15:02 03.07.2023

Reznikov: Absurd conclusions of Audit Service create huge problems for both Ukrainian army and business

4 min read
Reznikov: Absurd conclusions of Audit Service create huge problems for both Ukrainian army and business

Defense Minister of Ukraine Oleksiy Reznikov called the conclusions of the State Audit Service absurd that the profit that private and state companies received by cooperating with the Ministry of Defense is a violation and I am sure that a solution will be found and the interests of domestic business will be protected.

“I and, I am convinced, the lion's share of Ukrainians have one main priority – to bring victory over the enemy closer. Anything that brings victory closer is good, anything that delays and increases its price is bad … At the same time, there are people who have different priorities and criteria for making decisions. And it becomes very difficult to ignore, and even more so to tolerate. Now we have exactly such a situation where the absurd conclusions of the State Audit Service have created huge problems for both the Ukrainian army and Ukrainian business,” Reznikov wrote in his article for Forbes Ukraine.

The Minister stressed that dozens of Ukrainian enterprises withstood a year and a half of “the sheer horror of the Moscow invasion, withstood crushing shelling, passed a grueling winter, but now the audit can ‘defeat’ them.

Reznikov recalled the state audit of the Ministry of Defense initiated by him a year ago.

“The auditors did a lot of work, collected a lot of useful material, but at the same time someone came to the “breakthrough” opinion that the Ukrainian suppliers of the Ministry of Defense - both state–owned and private, which provide the army, do not have the right to profit. At all. It is Ukrainian – for some reason this ‘innovative’ approach does not apply to foreign ones,” the Defense Minister noted.

As the head of the ministry noted, "a conflict has arisen", in which on the side of the Ministry of Defense and Ukrainian business, a number of system–forming laws on entrepreneurship, a thorough package of by-laws, etc. "And on the other side there is a formal opportunity to find a clue in one of the government resolutions (No. 335). And on the basis of this to decide that the Ukrainian business should work without profit, and all the previously received profit should be returned. At the same time, creating jobs, supporting our economy, paying salaries and taxes here," the article says.

According to him, the Defense Ministry is convinced that the Ukrainian business providing the army has the right to profit, so they challenged the approach of the State Audit in court.

“Since the situation does not require any changes to the legislation or complicated steps. There is everything to act reasonably and legally. We are talking exclusively about the approach to law enforcement. That is, you use the right to create an opportunity. Or, on the contrary, to create a problem. It's just about that,” the minister said.

He stressed that Ukrainian defense is “unrealistic without a powerful Ukrainian economy.”

“And how can Ukrainian business scale production without profit? Do we want more Ukrainian weapons, guaranteed supplies of Ukrainian uniforms? How can this be achieved without scaling production and profit? And why does no one question the right of foreigners to profit? Is that fair? Absolutely not!”he said.

Reznikov expressed confidence that a solution will be found in this situation with audit claims and the interests of domestic business will be protected.

“The fastest way is to eliminate the norm containing a lead for formal claims. But this is a suboptimal way, which should not become the rule and should not be encouraged,” the minister said.

He also added that it is always possible to find a clue in Ukrainian legislation that will jeopardize some important process.

“I say this as a professional lawyer. When it comes to defense, it's not safe. And not only defense. Today, Ukrainian businesses have been banned from making a profit, and tomorrow they will be banned from receiving Western weapons and will begin to make claims for it. Now they are demanding a refund – tomorrow they will be forced to return HIMARS and Leopard. We can drown in formalism and stop. I am not exaggerating,” the Defense Minister said.

Reznikov added that “for some reason, lately people who got lost somewhere in the spring of 2022 have been showing excessive thirst for thoughtless formalization, and then heroically defended our western border for a long time.”

“If they try to ‘direct’ and emphasize their importance for the country in a difficult period in this way, this is a wrong way,” he stressed.

Earlier, the State Audit Service of Ukraine checked the contracts of the Ministry of Defense and declared a violation of UAH 2.5 billion. It is indicated that manufacturers who cooperate with the Ministry of Defense, according to the Audit Service, should not put profits into contracts with the state.