Vladimir Zhmak got Ukrzaliznytsia in a deplorable state. What has changed in the two months of his rule.
In recent years, Ukrzaliznytsia has been one of the most long-suffering government departments in Ukraine – more often than not, the head of the company is replaced only by the disclosure of multimillion-dollar corruption schemes and malicious bribes.
In August, Ukrzaliznytsia was headed by Vladimir Zhmak and the first thing he did was to audit the company. By the end of the year, he expects losses in the amount of 12-14 billion hryvnia. Correspondent.net tells what is happening now with UZ.
Denial of Deutsche Bahn and corruption-accused assistant
On August 26, Ukrzaliznytsia was headed by Vladimir Zhmak, who previously held executive positions in the Ukrainian representative office of the oil company TNK-BP and advisor to the president of the mobile operator Kyivstar.
In mid-summer 2015, he became the first deputy governor of the Odessa region, which was then headed by Mikhail Saakashvili. At one time, they studied together at KIMO. At the same time, Petro Poroshenko studied there for an older course. A year later, Zhmak left Saakashvili.
He applied for the post of head of the UZ back in 2016, but then this place was taken by the Pole Wojciech Balchun.
Since May 2019, he served as head of the supervisory board of Boryspil airport until he won the competition for the position of director of Ukrazaliznytsia.
It is known that Zhmak served in Afghanistan from 1982 to 1984. He was a scout, received the Order of Courage, the Defender of the Fatherland medal and For Courage, as well as many other awards.
The declaration for last year, presented in May 2020, refers to four apartments in Kiev, two houses, one of which covers an area of 720 square meters. There are six land plots.
The Ministry of Infrastructure assigned Zhmak the task of carrying out a structural reform, implying the separation of UZ into three areas of activity: cargo transportation, passenger transportation and infrastructure management.
At the same time, Zhmak himself says that he will also highlight the fourth direction – container transportation, which he calls a separate type of business. Now they are part of the cargo transportation.
Experts say that one of the main tasks of the new head of UZ, in addition to fighting corruption, experts call the restoration of demand for freight transportation and renewal of rolling stock.
What are the worst assets of UZ
On September 3, following the results of the first board meeting under his leadership, Zhmak announced a full-scale audit in Ukrzaliznytsia.
“The analysis will concern financial and economic activities, managerial decisions and appointments,” said the head of the state company.
The previous audit, the results of which became known in early May, revealed violations of almost 12 billion hryvnia, which the state company made in the period from January 1, 2018 to September 30, 2019. As the work of the State Audit Service showed, the industry reform, which was launched in 2019, almost did not budge the monopolist.
Along with the amount of financial violations, the salaries of top officials of Ukrzaliznytsia also increased: remuneration to the board increased by 80 percent, and to the supervisory board – 2.3 times. At the same time, the salaries of ordinary employees were cut.
One of Zhmak’s first decisions in Ukrzaliznitsa was the refusal to cooperate with the German railway operator Deutsche Bahn, with which Ukraine signed a memorandum of understanding regarding a strategic partnership for the development of UZ in February this year.
The first stage of cooperation was to be precisely consultations for Ukrzaliznytsia. However, Zhmak said that the work of the railways of Ukraine and Europe is difficult to compare: in his opinion, European rail transport is not “as vital as in Ukraine.”
Zhmak appointed the former head of the Georgian railway, Irakli Ezugbai, who was put on the wanted list in 2013 after the change of power in Georgia on charges of embezzlement and embezzlement of state funds on an especially large scale, responsible for freight transportation.
They met in the Odessa Regional State Administration, where Ezugbai dealt with infrastructure issues. Zhmak calls the case opened against him ridiculous, and his persecution is recognized as political.
“Irakli is a very high-class specialist. When I was offered to take part in the competition, I first of all turned to him for advice. When I won the competition, of course, the first person I invited to my team was Irakli. He will lead the most important direction – freight traffic “, – said Zhmak in an interview with UP.
Colossal losses and fight against corruption
Ukrzaliznytsia went to Zhmak not only drowning in corruption, but also incurring significant losses due to the coronavirus pandemic.
On October 29, he said that by the end of 2020, the company’s loss will amount to UAH 12-14 billion. In January-June 2019, UZ’s net profit amounted to more than one billion hryvnia.
In the first half of the year, Ukrzaliznytsia incurred a net loss of UAH 8.79 billion. The result was significantly influenced by a decrease in revenue from freight and passenger transportation compared to the first half of 2019, by 15 and 57 percent, respectively, UZ reported.
At the same time, Roman Kravtsov, who ran the monopolist from 2017 to 2019, said in a recent interview that over the past year, Ukrzaliznytsya “managed to get out of billions of dollars in losses to billions of dollars in income.”
According to him, since 2017, the company has been increasing its net profit: from UAH 114.5 million in 2017 to three billion in net profit in 2019. However, violations of 12 billion occurred under him.
Zhmak, on the other hand, promises to come out in 2021. “These are not illusions and not fictions – Ukrzaliznytsia will end 2021 with a profit. And with a profit not on paper in the form of exchange rate differences, or any other” drawn “figures, but with a real profit,” he said on October 29.
