Circuit patterns of Kharkiv mayor Kernes: procurement, markets, infrastructure

Author : Igor Smolov

Source : 112 Ukraine

Kernes and his entourage do not hesitate to enrich themselves in different areas
12:58, 21 September 2020

112 Agency

Dirty slums are often hidden behind the facade of a nice building. A striking example is Kharkiv, which used to be a progressive industrial city, which, over the last years it has been ruled by odious mayor Gennadiy Kernes, who turned it into a commercial "Shanghai."

With the help of fictitious bogus firms, Kernes and his entourage do not hesitate to enrich themselves in different areas: from repairing roads at inflated prices to buying trash cans and floor rags at insane prices. The high-profile scandals associated with this are increasingly leaking into the news agenda and becoming the subject of an investigation by law enforcement agencies.

Market empire

Against the background of the lack of significant achievements in recent years, Kharkiv is most often mentioned in the context of scandals related to the odious mayor Gennadiy Kernes.

In terms of the total area allotted for trade in the markets, Kharkov is the leader among all Ukrainian cities. At the same time, there is not a single utility company in the city that would own the rights to manage trading floors. Almost all of the city's trading floors are run by the city's mayor, Gennadiy Kernes.

Enterprises collecting money for rent from sites are registered as individuals from the inner circle of Kernes. The collection of rent, in particular, is the responsibility of the son and wife of the Kharkiv mayor: Rodion and Oksana Gaisynsky. Also the son of the closest ally of the mayor - Yuriy Medvedev, deputy of the city council from Kernes’s "puppet party" Revival, - manages one of the oldest Kharkiv markets ("Blagovishchensky"). The money is cashed.

Sole proprietorships withdraw the money from bank accounts, including "for the payment of salaries to employees." At the same time, there is not a single employee on their staff. Accountants, close to the management, receive funds in banks by powers of attorney, who transfer them to couriers. Those, in turn, deliver cash to customers from Kernes. Due to the inability to control the real turnover of these "enterprises", the State Fiscal Service receives tax reports from them, in which the true scale of activity is underestimated tenfold. In addition to the funds included in the article "payment for services", enterprises and private entrepreneurs from the Kernes orbit carry out operations to transfer funds with the designation of "financial assistance" and "replenishment of their own account." Last year, only four companies ("Sulli Trading Platform No. 1", "Traktorozavodska Market Trading Platform No. 4", "Magnit Plus", "Weser Company") cashed out almost 3 million USD in total.

The scale of the scheme is impressive - it involves about 140 such business entities. Officially, the beneficiary, one of Kernes's closest associates, deputy Medvedev, declares more than modest income. All his family property is registered with his wife Natalia.

In Kharkiv, they have an apartment of 68 square meters, an unfinished house of 661 square meters and three land plots with a total area of ​​almost 3 thousand square meters. They also have a plot of 1.2 thousand square meters and a garden house of 215 squares in Stary Saltiv (Kharkiv region).

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Medvedev owns a 2018 Toyota Camry for a million hryvnia, his wife bought a new Lexus ES 250 car last year for 1.76 million. The City Council deputy indicated the existence of corporate rights in 18 enterprises, in which he is mainly the ultimate beneficiary. At the same time, Medvedev declared in cash 350,000 dollars and 3.7 million UAH (131,500 USD). His wife has 123,000 USD and UAH 180,000 (6,400 USD).

Neither Kernes himself nor his associates care about the welfare of the entrepreneurs on whom they enrich themselves. People complain about poor working conditions and huge fees. In particular, they are persuaded to conclude "exclusive contracts" for the lease of a trading place. Impressive amounts must be paid either immediately or in installments throughout the year. For example, the cost of an "exclusive" place for 6 sq. m. without electricity costs over 3,000 USD at the Central market.

Often, fines are also issued, including for the delay in payment of rent, which is constantly increasing. At the same time, the territory is not cleaned, there are no normal access roads: goods have to be dragged into the pavilion from the road.

One of the most media reasons was the war for the Barabashovo market, which remains the only trading outpost independent from Kernes and Co.

