War always has two sides to it. While some are fighting the enemy for the independence and survival of Ukraine, others are trying to make huge fortunes. This is especially true for military goods. Not for nothing do they say: "War to some is boon to others". The war in Ukraine is no exception in this respect.
It is well known that the supply of ammunition is one of the key factors for the frontline situation. Ukraine imports them in large volumes, and the contracts amount to hundreds of millions of dollars.
Unfortunately, for some pseudo-businessmen, making unfair trade bumper profits is at the forefront of their minds, rather than the defense of the country, timely and adequate supplies of ammunition to our defenders, development of domestic production, growth of the competitiveness of the national defense industry, etc. Guided by profit motives, they are making extraordinary efforts to destroy Ukrainian manufacturers and wipe out competition within the country.
A vivid example of such anti-state actions is the situation around the state-owned enterprise Pavlohrad Chemical Plant Research and Production Association (hereinafter referred to as PChP), which now manufactures and supplies ammunition to the Armed Forces of Ukraine at the lowest prices. Below, I will elaborate on the attempts to remove this enterprise from the market.
Price to pay
PChP is a state-owned enterprise of strategic significance for the economy and security of the Ukrainian state. The company manufactures millions of units of ammunition annually. Domestically made ammunition is several times cheaper than foreign ammunition. It is not just 1-2% of import prices, but it is 30 to 200%.
The PChP's production volumes allow it to offer a lower price on the market. Unfortunately, this makes it a target for unfair competition.
In this context, it is worth mentioning the plant's director general. For many years now, this position has been held by Leonid Shyman, the Hero of Ukraine, who is also the design manager of solid-fuel rocket engines. Furthermore, in March 2023, the Cabinet of Ministers appointed Mr. Shyman as the General Designer for Ammunition and Explosives.
How PChP potential is being destroyed during the war
Despite the strategic role of the enterprise, both the plant and the PChP's director general have faced enormous pressure almost from the very beginning of Russia's war against Ukraine in 2014. Those who are making the Shyman's life and the plant's business a nightmare are doing immense damage to the interests of our country.
Thus, it was 2014; Russia occupied Crimea then and unleashed a war in Donbas. The issue of missile production arose. PChP was the only enterprise in Ukraine that was capable of manufacturing missile engines and components.
Some officials and oligarchs at the time were trying to force Leonid Shyman and PChP to work for them by all means. As I am told, there were some well-known individuals in the country who were interested in that.
Refusal of the offer to “play by their rules” resulted in criminal cases being launched against the PChP's CEO and a number of the company's executives. When such blackmail did not work, the cases had to be closed, as if they had been “sorted out."
For a while, PChP operated quietly, production was actively developing, and the plant, in cooperation with other enterprises, began to produce components for the Vilkha, Sapsan, and Neptun missile systems.
In 2022, with the outbreak of the war, the PChP was again recalled, as the need for ammunition became acute. Moreover, the manufacture of domestic missiles used by the Armed Forces of Ukraine today is related to the PChP to one degree or another.
It would seem that one should only welcome and encourage that. However, unfortunately, as soon as it came to money again, there appeared people who wanted to use the plant to make money from the import of ammunition.
That is why they have taken out old closed criminal cases against Shyman, in violation of all statutes of limitations, prepared suspicions, transferred them to the High Anti-Corruption Court and prosecuted them on trumped-up charges.
NABU's parallel reality. Case # 1
Now to the substance of the accusations against the director. The cases that the NABU has suddenly “remembered” now go back to 2018. That is when NABU detectives began to haunt systematically the management of the PChP. However, as long as the enterprise did not have significant profits, the cases were progressing rather slowly. Suddenly, when the plant began to develop actively and earn money, those cases became “of great importance” and a priority for NABU.
Shyman and his deputy are accused of selling the ammonite and gramonite explosives produced at the plant not directly to private mining and processing plants, but through dealers who had their own sales and distribution system built over the years, as well as a network of partners who were consumers of the products. According to the detectives, if PChP had sold explosives directly to private entities instead of through a dealer network, the plant would have made more profit.
