The end of the Ukroboronprom is close: there is a chance for salvation? (Apostrophe, Ukraine)

To whom to subdue

The transformation office of Ukrmorprom (OPS) presented a draft reform of state concern. Plans to create six industry corporations that will be created around progressive enterprises on the principle of sectoral synergy competencies. Already announced the creation of missile, aviation, aircraft, armored vehicles, radar, marine corporations.

The state concern in the next two years is going to the corporatization of enterprises, recovery of distressed assets, koncentrera production and realising surplus assets. Then will be eliminated. To date, the composition of the CRM 116 includes enterprises, which are grouped in five main directions of activity and products: aircraft manufacturing and repairing, precision weapons and ammunition, armored vehicles, automotive, engineering and special equipment, shipbuilding and marine equipment, radar, radio communication and air defense systems.

However, the representatives of the state enterprise “Antonov”, which is GK Ukroboronprom, has addressed an open letter to President Vladimir Zelensky with a request to pay attention to the threat of the domestic defense industry posed by the new reform.

“With breakneck speed, designs for the transformation of the group and of the companies-participants and made the laws against which are the enterprises-participants. Such proposals do not comply with current legislation, because they focus on loss of control on the part of the President and Cabinet of Ministers on the military industrial complex, which is an integral part of security sector and defence of the country, according to the law of Ukraine “On national security of Ukraine”, — reads the address of GP “Antonov”.

According to “ASTC”, the problem lies in the fact that the functions of the Cabinet of Ministers on management of objects of state ownership are limited only by approval of the Charter of the new structure and appointment of its Supervisory Board members. At the same time, the Supervisory Board will have almost unlimited rights to dispose of property of the enterprises, including strategic importance to the economy and security of the state.

Later, the Vice President of marketing and sales of Antonov Julius Kiselev on his page in Facebook said that the letter indicates problems with respect to GP with CRM. According to him, one of the reasons for the appeal, most likely, was to check the “Antonov” Ukroboronprom conducted on behalf of the Prime Minister.

After the change of leadership of Ukroboronprom, the scandals with his participation are increasingly began to appear in a public plane. In November 2019, “Antonov” has signed a contract with the Ministry of interior of Peru for the supply of aircraft An-178. In March of this year, the company stated that it did not receive advance payment from Ukroboronprom, but the group needs to pay a quarterly fee, which threatens to disrupt the international contract. The message was posted on the page of “Antonov” in Facebook. Some time later the message was deleted.

However, the bad feeling between “Antonov” and OPS is left. In particular, the General Director of Ukroboronprom aivaras Abromavicius said that “Antonov” for 3-4 years does not produce anything due to the lack of import substitution is about 60% of the components were manufactured in Russia. However, he assured that the company is not planning the privatisation of the plant.

“Apostrophe” addressed to the Deputy Director General of Ukroboronprom for interaction with public authorities Moustapha nayem to comment on the appeal “antonovites” to Zelensky. But former journalist and MP, and now the official did not respond to phone calls and messages.

Former Deputy Director General of Ukroboronprom Maxim Glushchenko believes that the recent appeal to the President of the management “Antonov” — a disturbing signal, which may be followed by similar treatment of other flagships of the industry. At the same time, he worries that the current leadership of “Ukroboronprom” will be uncontrolled interference in the activity of enterprises, whose rights have already begun to stop. However, he criticized the reorganization process, which the hasty and ill-considered, whereas the functions of the Cabinet and the state nominal.

“Of course, you can say, say, “the old system resists”. But it would be quite simplistic understanding of the processes. Most likely, in the current models of reform are not taken into account a proposal of the flagships of the industry that causes such a negative reaction. In fact, however, is always in the middle. Of course, there are always interest groups who “confuse your personal wool with the state”, trying to take control of profitable state enterprises, but we must not forget that every industry has its own specifics. Because the same “Antonov” is not against corporatisation, and more than once have stated. They also need an investor, and will appear and transparency of processes. But the changes must reflect the actual needs of each such company. Will not work to equalize all under one comb” — said “Apostrophe” Glushchenko.

