Defense Ministry paid $17 million to company owned by ex-MP's wife for faulty drones, journalistic investigation finds

Ukraine’s Defense Ministry paid an advance of UAH 650 million ($17.5 million) for drones of questionable quality to Ukrainian Aviation Systems, a company owned by the wife of former MP Boryslav Rozenblat, an investigation by Bihus.Info has found.

The journalists, reporting on the investigation on Sept. 4, found that in December 2022 the Defense Ministry signed an agreement worth UAH 807 million ($21.7 million) for 55 HAWK unmanned aerial vehicles.

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The contract was signed directly with the manufacturer, Ukrainian Aviation Systems LLC, which is owned by the wife of Boryslav Rozenblat, a former MP and a person charged in the so-called “Amber case” over receiving undue benefits and abuse of influence.

The investigation notes that the manufacturer claimed that it has been on the market since 2018 and has been mass-producing HAWK systems, which was the point that the agency and the government insisted on, allocating an unprecedented UAH 40 billion ($1.076 billion) to purchase drones from Ukrainian manufacturers.

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Despite the fact that the drones were only able to take off half the time, crashed and provided poor quality images during training conducted for system operators in mid-July, Rozenblat assured that all the shortcomings would be corrected by the time the training was completed and the ordered quantity was handed over.

However, when the training ended, the HAWKs remained "subpar." The day before the contract was awarded, on Aug. 14, it turned out that only four of the 55 ordered systems were ready, the investigation said.

During the initial test flight, the first drone took off but then lost its camera feed. At the time, Rozenblat assumed that it had overheated and asked to give the drone a second chance. It took off, but failed to land, as its wings broke off and its nose was cracked. The Defense Ministry commission that was present during the test rejected the faulty HAWK drone.

The second system also had problems. Rozenblat admitted that the fourth system did not take off either. Only the third HAWK managed to take to the skies and more or less cope with the test flight.

The manufacturer claimed that its system was developed in cooperation with foreign partners and is made mostly of imported parts. HAWK was approved for use in the Armed Forces back in 2017, when it was greenlighted by the then Minister of Defense Stepan Poltorak. At that time, there were reports that only seven of the nine attempts to test the HAWK were successful, but the Defense Ministry signed a contract with a company to which a member of the presidential faction was related, the investigation says.

The first two prototypes were manufactured a year later at a cost of about UAH 6 million ($212,800). In the summer of 2019, the Defense Ministry ordered seven more systems for the same price.

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Due to problems with the equipment, its replacement and new tests, the contract was significantly delayed, and the delivery dates specified in the contract expired.

The Defense Ministry filed a lawsuit to force the manufacturer to pay UAH 10 million ($269,000) in penalties for breach of contract, while the manufacturer demanded a price revision.

After Russia's full-scale invasion, the company handed over the systems that had been in storage for several years to the Armed Forces. The Defense Ministry confirmed this, saying that the military had not given any negative feedback about them. This is how the Ministry explained the signing of a new contract with UAS LLC – the corresponding order came from the General Staff, Bihus.Info reports.

However, the cost of the systems had now doubled to more than UAH 12 million ($323,000). The Defense Ministry said that the new contract with the manufacturer was for the same HAWK systems as before, but with improved characteristics, but in fact it turned out that UAH 650 million ($17.5 million) had been allocated for the purchase of untested systems, Bihus.Info journalists say.

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Oleksandr Liev, the former head of the department who signed the contract with UAS LLC, said in a comment that he was sure that he was buying the same HAWKs as in the previous batch, and all relevant services had checked the legal, financial and technical components of the contract before signing.

In August, Rozenblat said that he could hand over 30 systems in the near future, and several dozen more a couple of months later. The Defense Ministry agreed to postpone the delivery date to October. However, the fulfillment of the contract is in jeopardy due to the seizure of the company's accounts in a criminal case investigated by the State Bureau of Investigation.

Law enforcement officers assume that the company's management may have colluded with the Defense Ministry to seize funds by signing a contract at inflated prices, Bihus.Info journalists say.

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