Ukraine’s energy sector corruption crisis – what we know so far and who was involved
Ukraine’s national anti-corruption bureau, known as Nabu, says it has uncovered a high-level criminal scheme at the heart of government. It involves Ukraine’s nuclear energy body, Energoatom, that runs three nuclear power plants supplying Ukraine with more than half of its electricity.
What is the scandal?
A group of insiders allegedly received kickbacks of 10-15% from Energoatom’s commercial partners. If these suppliers failed to pay up, they were removed from a list of approved counter-parties or not reimbursed for services already given. About $100m (£760m) was received in this way, Nabu says. The alleged conspiracy had old-school touches. Its beneficiaries used code names for each other, such as “Professor”, “Karlson” and “Sugarman”. They carried blocks of cash around Kyiv in large and unwieldy bags, sometimes delivering it on foot. On one occasion, a plotter allegedly sent his wife to collect a stash of dollars, which she hid in her car.
Who was involved?
The alleged organiser of the scheme is Timur Mindich, an old friend and business partner of the Ukrainian president, Volodymyr Zelenskyy. Mindich co-founded Kvartal 95, the media production company set up by Zelenskyy before he went into politics. Last week he fled his apartment in Kyiv’s government district hours before Nabu investigators came to arrest him, escaping abroad. He is now thought to be hiding in Israel. Other alleged participants include Ukraine’s ex-deputy prime minister Oleksiy Chernyshov, who is already under suspicion in a separate case; the justice minster, Herman Halushchenko, and his protege, the energy minister, Svitlana Hrynchuk, who were both fired. All deny wrongdoing. At least three other backroom figures allegedly took part.
How have the public reacted?
With fury. Over the autumn, Russia has destroyed much of Ukraine’s energy infrastructure, leading to widespread and worsening blackouts. The hum of pavement generators has become a feature of everyday life, with electricity and heating supplies frequently interrupted. Meanwhile, Russian troops are advancing in the south and east after nearly four years of full-scale war. In one conversation collected by Nabu in its 15-month investigation a suspect said it was a “pity” to build a structure to defend power stations from Russian bomb attacks since the money could be stolen instead. Chernyshov allegedly spent some of the illicit cash on four luxury mansions in a new-build riverside plot south of Kyiv. The investigation, which has 1,000 hours of secretly recorded conversations, has been dubbed Operation Midas. The name seemingly refers to Mindich’s apartment, which features a gold toilet in the bathroom.
How far does the corruption go?
The big unanswered question. Was Mindichgate, as it has been called, a one-off? Or one of many similar insider schemes? Zelenskyy has condemned the scandal, slapped sanctions on Mindich and stripped him of his Ukrainian citizenship. “The president of a country at war cannot have friends,” he said last week after the news broke. He has called for investigations to run their course and for those found guilty to be punished and put behind bars. In July, however – while the Midas investigation was active – Zelenskyy had signed a decree effectively stripping Nabu and the special prosecutor’s office, another anti-corruption agency, of their independence and only backed down after the most serious street protests since Russia’s 2022 full-scale invasion. Nabu has indicated that the scandal extends to the defence ministry, where Mindich was involved in pursuing lucrative state contracts. And possibly banking, where he also had connections.
What happens next?
The affair is Ukraine’s biggest corruption scandal since Zelenskyy became president six-and-a-half years ago. Civil society activists, opposition MPs and prominent military veterans have urged him to take decisive action, even if that means the sacking and jailing of people who are personally known to him. The former president Petro Poroshenko has called for the current cabinet to be sacked and for a government of national unity to be formed. This is unlikely to happen. Poroshenko was himself embroiled in a defence procurement scandal, which played a role in his 2019 defeat to Zelenskyy, who promised to clean up public life.
Political commentators say corruption is the result of “mono-government”: the fact that Zelenskyy and his allies enjoy sweeping wartime powers under martial law. No elections can be held while fighting continues. The revelations have also dismayed Ukraine’s western partners and emboldened its enemies. Worst of all, there appears to be a connection with Moscow. According to Nabu, the kickbacks were funnelled through a Kyiv back office connected to the family of Andriy Derkach, a former Ukrainian politician who is now a pro-Kremlin Russian senator. Some cash ended up in Russia, the tapes suggest.
Is there an upside?
Of sorts. Some observers think the fact the scandal emerged at all is proof that Ukraine is slowly moving in the right direction – towards European norms and away from gloomy Soviet-style kleptocracy. Oleksandr Abakumov, the head of Nabu’s investigating team, acknowledged his colleagues had “faced a lot of obstacles” pursuing the Mindich case. But he stressed: “This isn’t a story about corruption in Ukraine. It’s about how the country is struggling with corruption, fighting with corruption.”
