KYIV, Ukraine (AP) — As Russia’s renewed attacks on Ukraine’s energy infrastructure cause rolling blackouts ahead of winter, a major embezzlement and kickbacks scandal involving the state-owned nuclear power company has put top officials under scrutiny.
It’s fast becoming one of the most significant government crises since Moscow’s full-scale invasion, with media reports implicating a close associate of President Volodymyr Zelenskyy.
Responding to a public backlash, Zelenskyy called for the dismissal of his justice and energy ministers amid the investigation. They later submitted their resignations, the prime minister said.
Anti-corruption watchdogs — the same agencies Zelenskyy sought to weaken earlier this year— revealed the findings of a 15-month investigation, including 1,000 hours of wiretaps, resulting in the detention of five people, and another seven linked to about $100 million in kickbacks in the energy sector.
Ukrainian officials are scrambling for European funds to manage mounting energy shortages as Moscow targets critical infrastructure and natural gas production to try to sink public morale. Meanwhile, Ukraine’s outnumbered forces are retreating under relentless assaults in the nearly 4-year-old war.
The country has been plagued by corruption since gaining independence, and Zelenskyy was elected on a mandate to eliminate graft. Military procurement scandals led to the ouster of Defense Minister Oleksii Reznikov in 2023.
But the timing of this one couldn’t be much worse.
“Internally this scandal will be used to undermine unity and stability within the country. Externally, our enemies will use it as an argument to stop aid to Ukraine,” said Oleksandr Merezhko, a lawmaker with Zelenskyy’s party. “It looks really bad in the eyes of our European and American partners. While Russians destroy our power grid and people have to endure blackouts, someone at the top was stealing money during the war.”
One lingering question is how high the corruption goes.
The National Anti-Corruption Bureau, known as NABU, refrained from identifying the suspects but said they included a businessman, a former adviser to the energy minister, an executive who oversaw physical protection at state energy company Energoatem, and others responsible for money laundering. It dubbed the scheme “Midas.”
The agency also accused eight people of bribery, abuse of office and possession of disproportionate assets.
The investigation, which NABU said conducted over 70 raids, was welcomed by Zelenskyy, who urged officials to cooperate with it. Energoatom says the inquiry didn’t disrupt its operations.
NABU released excerpts of tapes in which the network, using code names and secretive language, discussed blackmail and pressuring Energoatom contractors to extract 10%-15% in kickbacks and bribes in exchange for them to do business without facing internal blocks.
The network took advantage of a regulation enforced during martial law prohibiting contractors from claiming debts in court from companies providing essential services, such as Energoatom, which has annual revenues of about $4,7 billion. Four others worked to launder the money at a Kyiv office.
The tapes, which have not been independently verified by The Associated Press, say about $1.2 million was given to a former deputy prime minister, whom the plotters called “Che Guevara,” after the revolutionary leader.
Amid the scandal, Zelenskyy called for the ouster of Justice Minister Herman Halushchenko, who also was a former energy minister, and current Energy Minister Svitlana Grynchuk.
Prime Minister Yuliia Svyrydenko said they submitted their resignations. She also said the cabinet submitted proposals to apply sanctions against Timur Mindich, a close Zelenskyy associate, and businessman Alexander Tsukerman.
“Among other things, this is a matter of trust,” Zelenskyy said in a video on his Telegram channel.
That has raised questions about what the country’s highest officials knew of the scheme, especially with war powers concentrated in the president’s office. Zelenskyy tried to curtail Ukraine’s anti-corruption watchdogs last summer but reversed course after widespread protests.
Months later, the watchdogs released their findings.
In the tapes, Mindich, 46, a co-owner of Zelenskyy’s Kvartal 95 media production company, is believed to be speaking under the code name “Karlsson.” Under Zelenskyy, Mindich has gained clout and influence in multiple industries, including lucrative domestic drone production.
NABU has investigated his alleged connection with Fire Point, a drone manufacturer that has risen to prominence by securing government contracts. NABU investigated the company over concerns it misled the government on weapons prices.
“It looks like Zelensky distanced himself from Mindich long ago and when the scandal broke out, Zelensky didn’t start to cover Mindich,” Merezkho said. “But I don’t rule out that someone from his entourage might have succumbed to temptation to make a quick buck.”
The AP gained access to the company’s factory in August. Its executives deny connections to Mindich.
“The key issue here is that the company supposedly affiliated to Mindich is getting government contracts outside the competition, because of the personal relationship to the administration,” said Ukrainian investigative journalist Yurii Nikolov, who looked into the businessman’s dealings with Fire Point.
After his suspension as justice minister, Halushchenko said in a Facebook post that he would defend himself in court.
“I believe that being suspended for the duration of the investigation is a civilized and proper course of action,” he said. “I will defend myself in the legal domain and prove my position.”
Halushchenko, who was energy minister from 2021 until July when he took over as justice minister, has not been formally charged.
“The silver lining in this story is that we have effective and truly independent anti-corruption bodies which have shown concrete results,” Merezkho said. “As it turns out, no one is above the law and no one is immune.”
Political analyst Oleh Saakian said the scheme involved “millions, tens of millions of dollars,” but he also cautioned that its full scale is not known. While not the largest corruption scandal in Ukraine’s history, he noted it took place during wartime and is connected to “key players” in the government.
In the tapes from NABU, two discussions involved delays to building defensive fortifications for energy sites and waiting for a more profitable alternative before shielding them from Russian attacks. The talk mentioned giving contracts to build defensive protections to a known company, and later to increase kickbacks up to 15%.
An AP investigation this year revealed that despite over a year of warnings from Ukrainian officials about vulnerabilities near nuclear sites, the Energy Ministry failed to act quickly.
Particularly at risk were unprotected switchyards outside the perimeter of Ukraine’s three active nuclear plants — vital for generating power. Lawmakers highlighted this failure in a resolution calling for the removal of Haluschenko as energy minister and criticized him for alleged corruption and poor oversight.
Ukraine’s partners have poured money into its energy sector and are likely to look with consternation on the scandal.
A spokesperson for German Chancellor Friedrich Merz said the government is concerned by the reports of corruption, noting they involve “a sector that receives considerable support from Germany.”
The spokesperson, Stefan Kornelius, pointed to worries voiced in last week’s report by the European Commission and said Ukraine needs to ensure progress in fighting corruption.
“We will now watch developments in this concrete case and, if necessary, consequences will have to be drawn from it,” Kornelius said. But “at the moment we have confidence in the Ukrainian government that it will ensure this be cleared up, and in the anti-corruption authority that it will lay bare this case and it will be brought to a transparent conclusion.”
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