Unnecessary Risks: How Businessmen Related to Russia Are Trying to Get Into the Defense Sector of Ukraine

One of the main consequences of the two-year war with Russia is the revival and modernization of Ukraine’s defense sector. State-owned enterprises, which have remained since the Soviet Union, have partially or entirely lost their production capacities, and technological progress has presented them with sometimes impossible tasks. Therefore, the private sector aided large state enterprises, such as many small and medium-sized companies, especially those that have successfully proven themselves in producing drones, EW, and other electronics and equipment.

Realizing the private sector’s potential, Russia tried to slow down development processes by creating unhealthy competition, contradictions, and conflicts within the defense sector, using their agents of influence for this.

It seems that the greatest agents of influence, such as former People’s Deputy Hryhorii Dashutin, the owner of the “NICMAS” concern, and former Motor Sich JSC CEO Vyacheslav Boguslayev, were arrested. However, they managed to work on the Russian Federation’s military machine, transferring millions of dollars worth of military products to Russia. However, it was difficult not to notice their activities, and law enforcement authorities in Ukraine were able to stop their criminal activities.

The former Motor Sich CEO Vyacheslav Boguslayev is currently the most significant arrested agent regarding position and losses for Ukraine. He, his Assistant to the Department of Foreign Economic Activity, and some other people from the management established a scheme for the transportation of parts and components for the production and repair of Russian attack helicopters like Kamov Ka-50 “Black Shark,” Mi-8AMTSh-VN “Sapsan,” and Mi-28N “night hunter.” The Russian Federation now uses all these helicopters in the war.

Of course, the components were not supplied directly to Russia. Boguslayev used a scheme with controlled companies registered in the Middle East, Europe, and East Asia. These companies ordered from “Motor Sich,” received parts, and then transported them to Russia.

The story’s finale for Boguslayev and his leading partner, Petro Kononenko, was not the most optimistic one. The Supreme Anti-Corruption Court of Ukraine decided to confiscate their assets, including over 600 million hryvnias in funds, weapons (366 units), real estate (14 objects), and corporate rights.

In other cases, such as with “Avia-Fed-Service,” the matter remains unresolved. Despite numerous accusations, no investigation was conducted against the company’s managers, and “Ukroboronprom,” which includes “Avia-Fed-Service,” declared that all allegations were groundless.

There are even more companies that, in this way or another, are connected to the Ukrainian military-industrial complex (MIC) remain in the gray area and continue operating despite their inclusion in the register of companies that have ties with Russia. It is about “ARTLINE INTEGRATION LLC,” which is engaged in manufacturing, including military equipment, JSC “UKRAINIAN ENERGY MACHINES,” which is involved in the production of energy equipment, Transship Group that still controls the most critical Ukrainian seaports.

However, it is easier to work with such companies because they had connections with the Russian Federation even before the start of the full-scale invasion and had no way to hide them. Another thing is new businesses that are not formally connected to Russia and, therefore, can inspire confidence. Having received it, they can engage in espionage, sabotage, or make money on the grief of Ukrainians.

For example, Pavlo Verkhniatskyi, a former Russian and now Ukrainian entrepreneur, is trying to enter several niches of the defense sector in the economy at once.

Verkhniatskyi studied at a university in Russia; in 2013, he graduated from Moscow State University (Russian: MGIMO), which is unsurprising given that Pavlo’s father worked at the Ukrainian embassy in Russia. In 2014, he founded COSA Intelligence Solutions, a corporate intelligence consulting company in the Russian Federation, where he still works. Interestingly, on the company’s website, until 2022, Ukraine and the Baltic countries were included in the region “Post-Soviet states” (former Soviet countries) and not as European countries.

Verkhniatskyi’s colleague at COSA Intelligence Solutions is Petro Kopka, a former KGB officer who started his career in the Cherkasy region but was promoted and moved to the KGB headquarters in Kyiv in 1984. After the USSR collapsed, he transferred to the Main Chief Directorate of the Foreign Intelligence Service of Ukraine, where he worked until his retirement in 2003. From 2004 to 2010, Kopka served as deputy director of the National Institute for Strategic Studies (NISS).

Until 2016, Verkhniatskyi was the director of another Moscow legal entity, “MTK”. Then, until 2015, he worked for the “Center for Political Information” a Russian consulting company on political issues. Among the center’s works is the publication of books in support of Putin’s policies, in particular, “Justification of Eurasian Integration,” 2015 and “Vladimir Putin: Who is Mister P?”, 2015, which was published in the USA under the title “Pharaoh.”

The covers of the books “Justifying Eurasian Integration” and “Vladimir Putin: Who is Mister P?”

Moreover, in 2013, Verkhniatskyi publicly supported the new Minister of Defense of the Russian Federation, Shoigu, and he had been working on complementary publications on his activities.

After the full-scale invasion in 2022, Verkhniatskyi’s public speeches have hardened and become more straightforward. At the same time, he became a member of the public council at The National Agency on Corruption Prevention (NACP) and the Association of Corporate Security Professionals of Ukraine. Perhaps Verkhniatskyi has really severed all ties with the Russian Federation and is not a secret agent of Kremlin influence. But is it worth risking involving people like him in the sensitive defense sector?

This story has completely odious cases, such as the cooperation of the Armed Forces of Ukraine with Mykhailo Kokorich. First, Kokorich created the Dauria Aerospace company in Russia and even received contracts with Roscosmos. Then he renounced Russian citizenship and secretly supplied Ukraine with drones produced by his new Swiss company, Destinus. Kokorich talked about such activities in an interview with the French publication Challenges.

It concerns three drone types, Lord, Ruta, and Hornet, which have neither public information regarding their characteristics nor photos. Considering their characteristics, which Kokrorich talked about, as well as their application options, which simply contradict themselves (for example, the Lord drone can be both a scout and a kamikaze drone, which is technically impractical), their sale to Ukraine is more like a corruption scheme with selling junk for a lot of money. And if we add to this the fact that there are no recorded examples of their use by the Armed Forces, then the feasibility of such cooperation with the former Russian Kokorich raises even more questions.

Summarizing all of the above, on the one hand, the close economic ties between Ukraine and Russia until 2014 gave birth to many businessmen and political figures whose work and connections spanned both countries. However, should the Ukrainian leadership take risks during the war, allowing businessmen who have not severed these ties to continue to work with Russia in the defense sector? Should we accept help from companies whose founders were friends of the Kremlin? The problematic circumstances have already created a new formation of Ukrainian entrepreneurs, whose path in the production of various systems for the army began on a volunteer basis and who have already proven their ability to provide defense orders at the appropriate level of quality.