Зміст публікації
Since 2022, the Anti-Corruption Center MEZHA has been systematically and continuously monitoring all relevant processes related to recovery, actively contributing to numerous legislative acts, including those related to the E-recovery program (thanks to our efforts, the commission now includes 30% civil society representation to ensure effective monitoring and other safeguards for an objective calculation of compensation costs) and related to the operations and funds allocation from the Fund for the Liquidation of the Consequences of Armed Aggression (hereinafter – the Liquidation Fund), UNITED24 accounts, etc.
The recovery institutional architecture remains dynamic and continues to evolve, alongside shifting responsibilities of key policy makers. In this section, we highlight the key findings regarding the allocation of funds, offering valuable insights to support the effective implementation of recovery projects
HOW POLITICAL FACTORS IMPACT THE RECOVERY EFFORTS
- In 2025 Ukraine lacks a strong policymaker in the recovery sphere due to political reshuffles
Since 2025 the focus has shifted away from the Ministry for Development to the Ministry of
Economy and the Ministry of Finance, which oversee the public investment reform. As a result, the recovery policy has effectively come to a standstill.
Spring to autumn 2024 was a turbulent period for the Ministry for Development. On May 9, 2024,the Parliament dismissed Oleksandr Kubrakov, Deputy Prime Minister for the Recovery of Ukraine and Minister for Communities, Territories, and Infrastructure Development. The explanatory note to the draft resolution stated that Oleksandr Kubrakov was being dismissed in order to create a separate ministry for the development of communities, territories, and housing and communal services.
However, the Ministry was merely renamed, which, unfortunately, did not result in any meaningful improvements in its work. Moreover, it was not split into two separate ministries, contradicting the official reason given for his dismissal.
Following Oleksandr Kubrakov’s sudden dismissal, the position of Deputy Prime Minister for Recovery remained vacant for nearly four months. On September 5, 2024, Oleksiy Kuleba was appointed Deputy Prime Minister for Recovery after the politically motivated dismissal of Oleksandr Kubrakov.
Moreover, on June 10, 2024, Mustafa Nayyem reported his dismissal of the Head of the Agency for Restoration due to “systemic obstructions preventing the effective exercise of his powers”. A significant point was that his participation in the Ukraine Recovery Conference 2024 in Berlin was not approved, although the involvement of the Head of a state agency responsible for implementing recovery projects would have been entirely logical. It was only on September 27, 2024, that Serhiy Sukhomlyn was appointed as the Head of the Agency for Restoration by a Cabinet of Ministers decree.
Thus, key institutions responsible for Ukraine’s recovery remained without appointed leadershipfor an extended period.
2. The change of the political team affected the ministry’s transparency and cooperation with the civil society
Yes, the decision-making process regarding the allocation of funds was, in some cases, closed, and MEZHA’s requests to participate were ignored.
On January 17, 2025, MEZHA sent a letter to the Ministry for Development requesting the involvement of our representatives in the meeting of the Interagency Commission for reviewing appeals and preparing proposals on the allocation of funds from the United24 account opened for the Ministry for Development, considering our experience in funds monitoring. The meeting was scheduled for 3:00 PM on January 20, 2025.
Ultimately, despite numerous attempts by experts from MEZHA to join the online meeting, they were excluded by a representative of the Ministry for Development. Notably, we were allowed to attend previous meetings, and in 2022–2023 we even received draft regulations. Now, that’s no longer happening — and the Ministry for Development is no longer taking a proactive approach.
3. The absence of the legislative framework for recovery
The draft law “On the Principles of Ukraine’s Recovery” has been under development by a working group at the Ministry for Development since autumn 2023 — for almost 2 years. MEZHA systemat ically pointed out that the draft law contains only general provisions and fails to address key issues such as: the legal status of the Agency for Restoration; transparent allocation of funds for recovery projects, including the publication of the full set of data related to such projects; obligatory prioritization; the possibility for self-government bodies to submit applications for fund allocation, etc.
