Ukraine prosecutors search state railway offices in embezzlement probe

Ukrainian prosecutors conducted a search on June 13 of the offices of state railway monopoly Ukrzaliznytsia (UZ, RAILUA) with the cooperation of its top management, the company reported on June 13. The search was conducted as part of an investigation of the embezzlement of “hundreds of millions of hryvnias,” the NewsOne television network reported, citing a prosecution official. Currently, prosecutors suspect a locomotive department manager in embezzling about UAH 12 mln. He is suspected in the procurement of materials of substandard quality in 2015-2016. The investigation “is being conducted at the initiative of company top management and in tight cooperation with the prosecutor general’s office,” the company said.

Alexander Paraschiy: It would be a positive development if the investigation was indeed initiated by Ukrzaliznytsia top management. The procurement of goods and services for a railway monopoly with total material costs of about UAH 20 bln p.a. is key source of inefficiency and money waste. The monitoring of procurements by top management – with the help of law enforcement bodies – may lead to significant progress in cost-cutting, which coud reach as high as hundreds of millions of hryvnias, as estimated by prosecutors. We retain our neutral view on RAILUA bonds.