The National Anti-Corruption Bureau of Ukraine (NABU) has detailed a sweeping investigation into a $100 million kickback and money-laundering scheme in the energy sector involving some individuals with ties to the government.
NABU, along with the Specialized Anti-Corruption Prosecutor’s Office (SAPO), said detectives had detained five individuals and notified seven members of their alleged involvement in a criminal conspiracy it has codenamed Midas.
Although the suspects were not officially named, local media reported that Timur Mindich, a former business associate of President Volodymyr Zelenskyy and the alleged mastermind of the scheme, had been charged. So was Ihor Myronyuk, who advised German Galushchenko when he was Energy Minister. Galushchenko subsequently became Justice Minister and resigned along with the Energy Minister on November 12. Energoatom’s supervisory board was suspended.
The allegations center on Energoatom, the state-owned operator of Ukraine’s nuclear facilities, and suggest a fairly simple kickback scheme, where contractors were forced to rebate 10%-15% of a deal’s value to company insiders. One particularly damaging element of the inquiry suggests some of the embezzled funds were earmarked to build protective infrastructure for Ukraine’s energy infrastructure. Power stations have been extensively attacked and damaged by Russia in recent weeks, causing widespread power cuts.
NABU and SAPO said the scheme was “legalized” by entrusting the embezzled funds to a separate office located in central Kyiv, which belonged to the family of former Ukrainian MP and current Russian senator, Andriy Derkach.
The 15-month investigation is something of a triumph for Ukraine’s anti-corruption agencies after an attempt in July to bring them under government control. That failed amid uproar both inside Ukraine and among the country’s Western backers. But while it is a testament to Ukraine’s continuing efforts to combat graft, that is unlikely to dampen public outrage.
Details showing that members of the group used their official connections in the energy ministry and Energoatom to ensure control over personnel decisions, procurement processes, and financial flows suggest a degree of impunity.
There has long been Western unease over governance in Ukraine’s energy sector. In 2023, CEPA detailed concerns about government interference in the activity of state-owned enterprises such as Energoatom, Ukrenergo, Naftogaz, and GTSOU, fearing that a lack of accountability and corporate governance safeguards in state-owned energy firms could foster widespread corruption.
A number of senior managers have been removed in recent years, causing confusion and some dismay among Western energy companies and European think tanks that have spoken to this author.
Take Volodymyr Kudrytskyi, the man credited for defying all odds to connect the Ukrainian grid to Europe’s and ensure security of supply for the country, just as Russian tanks were rolling into Ukraine in spring 2022.
He was forced out as head of Ukrenergo more than a year ago, with many observers expressing fears in private that the government was exerting influence over strategically important energy state-owned enterprises for murky reasons.
On October 28, he was arrested on claims he had tried to defraud a bank in 2018. Kudrytskyi says the accusations are false, and is currently free on bail.
But his case is not singular. Other high-profile CEOs of energy state-owned enterprises, such as Naftogaz’s Andriy Kobolyev, were also forced out of their jobs and are facing official action.
Sources outside Ukraine have told this author that all these cases follow a similar pattern — the sidelining of high-profile individuals who fought to protect the independence of energy companies from government interference and the type of corrupt practices that are now being revealed by NABU and SAPO.
The latest scandal with its high-level ramifications is likely to raise many questions among international donors and the local population. They are sure to provide fuel for Russian propaganda campaigns in an effort to undermine Western support and stoke division within the country.
Some will ask whether supporting Ukraine’s war efforts against Russia is not a waste of time, money, and effort?
But that would miss the point. Graft is deeply embedded in many countries, and it takes time to eradicate. Ukraine’s efforts to face the issue are showing results – it has risen to 105th from 122nd place in Transparency International’s corruption index between 2021 and 2024, even as Russia moved in the opposite direction to 154th. From greater effort, expect greater results.
Meanwhile, the Russian kleptocracy will try to exploit hard evidence of Ukrainian crime-fighting to claim the country’s rulers are fleecing the population. It is clear now, and has been for some years, that those words describe the ruling elite in Moscow far better than its counterpart in Kyiv.
Aura Sabadus is a senior energy journalist writing for Independent Commodity Intelligence Services (ICIS), a London-based global energy and petrochemicals news and market data provider. She is also a Non-resident Senior Fellow with the Democratic Resilience Program at the Center for European Policy Analysis (CEPA).
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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