Once again, MEZHA has submitted proposals to the draft law in May, 2024. However, the Ministry also informed us that due to changes in leadership and the renaming of the Ministry for Develop ment, amendments were being made to the order regulating the working group’s activities. The dates of the working group’s next meetings remain unknown, and no further updates have been provided by the Ministry.
The need to adopt the draft law is also emphasized in the Report of the Accounting Chamber on the results of the performance audit titled “Territorial Communities During Wartime: Recovery of Social and Critical Infrastructure” (decision No. 55-2 dated December 10, 2024):
“despite the measures taken by the Ministry of Infrastructure to support recovery initiatives in Ukraine, legislative gaps, flawed procedures for fund distribution, and the slow pace of project implementation are hindering the effective recovery of social and critical infrastructure in territorial communities”
Therefore, the Accounting Chamber recommends that the Ministry for Development finalize the draft law and submit it to the Cabinet of Ministers in accordance with the established procedure. The slow pace of developing this key draft law, which is supposed to regulate recovery processes, is a matter of public concern.
RECOVERY METRICS
Despite the full-scale invasion, Ukraine has managed to implement numerous recovery projects through the Liquidation Fund and banking accounts opened for the ministries in the National Bank of Ukraine, including under UNITED24 brand (hereinafter – accounts).
The Liquidation Fund and ministry accounts are not the only mechanisms for financing recovery projects. However, over several years they have accumulated significant funds, established tested procedures, and can be considered pilot mechanisms, as they were among the first to start funding recovery projects.
In 2023, UAH 56.6 billion from the Liquidation Fund was allocated for the restoration of social
and critical infrastructure, among other areas, and UAH 23.27 billion was allocated in 2024.
As of January 1, 2025, the Liquidation Fund had a balance of UAH 7.6 billion intended for the com pletion of already initiated projects. In 2025, the areas for allocation of funds from the Liquidation Fund have been critically reduced. Now, the funds will be used only to compensate for damaged or destroyed residential properties, as well as to complete projects financed by the Fund last year
By February, a total of UAH 45.8 billion had been allocated from the accounts to fund projects across various sectors, including healthcare, education and science, culture, humanitarian demining, and others. Some accounts, however, remained inactive. The Ministry of Youth and Sports’ account had insufficient funds to begin allocation (UAH 15.6 thousand). As of January 2025, no funds had been received or spent via the Ministry of Veterans Affairs’ account, and accordingly, no commission had been established.
While the procedures for using funds through these financial instruments are legally established, they require further improvement to ensure the effective use of resources, especially as their volume is significantly decreasing. At the same time, the political context has also had a considerable impact on the effectiveness of the recovery processes.
RISKS AND ISSUES IDENTIFIED DURING THE MONITORING
- Legislative and political shortcomings of the Liquidation Fund operations:
- non-mandatory prioritization of the projects;
- abuse of the procedure for allocating funds from the Liquidation Fund based on government
decisions to avoid applying the general procedure of decision-making by the working group
and prioritization of projects; - absence of a procedure for determining the main fund administrators;
- the operational procedures of the Liquidation Fund are not stable, as the Budget Code of
Ukraine lacks provisions regarding the Liquidation Fund, which leads to frequent changes in
the directions of fund usage and sources of funding, among other issues; - lack of public and local self-government representatives in the Interagency Working Group
which adopts decisions on funds allocation.
2. During the monitoring of the use of funds from the accounts, we identified the following violations/shortcomings:
- closed nature of some commission operations on funds distribution;
- the need for clear prioritization criterias in the use of funds from accounts;
- significant miscalculations in the required amount of funds for proposed projects;
- unjustified amount of funding allocated for the projects;
- violation of the procedure for convening meetings;
- non-disclosure of all essential information.
3. Recommended approach to the application of prioritization which leads to inefficient use
of funds (as illustrated by the Liquidation Fund)
4. Overpriced construction materials during the use of funds from the Liquidation Fund for
non-priority projects
As it has been stated above, the CMU abuses the procedure for allocating funds from the Liquida tion Fund through protocol decisions, circumventing the general decision-making process of the working group and the prioritization of projects.