In fact, PChP executives are accused of selling products with a profitability of 76 to 183%. Pardon me, but when a buyer comes to you and says they are ready to buy with a 100% profitability, what are you going to tell them? Of course, you sell it. This is logical. However, a few years later, NABU opened a case against the PChP director general because the company supplied products through a dealer.
All right, but can you show me the law provision prohibiting that? Is not it allowed to sell through a dealer in Ukraine? What an absurdity! Imagine that you drive a car, eat sausage, and upgrade your wardrobe, but you buy it all from a car manufacturer, a sausage shop, and a clothing factory, respectively. I am sure that this is not the case. Everyone buys the things they need in stores, which are essentially the same as the dealers. It appears that, according to the NABU, some people are allowed to buy from dealers, while for others it is a taboo. Excuse me, where do we live and since when is this prohibited?
I am not even mentioning the financial performance of the PChP, which is fairly impressive. The state, as the owner, has set a 46% profitability for the PChP. At the same time, owing to the competent involvement of Shyman and his management team into the sales activities of the dealer network, the production and sales of explosives increased dramatically in 2015-2016, while PChP made a profit that was 2-4 times higher than the target set by the state. Moreover, PChP pays not only income tax but also dividends to the state as the owner of the enterprise. PChP also paid 55% of its profits to the state budget. Few people may like it, but when direct contracts were in place until 2010, PChP did not make a profit, but rather suffered losses of 7 to 15%.
Let us move on. Who are the victims? Surprise, there are none. The prosecutor's office is now trying to declare PChP an aggrieved party in order to establish the extent of the damage. However, the plant has officially testified that this is impossible since, again, there is no damage and PChP has made a profit in excess of the norms set by the enterprise's financial plan and the government. Even state experts point out that losses cannot be determined because the company has made a profit.
Let me ask you, how can an enterprise be recognized as an aggrieved party if it has made a profit? This is another absurdity. In fact, everything is a stretch. In a word, everything is typical of NABU. The detectives just interfered with the company's routine business relations, artificially “pulled” them under the Criminal Code, pressed charges and filed the case with the court. They did not just file the case, but condemned the Hero of Ukraine, the head of PChP, a strategically critical enterprise for the country, to many years of court trials. Now he will spend years in court proving his innocence. That is, instead of focusing on production tasks, Mr. Shyman has to worry about how to defend himself. The first instance, the court of appeal, and then the cassation... all this will consume the time of a person who is strategically important for the country.
To my knowledge, if PChP had not entered into contracts for the supply of industrial explosives through the dealer network in 2015, the result would have been the loss of UAH 38.22 million in net income over two years (2015-2016). Therefore, there is no crime a priori.
Moreover, the illegal and unjustified interference of law enforcement officers in the business activities of the PChP has led to the closure of the industrial explosives production shop in 2016, the dismissal of employees and, as a result, the loss of revenues from this activity by the state. All “thanks” to law enforcement officers, this extremely important and much needed manufacturing facility no longer exists!
Just imagine how many highly qualified specialists have lost their jobs due to the NABU's malicious actions! It is hundreds of people. At present, this is an irreplaceable human resource potential. Because of these senseless actions of NABU detectives, the state has lost an entire industry that could still work for the benefit of the country and develop.
Case # 2
In October 2016, PChP agreed to purchase seamless pipes from Petroleum & Materials LLC (USA). There are only three countries in the world that manufacture such pipes, and one of them is the United States. Under the terms of the contract, PChP transferred $918,000 to this company, and Petroleum was supposed to deliver the pipes to PChP within 2 months.
However, the representatives of Petroleum & Materials LLC did not fulfill their contractual obligations; in fact, they turned out to be fraudsters. Therefore, immediately in December 2016, Leonid Shyman, the director of PChP, initiated on his own the court procedures to enforce the debt collection from the contractors in the United States, involving American lawyers in the case and protecting PChP's interests. He was quite successful. The accounts of the American company and its management were frozen, and the US court ruled to sell the debtors' property in favor of PChP.
Needless to say, PChP provided this information to Ukrainian law enforcement authorities for their knowledge and use in work. Nevertheless, NABU detectives, as “well-known experts in commercial law,” notified of suspicion, guess whom? Right, Shyman! In fact, it was for forcing the American company to return the money for the undelivered pipes with the help of the American court. Nonsense. The NABU is once again criminalizing ordinary business activities in a blatant and arrogant manner, despite the fact that the American company has pleaded guilty under oath in court and is returning the money. However, the NABU cynically ignores court decisions.