In February, violent clashes involving a total of about 100 people took place on the basis of attempts to establish control over the market by the Kernes' gangs. Hedgehogs were displayed at the entrance arch. Rubber batons, pyrotechnics, tear gas cans, and traumatic pistols were used. The police stopped the fight.

Press service of the National Police

The mayor is seeking the construction of a road that will run through the territory of the market buildings. The objects are constantly being demolished, despite the fact that the court on termination of the land lease agreement was lost.

The mayor's office quarantined only Barabashovo, while other markets and retail outlets, which are associated with people from Kernes' inner circle, continued to work. This caused a resonant scandal.

Kernes & Co make money on the city subway

Kernes also categorically refused to suspend city subway in connection with the threat of the spread of Covid-19. Until 2009, the services of cleaning, repairing rolling stock, repairing escalators were carried out by the metro's own forces. Then their implementation was entrusted to three firms, the staff of which was transferred to those underground workers who were responsible for the execution of the work.

These were companies, created by people from the circle of director Serhiy Museev, the former head of the administration of the Kholodnohorsk district, a deputy of the Kharkiv City Council. Two years ago, the Security Service accused him of collaborating with the Russian FSB. With access to state secrets, he collected and transmitted information to Russian curators. They failed to detain him - Museev fled to Russia. Despite this, the post of head of the Kholodnohorsk Regional State Administration remained with him until January 2019.

The firms that were created with the direct participation of his son Maksym (Vago-Rev, PSMP-753, Progressive Cleaning Systems) still remain the main contracting organizations of the Kharkiv subway. According to Smida, the well-known businessman Alexander Livshits from Kryvy Rih and Iryna Perova from Kharkiv are among the shareholders of this company. The media claim that Perova is registered in the apartment of Alla Dobkina, the daughter of a close associate of Kernes, People's Deputy Mykhailo Dobkin. Every year, the municipal "Kharkiv Metro" transfers hundreds of millions of hryvnias to the accounts of three companies. For three years, the amount amounted to 107 million USD.

Over the past year, about 71,000 USD were received from the budgets of different levels to the account of the "Kharkiv Metro." As of September 1, 2020, 24 million USD were transferred from the budget to Vago-rev's accounts.

The services provided by the contractor are performed either poorly or are not performed at all. The company has already come to the attention of law enforcement officers. It is suspected of receiving funds for carrying out fictitious repairs to the rolling stock of the Kharkiv Metro. The attention was paid to the agreement for 25 million USD, concluded in 2016. In connection with this case, Vago-Rev's bank accounts were arrested in 2018, but in 2019 the arrest was lifted.

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"Progressive cleaning systems" specialize in the maintenance of residential premises and adjacent territories of Kharkiv, sanitization of the premises of the Kharkiv metro, which has gained unprecedented relevance in connection with the coronavirus pandemic. This is also a source of enrichment and money laundering for Kernes and his entourage.

All three main contractors of the Kharkiv Metro have come to the attention of the law enforcement agencies - the check for the waste of the city's funds has not yet been completed.

Not only law enforcement agencies recorded violations in the work of the Kharkov subway. After the audit, the State Audit Service came to the conclusion that for the period from January 1, 2016 to February 28, 2019, the enterprise understated the income from advertising activities by 4 times. In 2019, the company received an income of only 716,000 USD from leasing advertising space instead of 3 million USD per year. When compared with similar purchases of Dnipro and Kyiv metro, the Kharkiv one buys goods, services and works at significantly inflated prices. In particular, the R-50 rails were purchased at 60-70% more expensive than the subways in Kyiv and Dnipro. Annually on purchases "Kharkiv Metro" loses 280,000 USD.

At the same time, the official loss of the Kharkiv Metro for the first half of 2020 amounted to 7,5 million USD. For the first half of 2019 – 1,9 million USD. At the same time, the metro does not have enough money to pay salaries to staff members.

Profits from housing and fictitious repairs

Kernes and representatives of his entourage do not hesitate to earn money in the housing sector.

