in freezing facilities during the winter.
“We treat people like cattle, and then we want them to respect the authorities, respect Ukraine, not to go anywhere, and for our businesses to work,” he added.
Zelensky demanded that the Cabinet of Ministers convene a meeting to improve the efficiency and working conditions at UkrOboronProm.
Last June, Zelensky named reformist former Economy Minister Aivaras Abromavicius to the board of the enterprise, tasking him with carrying out a long-awaited audit.
Asked by Zelensky on Nov. 6 when it would be possible to fix all the plants in Kharkiv, where there are 18 UkroOboroProm enterprises, Abromavicius said it would require money and state support. Zelensky asked to meet again within a week for further discussions.
Created in 2010 by then-President Viktor Yanukovych, UkrOboronProm has a monopoly over exports of all military products, making it both a regulator and the only game in town. Over the last decade, UkrOboronProm has rigged deals, pushed entrepreneurs away and kept Western investors out of the loop.
In 2017, an investigation revealed that as much as Hr 100 million ($3.7 million) allocated to buy spare parts for armored military vehicles was pilfered from Kyiv’s Armory plant in 2014 -2015, and the parts were never delivered.
In late July, John Herbst, a former U.S. ambassador to Ukraine, called UkrOboronProm a “serious, serious problem” for the country and said that the whole military industry is suffering from a “lack of transparency and corruption.”
For Ukraine, developing a transparent defense industry could open the door for foreign investment, economic development and closer NATO integration.