The search for those responsible

The core of the discussion about the reform of the Ukroboronprom is the lack of personal responsibility in the issue of reforming the defence industry and of public concern. Hard to remember in recent years, examples of effective reforms, and here we are talking about national defense. Fucapi with a reboot of the law enforcement system and prosecution services — a striking proof.

The head of the expert organization StateWatch Gleb Kanevsky, which is included in the working group on reform of Ukroboronprom, explains that we are talking about a specialized government body that will be involved and will oversee the reform.

“Today, such a body is not present, this is a matter for the Ministry of defense, Ministry of economy, the national security Council, parliamentary Committee. As far as I know, in the President’s Office is considering two options — profile Vice-Prime Minister for defense industry without the Ministry or the creation of a relevant Ministry. Now these functions are partially performed by economy, I don’t think they want to give this direction”, — says “Apostrophe” Kanevsky.

According to Kanev, the transformation plan OPS has been developed, the necessary bills prepared by the state concern the analysis activities of all businesses. Here it is worth Recalling the statement of Abromavicius, that one-third of the 116 group companies unprofitable (that is to say, even if the Malyshev plant in the cons), not to mention the fact that the concern is there is totally bankrupt. The main assets of these enterprises is the facility and land, which cannot be disposed of because these businesses, by law, are of strategic importance. And uncontrolled right to dispose of this property carries risks of corruption.

The audit of OPS spent more than 30 million, but its results were never seen. Without these data, in a hurry to start reforming the direction of the MIC looks weird. Of course, if the task is not to hide the results.

Glushchenko believes that the inefficiency of OPS to hide already impossible, it is understand and management of state concern, where 90% of the net income gives 27 companies from 116. In this regard, according to the reform concept, the core of the new corporations should be 38 the most promising enterprises. In principle, this is a logical step, which aims to concentrate production in the most demanded and promising directions, in parallel getting rid of dead businesses that pull the money, without bringing any return. But the experts, and employees of defense enterprises, many questions arise for which answers are not yet available.

“In the current situation, it does not matter who will head reform of the Ukroboronprom. All our reforms in the defense industry come up against one insurmountable factor is the lack of personal responsibility! What’s the difference who will be in charge of the process, if everything is reduced to the regular writing programs and presentations, and when the time comes to announce the result, then none of the reformers would not be in place? Theoretically, any great reform would be implemented only under one condition: you put the document on the deadline and a particular artist. In another way it does not work! In fact in the same Ukroboronprom manages the Supervisory Board — the responsibility is blurred,” says Glushchenko.

The final countdown

According to official statements, the development of the concept of reforming the OPS went 150 days. The first pilot projects on new models promise to provide less than a year. The interviewed experts believe that this is real terms, if the proposed amendments will find support at all levels of government. But, as we have seen, the national security Council has already expressed its “but” it is also difficult to predict what will be the situation in the Parliament.

According to Kanevsky, in a short time in Parliament may be made to the draft laws necessary for the reform of the defense industry. The working group finished work on its preparation.

“This is the optimistic scenario, about the pessimism while I don’t want to think. In may-June in Parliament is for a list of bills for the reform of the sector of the defence industry,” he tells the publication.

“The leadership of the group calls the approximate timing of the birth of the first pilot projects on new models — 9-12 months. In principle, it is possible to accept such a dispensation, but only on the condition that it would be given the green light at all levels and provided appropriate legislative support for the process. Although I personally believe that to meet this deadline in our reality is almost impossible,” predicts Glushchenko.

In any case, it is important that both supporters and opponents of the proposed reform models for the two Parties, go to the idea that the group in this form can no longer exist. Long-forgotten new developments, international contracts for the supply of arms and technology, and the implementation of the state defense order is on the verge of collapse for several years. But reforming the OPK for the sake of reform in conditions of war and the constant threat from Russia is not worth it.