According to him, for this it is necessary to invest in infrastructure UAH 9.4 billion (of which 4.3 billion of own funds), 4.1 billion in locomotives (2.8 billion of own funds), seven billion in freight cars (4.8 billion own funds) and two billion of own funds in passenger transportation.
The head of UZ added that the company counts on the support of international financial institutions.
“We are counting on our partners from the financial sector. First of all, international financial institutions,” he said.
In 2019, an agreement was signed between Ukrzaliznytsya and the European Bank for Reconstruction and Development, according to which 70 percent of the $ 100 million raised from the EBRD will be used to modernize the railway infrastructure of the TEN-T international transport corridors.
However, in early September, the media wrote that the tender for the implementation of this agreement was not carried out according to procedures. The winner is a world-renowned company Vossloh Fastening Systems Gmbh, but, unlike the Ukrainian participants in the tender, it did not confirm the compliance of its products with the requirements of the tender.
Zhmak will fight corruption, theft and other abuses by “destroying premises.”
“The fight against corruption is one of the tasks set by the supervisory board. The fight against it must begin with the elimination of prerequisites. One of them is the shortage of locomotives, which I want to eliminate. If there is no deficit, there will be no abuse,” he said.
As for the re-equipment of rolling stock, for the new head of UZ there is no difference from which country and from which manufacturing company to purchase equipment: from the Korean Hyundai or the Ukrainian Kryukov plant. The main thing is a competitive offer in the market, says the top manager.
If Zhmak inherited the previous problems for the most part, then problems with wage payments occur during his tenure.
At the end of October, the media began to write that Ukrzaliznytsia workers were massively complaining about the worsening working conditions. People say that salaries have decreased compared to last year, while the workload in many areas, on the contrary, is growing.
During the strict quarantine, railway workers went to idle en masse (75 percent of the salary was paid). Then, from July 1, some of the people were transferred to a four-day work week. In total, the innovation affected 40-50 percent of the staff.
In September, Zhmak said that “in the next few days” such a regime would be revised and people would return to normal work. But it was only on October 23 that it was announced that UZ would return for a five-day period from November 1.
According to the company, in September last year, the average salary for the company was 12,435 hryvnia, and in March 2020 it dropped to 11,660 hryvnia. Locomotive drivers received 20,162 hryvnias, assistants to machinists – 14,215 hryvnias, trainers – 13,013 hryvnias, station attendants – 11,670 hryvnia, track fitters – 12,038 hryvnias, electromechanics – 13,350 hryvnia.
Scandals of recent years
You can endlessly list all the corruption scandals in recent years. One of the most striking episodes that happened in September 2020 was money in the refrigerator.
The SBU announced the exposure of certain leaders of Ukrzaliznytsia to the organization of a corruption scheme in container transportation.
According to the investigation, officials created artificial barriers to their work in order to attract contractors. We chose a controlled “gasket” that monopolized this market segment. Through this company they stole more than four million hryvnias.
During searches in the premises of Ukrzaliznytsia and the office of a commercial structure, law enforcement officers found part of the proceeds in the refrigerator. The names and timing of the scheme were not disclosed.
A few days earlier it became known that during the reign of UZ by Evgeny Kravtsov, two Audi A8 Long limousines were purchased for the money allocated for the repair of a diesel train, worth about 4.5 million hryvnia each.
“The purchase was carefully concealed – the purchase was made out without a tender, but bought through an insurance company, the founder of which is the branch of the Odessa Railway. After that, the cars were transferred to the balance of the Odessa railway, but they were afraid to operate because of the outbreak,” said a member of the Supervisory Board of Ukrzaliznytsia Sergey Leshchenko …
At the end of August, the SBU reported that in 2019-2020, 60 million hryvnias were allocated for the procurement of inventory items for the repair of passenger rolling stock, which were received by the winners of the tender, who turned out to be controlled by the organizers of the competition. The cost of production was overstated and the state lost 12 million.
In the middle of summer, UZ was disgraced by a leaky train. The incident happened with a train from Apostolovo to Kherson on June 30.
The published footage shows how water pours in from the cracks in the windows and the roof of the car; it quickly covered the floor of the car, puddles formed, and the shelves were completely wet.
Ivan Yurik, who at that time was the head of the UZ, announced a couple of days later that all the perpetrators had already been fired.
Of the odious cases: in August 2019, the contract was terminated, according to which UZ planned to purchase embroidered shirts and towels at a price of four thousand hryvnia apiece.
At the same time, Ukrzaliznytsia reported that in the first seven months of 2019, train passengers stole 2,417 terry towels, 957 bedspreads, 47 pillows, 638 blankets, 875 pillowcases, 180 glasses, 456 cup holders and 360 teaspoons worth about UAH 400,000.
Corrupt schemes are found with each new chapter of the KM. However, the most scandalous of all in recent years was the Pole Wojciech Balchun. He worked from June 2016 to August 2017. He retired voluntarily.
However, in addition to his shocking appearance, quarrels with the Ministry of Infrastructure and thousands of new routes, he was remembered for the complete absence of the fight against corruption.
During his reign, about 90 criminal proceedings were opened on the facts of misappropriation, embezzlement, seizure of property through abuse of official position by officials of Ukrzaliznytsia.
News from Correspondent.net in Telegram. Subscribe to our channel https://t.me/korrespondentnet