For example, the CMU allocated UAH 50 million outside of meetings of the Interagency Working Group and without prioritization to the National Academy of Medical Sciences for the construction of the medical and rehabilitation building of the Amosov National Institute of Cardiovascular Surgery of the National Academy of Medical Sciences of Ukraine (the total project cost – UAH 4.18 billion). In particular, this project was submitted for consideration at the third meeting of the Interagency Working Group (August 16, 2023). Based on the results of the prioritization, it received 13 points, ranking second to last among all evaluated projects, and was not recommended for funding by the Interagency Working Group. However, the CMU funded it at their own discretionwithout established procedures.
After obtaining the final resource statement on request MEZHA identified a probable overpricing of about UAH 25 million across three items of con struction materials. This fact was reported to the State Audit Service.
5. The exaggerated role of the DREAM system
While the DREAM platform allows us to see the list of funded projects, it does not provide the necessary level of oversight over the commission’s decision-making process. To ensure genuine transparency, it is essential that minutes, applicants’ submitted documents, commission decisions, and other related materials are published and made publicly accessible.
Moreover, transparency safeguards in the allocation process must be enshrined in law. As noted above, without such legal guarantees, the entire process depends on the political will of the cur rent leadership — which is often unstable and subject to rapid change
UNCOVERING THE SYSTEM: CORE RESULTS OF OUR PUBLIC FUNDS OVERSIGHT
- Doubtful projects with unjustified prices haven’t received funds
Case №1: MEZHA analyzed all the proposals submitted for the allocation of funds from the account of the Ministry for Digital Transformation. In particular, a proposal was received from the Commission for Regulation of Gambling and Lotteries (KRAIL) for the creation of the State Online Monitoring System and the purchase of services for its operation in the amount of UAH 62.4 million. In 2021, a procurement was already conducted for the development of this system, but the expected cost was over 10 times lower –UAH 5.4 million. Moreover, in September 2023, in the regulatory impact analysis of the CMU Resolution “On Approval of the Procedure for the Functioning of the State Online Monitoring System,” the expenses for creating this system amounted to 46 million. Thus, different prices were indicated – 62.4, 46, 5.4 million UAH and doubts arose about the justification of the specified cost.
MEZHA expressed concerns in the letter and sent it to the members of the commission prior to the meeting. Our concerns were taken into account, and the proposal was not supported due to the need for clarification of the expected cost.
Case №2: An application for funding the reconstruction of the O.F. Herbachevsky Regional Clinical Hospital of the Zhytomyr Regional Council and the Zhytomyr Regional Children’s Clinical Hospital was submitted for consideration by the interagency working group (the Liquidation Fund). The O.F. Herbachevsky Regional Clinical Hospital was proposed to receive UAH 207 million from the Fund. First of all, these facilities were not damaged. Additionally, the overall estimated cost of the hospital’s reconstruction has increased from 850 million to UAH 4 billion, nearly 5 times higher. The change in the estimated cost is due to adjustments in the project documentation carried out by the company, whose director and owner is Roman Hrynkevych (suspected of involvement in a criminal group and fraud committed on an especially large scale during a state of war, within the case regarding the supply of poor-quality clothing for the Armed Forces).
To prevent the allocation of funds to these projects, MEZHA sent a letter to the Ministry for
Infrastructure. The mentioned projects were not recommended for funding from the Fund.
2. Regulations have been changed
The draft regulation for the commission’s work on the distribution of funds from the Ministry of Digital Transformation account was reviewed. Experts of MEZHA. We provided recommendations for the draft regulation. As a result, the regulation now includes video archives of meetings – this will enhance transparency and attention to the commission’s meetings. As a result, the last two meetings were recorded and published on the website.
3. Financial control authority considered our findings during the audit
In July, 2024 the Accounting Chamber published the results of the audit on the effectiveness
titled “Territorial Communities at War: Restoration of Social and Critical Infrastructure”.
During the preparation of this report by the AC, its representatives met with our team in March, 2024 and reviewed our analytical materials on the functioning of the Liquidation Fund, as well as the monitoring reports prepared as part of this project.
