The patient is more dead than alive at this point
On October 31, the Kyiv City Council approved a recapitalization of "Kyivmiskbud" for over 2.5 billion hryvnias. This measure is expected to partially revive the largest capital construction company, whose capital has been regularly disappearing into unknown directions over the past years. Currently, "Kyivmiskbud" has over 20 unfinished projects across all districts of the capital – approximately 40,000 Kyiv families are unable to receive housing for which they have already paid.
What happened to the once-thriving construction company and how "Kyivmiskbud" plans to spend the funds received from the Kyiv City Council is detailed by "Kashtan NEWS".
The Legacy of Mykyta
Work has not been carried out on a significant portion of "Kyivmiskbud's" projects for over a year and a half. The standard explanations provided by the previous management and continued by the current one boil down to three points: coronavirus, war, and the unfinished projects of the bankrupt "Ukrbud" of Maksym Mykyta, which the government transferred to "Kyivmiskbud" in 2020. While the projects were handed over, the funds for their completion were not. Therefore, as explained by "Kyivmiskbud", it is not surprising that the company faced financial difficulties and is now on the brink of bankruptcy.
3 However, deceived investors have doubts that Mykyta's legacy has indeed proven to be such a heavy burden for the municipal developer. As stated in December 2023 by investor representative Oleksandr Dyadyuk, along with 1917 unfinished apartments of "Ukrbud" valued at 4 billion hryvnias, "Kyivmiskbud" received land and technological networks, which in themselves are assets.
“With the transfer of 'Ukrbud' projects, the company effectively received a kind of oxygen cushion. And it invested 1.1 billion hryvnias into them. In other words, 'Kyivmiskbud' survived thanks to 'Ukrbud'. 'Ukrbud' saved 'Kyivmiskbud' in 2020,” summarized Dyadyuk during a press conference in December.
Earlier, Kyiv City Council member and member of the budget and socio-economic development committee Liliya Pashynna noted that the management's statements about the extremely difficult financial situation in the company are, to put it mildly, exaggerated.
4 “I have read the documents and want to say that not everything is that bad. In my opinion, this is more publicly inflated, claiming that there is a catastrophe on the verge of bankruptcy, when they currently have assets worth about 17 billion hryvnias. And liabilities of 4 billion. So, maybe sell those assets that exist and pay the debt?” she said in a September 2023 interview with "Kashtan NEWS".
Kozyn, Everest, and the Azure Coast
The fact that the finances of the supposedly impoverished developer are not so dire is indirectly evidenced by the corruption scandal that erupted in May 2023 surrounding the entourage of then-head of "Kyivmiskbud" Ihor Kushnir. The publication BIHUS.info published a journalistic investigation regarding the fate of a plot of land in Kozyn, where the "Kyivmiskbud" recreation base was previously located. In 2013, a year after Kushnir was appointed head of the company, the base was sold to "Lisorgbud", one of the founders of which was Kushnir's wife Oksana's aunt. Now, on the site of the base, houses have been built where the entourage of the former head of "Kyivmiskbud" resides, including Oksana Kushnir's brother's wife.
Following this, the Kyiv City Council approved the creation of a temporary commission to investigate the activities of "Kyivmiskbud" during a plenary session on May 25, but the scam involving the Kozyn base turned out to be just the tip of the iceberg.
5 In July of that year, BIHUS.info released another investigation into the wealth of the Kushnir family. The journalistic material claims that in 2020, Oksana Kushnir, through her Cypriot company Koksi Holding, purchased an elite villa located near the French town of Villefranche-sur-Mer on the Azure Coast. The estimated value of the villa is nearly 20 million euros. Meanwhile, Ihor Kushnir himself stated to the publication that he owns neither real estate nor movable property abroad.
The investigation also covered the scandalous ascent of the Kushnirs to Everest, first reported by the Nepalese publication The Himalayan in May 2023. As Ukrainian journalists discovered, Ihor Kushnir left Ukraine on an invalidity certificate, and the climb to the world's highest mountain cost the couple approximately 150,000 US dollars.
The press service of "Kyivmiskbud" defended its leader, stating that Kushnir has been classified as a third-group invalid since 2005 due to an oncological illness (melanoma) and has undergone several operations to remove metastases. At the same time, according to the press service, Kushnir is an experienced climber, and conquering Everest was his long-standing dream.
No culprits found
However, even after this exhaustive explanation, investors of "Kyivmiskbud" were not swayed by the suffering of the millionaire-invalid, and the situation surrounding the company reached a boiling point. Kushnir was suspended from his duties, and in July, law enforcement conducted searches at "Kyivmiskbud" offices in connection with several cases: embezzlement of property, official forgery, legalization (money laundering) of property obtained by criminal means, and fraud with financial resources.
6 According to the investigation, officials from several capital enterprises, including "Kyivmiskbud", organized a scheme to misappropriate funds allocated for the Economic and Social Development Program of Kyiv for 2021-2023.
“To this end, false information regarding apartment prices was entered into the procurement documents for apartments purchased with budget funds. Subsequently, the real estate was sold through controlled investment funds that have tax benefits, for the purpose of embezzling budget funds, citizens' investment funds in construction (pseudo-investors under preliminary contracts), and further transferring them abroad to accounts of controlled offshore companies,” reported the National Police at that time.
However, there has been no court ruling in this case yet. Meanwhile, the findings of the temporary commission established by the Kyiv City Council to investigate the activities of "Kyivmiskbud" appeared just five months later: in December 2023, the Kyiv City Council listened to and adopted the commission's report, which revealed – spoiler alert! – that nothing criminal is occurring within the company, and the numerous unfinished projects are solely the fault of the war and coronavirus.
When asked whether the commission investigated the details of Kushnir's luxurious lifestyle, the commission chair, "UDAR" party deputy Myroslava Smirnova, replied that it was not possible to confirm illegal enrichment since Bihus.info did not cooperate with the Kyiv City Council.
“We invited them to the commission meeting – unfortunately, no one was present at the commission meeting,” Smirnova stated.
“Give us money”
Thus, a typical Kyiv situation has developed: investors' funds have disappeared, people have not received their apartments, but no one is to blame, because "it is what it is." However, in that same December 2023, Ihor Kushnir did submit a resignation letter, and starting February 2024, his position will be held by Vasyl Oliinyk. At the beginning of his tenure, Oliinyk promised to develop a recovery plan for the company, restart the construction of several complexes in phases, and establish effective communication with investors.
To say that effective communication has not been established would be an understatement, as has the restart of construction. Over the course of a year, deceived investors continued to gather at protests outside the Kyiv City State Administration, demanding the completion of their buildings – and each time received a new batch of promises. However, at least "Kyivmiskbud" did indeed develop a plan. This plan primarily revolved around the old, familiar formula of “give us money.”
7 It should be noted that the idea of requesting a billion for recapitalization had occurred to the management of "Kyivmiskbud" a year and a half ago. In April 2023, the company made such a request to the Kyiv City Council, but a month later, a scandal erupted over the Kozyn plot, followed by the Azure Coast and Everest. Thus, the initiative seemed to have faded away, but it did not disappear entirely.</