Most of the repairs in the city are carried out by the "Kharkiv Repair and Construction Enterprise." Last year, its financing amounted to 7,1 million USD. The utility also selects contractors for firms controlled by certain individuals from the circle of those close to Kernes. Last year, "Kharkivstartstroy", "SK DM", "Budpromsystema" mastered more than 1 million USD of funds, allocated by the Kharkiv repair and construction enterprise. At least a third of the funds allocated to finance the work is embezzled: repairs are carried out only on paper. To carry out them, the Kharkiv repair and construction enterprise hires contractors, the staff has no more than three or four employees, which, of course, is not enough to fully carry out the repair work. They pass the order down the chain.

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Such schemes also did not go unnoticed by law enforcement officers. On January 20, a criminal case was opened against the director of the Kharkiv Municipal Economy Department Roman Nekhoroshkov and his deputy Oleksandr Lement. They are suspected that they, being in a criminal conspiracy with the director of "FIRM ASTREA" Roman Skypnychenko and owner of the company Andriy Artemenko, profited from the overestimation of the cost of work and components at various facilities. The amount of losses is estimated at 64,000 USD. The case will be brought to court in the near future. And this is not the only criminal act against Kernes officials, investigated by law enforcement officers.

The media described dozens of examples of abuse by the Department of Housing of the City Administration.

In July, the Department paid for the state of emergency "KharkivStartStroy" repair and restoration work in a residential building, which is an architectural monument, in the amount of 10,100 USD. Half of this amount was spent on metal-plastic windows alone, although they could be installed three times cheaper.

Kharkivzelenbud ordered a decorative structure with elements of illumination from MK Gencom City for almost 250,000 USD. Instead of a prefabricated metal frame with LED devices, one could buy six expert-class ventilators from a European manufacturer, three ambulances or a fire truck.

Also Kharkivzelenbud ordered 350 metal waste bins and 100 lids for them for 40,000 USD. Litter-bins cost three times more than from the Frunze Plant. Kernes's public utilities were also seen buying curbs with a double overpayment. Materials for repairing the embankment were purchased at inflated prices.

A lot of noise was caused by the story of the reconstruction of Victory Park, for the purchase of materials for which the little-known "Ukrrestavratsiya" was allocated 5,3 million USD. For asphalting the paths, we bought a mixture at a price one and a half times higher than from competitors, crushed stone - three times, sand - twice as expensive. The overpayment alone on the sand is commensurate with the renovation of the regional hospital in the Trostyanetsky district. Park benches, lighting poles, litter bins were all overpriced, so the repairs cost $ 3,000.

Kernes spent 25 million USD of budget funds on the reconstruction of Shevchenko Park, which caused discontent among the townspeople. 14 million USD are planned to be spent on the reconstruction of the zoo. At the same time, there are no funds for additional payments to health workers who work with coronavirus.

Related: Kharkiv Mayor Kernes transported to German Charite clinic

Theft of funds in the construction and repair of roads

It would be strange if the enterprising Kernes & Co. left out such a sweet source of income as road construction. The main mechanism for embezzling funds remains the overestimation of the volume of actually performed repair and capital work. In addition, write-off of bitumen and crushed stone is practiced. Conversion of non-cash funds into cash is carried out by Alliance Energo Trade.

A separate place in the schemes of making money on fraudulent activities with the street-road network is occupied by "Parking +", which received almost 10 million USD last year. A significant part of the funds was cashed out through "gaskets." Almost 42 million USD have already been spent on the maintenance and current repair of the road network.

"Parking +" before the transition to the position of director of the Department of Construction and Road Facilities of the Kharkiv City Council was headed by Volodymyr Chumakov, known as a person close to Kernes. He has been heading the department for ten years. In July, Chumakov got into a scandal because he did not file a Spanish property lease company that belongs to his wife and daughter. In June 2019, the Chumakov family bought a house in Spain for 0,5 million USD. They also own 27 acres of land.

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The Chumakovs point to dividends and salaries at the Czech firm Prof Materials as their main source of income. Over the past year, they earned less than 180,000 USD. Quite modest incomes against the background of their spending, right? In addition, in 2016 Olga Chumakova bought a 2016 Porsche Cayenne for 88,000 USD. A year later, Volodymyr Chumakov bought a Mercedes-Benz GLS 350 D4 Matic, produced in 2016. Czech firms, co-owned by Chumakov's wife and daughter, supply pipes to Ukraine. And they are bought by firms that receive contracts for the performance of work from the department headed by Chumakov.

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