Another criminal offense has been pinned on the PChP CEO, and all of his and his family's property was seized. It even went to the point of absurdity - his payroll and pension cards were arrested, which essentially deprived Shyman's three minor children of their livelihood.
I will disappoint you if you think that NABU stopped there. A year ago, when Shyman was supposed to go abroad on a business trip to work on crucial state tasks related to the country's defense capability, NABU detective Eduard Skubak, who, based on my information, is the very “driver” and ideological inspirer of all cases against the PChP director general, initiated the serving of a new suspicion and a motion for a preventive measure on the very day of Mr. Shyman's departure. In other words, he actually disrupted an important business trip abroad by the CEO of a strategic enterprise at a very difficult time for the country. After being released on bail, Leonid Shyman was still able to travel abroad and fulfill state tasks. However, he had to make extraordinary efforts to do so.
To be continued?..
In any civilized country, especially in times of war, such approaches by the law enforcement system would be a complete disgrace, but NABU is not about civilization, but rather about savagery. During the war, NABU continues to cause consistently problems for PChP and Leonid Shyman personally. Yet this is unacceptable in the context of his fulfillment of crucial state tasks as director of a strategic enterprise.
Naturally, Shyman is very much preventing some people from making a lot of money on ammunition. There is no doubt about it. Moreover, when PChP was announced to be part of Ukraine's missile program, Shyman soon received a new suspicion. The NABU managed to open the case, conduct the investigation, and serve the suspicion within 9 days. What a super sprint!
Still, the question is, why was NABU given the main role in this? As everyone knows, Gizo Uglava has long been the first deputy director of NABU. According to law enforcement sources, Uglava may be connected to the Russian GRU, which is probably paying for this persecution. If that were true, then wouldn't such a scenario be beneficial to Uglava? Just think about it. What kind of crime can there be in supplying products through a dealer? Nowadays, however, this practice actually poses a threat to all other state-owned enterprises. If the precedent is upheld in court, they could easily put anyone in jail in the country. Do you know how many state-owned and state-financed enterprises there are in Ukraine? Ask anyone: why don't you buy sausage at a sausage shop? Why don't you buy clothes at a factory? And if we are talking about the ammunition market, where billions of hryvnias are being traded, it becomes clear who benefits from it.
Are the President or the Defense Minister aware of all this? I doubt it. The only reason for the blockade is that PChP reduces the price of ammunition. That is, once again, by its pricing, the PChP deprives its competitors of the opportunity to earn millions on ammunition.
Today, Pavlohrad Chemical Plant runs at a profit. It hands over everything it earns to the state. The plant's production has increased. Even in these difficult times, PChP pays 80-90 thousand hryvnias in salaries to its employees. Despite the Big War, Mr. Shyman, unlike many others, stayed in Ukraine and he has continued to manage the strategic enterprise in these challenging times. It is only because some highly specialized foreign experts are unable to come to Ukraine today that the PChP CEO is forced to travel abroad on business trips.
During the years of the war alone, dozens of ammunition production technologies were developed under Shyman's leadership. Despite the challenges posed by illegal criminal cases “in the name of the NABU,” Leonid Shyman continues to work for the benefit of the state and defend his good name in the courts. I am sure that he will defend it. With what efforts and for what purpose though? And how many more such steps from NABU, so to speak, “circles of hell”, must Shyman go through so that the state does not lose the ammunition industry and so that we all can work honestly without fear of illegal persecution by NABU? Today, it is not clear whose interests NABU is defending at the expense of taxpayers: the state's or some private individuals'? If it is the state's interest, does the state need such protection? I doubt it, because, as everyone can see, all of NABU's work is reduced to the notional Shyman, and tomorrow anyone can be in the position of the PChP CEO. Meanwhile, we will continue to “express our serious concern” about the situation.
In closing, I would like to recall the words of a classic: “What reforms do you still need?” What other steps should NABU take and, above all, how many of them, to destroy the Ukrainian defense industry completely?
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