Ukraine moves to quell $100 million energy corruption scandal

By Dan Peleschuk

KYIV (Reuters) -President Volodymyr Zelenskiy called for the dismissal of two cabinet ministers on Wednesday amid a probe into an alleged $100 million corruption scheme involving a former associate that has fuelled fresh public anger at Kyiv's wartime government.

Anti-corruption authorities said this week they had detained five people and identified two others still at large, suspected of involvement in the alleged plot to control procurement at nuclear agency Energoatom and other state enterprises.

Ukraine's biggest wartime graft scandal comes as Kyiv's outmanned and underequipped troops are struggling to fend off grinding Russian advances on the battlefield.

Zelenskiy, whose former business associate from his comedy career is among the suspects, said in a video address that corruption in the energy sector - weakened by regular Russian air strikes on infrastructure - was "absolutely unacceptable".

Shortly after his remarks, Prime Minister Yulia Svyrydenko submitted a request for parliament to dismiss Energy Minister Svitlana Hrynchuk and Justice Minister German Galushchenko, Hrynchuk's predecessor in the post.

Galushchenko has not been identified as one of the seven suspects announced this week, but a former advisor of Galushchenko's has been. He has denied wrongdoing.

Galushchenko's voice was among those heard in a recorded conversation with some of the suspects in the case that was released by the National Anti-Corruption Bureau of Ukraine, according to a source familiar with the matter.

The minister did not respond to a Reuters request for additional comment.

Hrynchuk, who earlier on Wednesday said she had submitted her resignation, has denied any wrongdoing.

ENERGY SECTOR ESPECIALLY VULNERABLE

The probe by anti-corruption body NABU, details of which have been incrementally released in sleekly produced videos featuring the lead detective, is the latest revelation of alleged graft that has plagued Ukraine's wartime government.

Showing progress in fighting corruption is central to Kyiv's bid for membership in the European Union, which officials consider key to escaping Moscow's influence.

Accusations of kickbacks in the energy sector are particularly sensitive among Ukrainians, who are facing daily power outages ahead of winter as a result of massive Russian attacks on infrastructure.

It could also dampen enthusiasm among donors who have provided critical assistance to Ukraine's hobbled energy sector.

Speaking on local television, lawmaker Serhiy Nahorniak, a member of parliament's energy committee, said he had already been contacted by donors refusing to provide a transformer for Ukraine's battered Sumy region.

"Having read the news, they said, 'We think you can afford more than one transformer,'" he told the Kyiv24 channel, without specifying who the donors were.

ANTI-CORRUPTION AGENCIES STEP UP PRESSURE

Earlier this year, Zelenskiy tried to limit the powers of Ukraine's anti-corruption authorities, but rowed back on those changes after rare street protests and an outcry from European partners.

Political opponents accused him of trying to scuttle the activities of corruption-fighting bodies to protect his associates, which Zelenskiy strongly denies.

One of the seven suspects identified by prosecutors is Timur Mindich. He is a co-owner of the influential Kvartal 95 television studio, which produced the popular sitcom that brought Zelenskiy to fame as a comedian before he launched his political career with a successful campaign for president in 2019.

Mindich did not immediately respond to a request for comment sent to Kvartal 95. In a statement on Wednesday, the company said it had legal ties to Mindich as a co-owner, but that he did not influence its content and the reported allegations involving him were unrelated to the company's activities.

Valeriy Pekar, a prominent public intellectual, wrote on Facebook that "a Pandora's Box" was now open that would likely produce more shocking revelations.

"The authorities are still underestimating the scale of the problem and are trying to slow it down," he said. "This is a mistake."

(Additional reporting by Anastasiia MalenkoEditing by Alex Richardson, Peter Graff and Frances Kerry)