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Ukraine's Defence Ministry pays billions of hryvnias to Polish firm Alfa but receives no weapons Ukrainska Pravda

Monday, 28 August 2023, 12:28
Ukraine's Defence Ministry pays billions of hryvnias to Polish firm Alfa but receives no weapons  Ukrainska Pravda

The Ukrainian Ministry of Defence (MoD) entered into a series of contracts with the Polish company Alfa in 2022 for the supply of various types of weapons and ammunition. However, the company failed to fulfil its obligations and, as of 2023, owed the Ukrainian MoD over UAH 3.5 billion (roughly US$94,77 million).

Source: UP article "Money on Blood. How an ordinary Polish company took tens of billions from the Ukrainian Armed Forces"

Details: Ukrainska Pravda reported that the Ukrainian MoD has entered into several agreements with the Polish company Alfa since April 2022.

The Polish company was obliged to supply the Ukrainian MoD with the flak jackets and helmets but failed to do so on time and did not fulfil the order by 100%.

Meanwhile, the Ukrainian MoD concluded a range of other unfavourable agreements with Alfa, and as of early 2023, the company owed the Ukrainian Defence Ministry over US$94,77 million under various contracts.

The Polish firm received and withdrew billions of hryvnias from Ukraine. However, it failed to deliver the paid-for weapons.

UP is aware of at least 7 agreements concluded by the Ukrainian MoD directly with Alfa. Some of them are being disputed in international arbitration.

The first contract

The Ukrainian MoD entered into its first contract with Alfa on 11 April 2022. It was a deal to supply 20,000 ballistic helmets, 20,000 flak jackets and 40,000 armour plates. The deal is worth €24.5 million with 100% advance payment.

Alfa managed to deliver all the bulletproof vests and plates, albeit behind schedule. However, 11,000 of the 16,000 helmets it supplied were instantly returned as unsuitable, and another 5,000 remained in storage, not accepted by the Armed Forces of Ukraine (AFU).

The second wave of contracts

Three agreements worth about UAH 3.3 billion (almost €64.4 million) were signed with Alfa on 22 April 2022. The Polish company received a 50% advance payment under each of them.

These included supplying several Gvozdika self-propelled howitzers, 122mm ammunition for the D-30 howitzers, and 122mm missiles for the Grad multiple rocket launchers.

As far as the UP has learned, only a tiny amount of the contracted weapons has arrived. Only 1/10th of the D-30 ammunition arrived late, 1/3rd of the Grad missiles, and although all the Gvozdikas came, they were in a condition that does not exactly match the technical class stated in the contract, and the Ukrainian MoD is now trying to get compensation from the supplier.

Alfa had almost UAH 1.7 billion (roughly US$46,03 million) in receivables from the Ukrainian MoD as of early 2023 under three April 2022 agreements.

The third wave of contracts

The Ukrainian Defence Ministry awarded three more contracts worth about UAH 2.6 billion (roughly US$ 70,4 million) on 13 June 2022, aware that the company was breaking previous agreements. The company received half of this amount as an advance payment.

All three agreements were reportedly signed on behalf of the Ukrainian MoD by Vladyslav Shostak, Chief of the Military-Technical Policy Department, who will be dismissed a week later in June 2022.

This time, the contracts included the supply of:

  • 120mm mines (over €11 million in advance);
  • 152-mm shells for the Giatsint howitzer (€18 million in advance);
  • 152-mm shells for the Dana self-propelled artillery system (€13 million in advance).

About 40% of the ammunition for Giatsint arrived; 120mm mines were delivered less than 1% of the contract, and no ammunition was delivered to Dana at all.

At present, the Ukrainian Defence Ministry is trying to recover €27 million in prepayments and almost €13 million in fines for disrupted deliveries.

Eighth transaction (no prepayment)

Regardless of the supply disruptions, the Ukrainian Ministry of Defence once again ordered another 20,000 helmets and 50,000 flak jackets from Alfa on 25 October 2022, worth almost €50 million. This time, no prepayment was required.

The helmets never arrived in Ukraine and half of the flak jackets delivered failed ballistic tests.

Deal through the Ukrainian company Progress

The Ukrainian MoD entered into three contracts on 27 April 2022 with the Ukrainian state-owned arms importer Progress, which was to supply similar types of ammunition as the Polish company.

The total value of the three agreements with the state-owned company was over UAH 17 billion [roughly US$460,29 million].

Meanwhile, the UP reports that Progress was supposed to purchase Bulgarian ammunition for D-30 and D-20 howitzers and Grads rockets through the same Polish company, Alfa.

As far as Ukrainska Pravda knows, the deals with the Poles at Progress were overseen by Oleksandr Myroniuk, Ukraine's Deputy Director and former Deputy Defence Minister, known for the search in the criminal case of the purchase of low-quality flak jackets, during which millions in various currencies were found in Myroniuk's sofa.

Meanwhile, the price of the ammunition through a Ukrainian intermediary was 57% higher than the price under the Ukrainian contract.

The Polish company was to supply 122mm full-charge rounds for D-30/2C1 howitzers for €760, while Progress was to provide the same munitions for €1,195 per piece, with a margin of 435 euros per round.

The Polish contractor performed this contract for Progress much more efficiently than its own contract for the supply of the same projectiles, but at a 57% lower cost: the Alfa contract was completed by 10%, while Progress' fulfilled about 80% with delays.

However, despite the inflated price under this agreement, Progress owed the Ukrainian MoD over UAH 200 million (roughly US$5,41 million) at the beginning of 2023.

Polish Alfa was founded as a limited liability company back in 2005.

The company is engaged in selling various products, including military ones. The company reported a profit of PLN 1.23 million (slightly more than €300,000) in 2020, and Alfa earned PLN 7.4 million (about €1.8 million) in 2021.

Alfa has not yet submitted its financial statements for 2022 when the company signed contracts worth hundreds of millions in Ukraine.

On the contrary, the company has amended its data in the registers 4 times in the first half of 2023, which may be a way to delay the submission of reports.

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