How the corrupt pyramid in Belarus works

Final snatch – this is how a well-known analyst Sergei Chalyi described the latest actions of the authorities on sharing a piece between businessmen being in tight connection with them. How true are these facts and how does it happen in reality? On what scale do the laundry schemes operate? Where does the money go and what was the authorities’ reaction to our investigation? In this article we summarise another year of our investigative journalism, bringing separate episodes together into a full story.

CORRUPTION METS IN MEDICINE

The year before last healthcare was called one of the most corrupt industries in Belarus by then-Attorney General Alexandr Koniuk. This was said not due to the common tradition of giving gifts to surgeons. The main wheeling and dealing has been happening around governmental purchases of drugs and equipment, says former Chairman of the KGB Valery Vakulchik:

«In fact, the existing procurement system initially appeared as fertile ground for corruption».

Mechanisms of the system operate in the following way. One official makes a deal with a contractor that creates an artificial monopoly on supply to the government and on behalf of it pays for the goods and services three times as much as it could have been if competition existed. The businessman meanwhile pays the official off his share of extra profit.

From 2017 to 2019 security forces exposed a number of such dealings which made an affair called “the doctors’ plot”. The then Deputy Prime Minister Vasily Zharko said that he had no clue about these schemes:

«If only I had known, then appropriate measures would have been taken. The Ministry of Health is a huge system: it consists of 270.000 people, 1.000 organisations. An indecent person must have been hired».

For the last 20 years the system has been governed by one and only clan of bureaucrats. Its pioneer was Ludmila Postoyalko, who is, according to mass media, Lukashenko’s mother-in-law.

Graphics: Belsat

She became the Deputy Minister of the Ministry of Health in 2001, one year after which – the Minister of Health. Her successor and countryman Vasily Zharko was her colleague in a children’s hospital in Brest.

When Postoyalko started as the Deputy Minister, Zharko became her Secretary General in Belarusian Red Cross. Having started as the Minister in 2011, Zharko assigned Dmitry Pinevich as his Deputy, who had taken this post until eventually became the Minister himself. Sergey Satsuk, Ej.by editor, says that these illustrative scheme cases with Zharko appearing haven’t been closed:

«Schemes are operating and I know it. The whole system is running the way it was initially supposed to. What concerns Zharko, I guess that in one way or another he takes his part in it. Since he’s been so deeply involved with the wheeling and dealing, he couldn’t have just retired».

In 2010 a gold mine was found – the programme of import substitution was announced that allowed national production to start off. It provides the officials with more opportunities to get some illegal profit.

One year after that Vasily Zharko sold one of his apartments to Sychev’s wife.

Soon after this deal he registered “Nativita” and started to, allegedly, produce the anti-cancer drugs. In fact, the company was just an importer and sold the drugs times more expensive than the market price.

With the limited information at our disposal we revealed 40 mln rubles of budgetary loss.

Sergey Satsuk, editor of Ej.by says: «Those who overstate the price two times must have been paying someone from the tender commission or bribed someone else. And those overstating it 5 to 10 times must have got a protection racket – they pay big people on a regular basis»

In 2017 the high-profile “doctors’ plot” affair started off with mass arrests of the Ministry of Health officials and their allied businessmen. But just a few months before the arrests Lukashenko reassigned Zharko as a Deputy Prime Minister. Valery Malashko, an official outside the Ministry who worked as a deputy chairman of Mogilev regional executive committee, became a whipping boy during the case from 2017 to 2019.

Graphics: Belsat

Lukashenko held him to account: «How did you let that happen? The arrested are all your employees. Tell me honestly whether you are able to rule the Ministry. Otherwise, you are all headed for trouble».

Meanwhile, Zharko’s ally on property deals Alexey Sychev was fined about $20.000 not on “Nativita” case but for his other company’s “Vitvar” activities, which was repeatedly caught for overstating the prices on budgetary supply.

Dmitry Pinevich played fool even though he signed the GMP certificate for “Nativita” in 2019.

As a result, “Nativita” was made to supply the government with the medications in the amount of 38 mln rubles.

Anyway, the scheme went on but only the other drugs are being overpaid.

We tried to question Dmitry Pinevich but both times we failed to – this time in April the Minister escaped to his cabinet. When we entered the room, he was no longer there. We could only wonder where he was hiding as the Minister is rather tall.

While Pinevich was Zharko’s deputy, he built a cottage worth more than $250.000; whereas Zharko received assets worth in total about $1.5 mln: a 3-room apartment in Nemiga, another apartment next to Drozdy and a cottage behind the National Library.

When the last trial on the “doctors’ plot” was over in 2019, Vladimir Karanik became the Minister.

Graphics: Belsat

DOWN THE TUBES

While Zharko along with Pinevich were very busy coordinating medication procurement, Karanik was responsible for “Minsk Oncology Centre’’ reconstruction.

He used to work there as a head doctor (appointed by the Minsk committee with Pinevich in charge). Last year Karanik cut the red ribbon when the oncology centre increased its ability to perform serious operations. Sounds good but the reconstruction turned out to be pricey – $153 mln, which is $23 mln more than to build the presidential clinics from scratch.

Why is that? We studied the data from one of the tenders with regard to this reconstruction – sewage system procurement for radioactive waste disposal. Thus, we found an alternative commercial offer from a well-known European company, whose services cost twice less than Zharko’s committee paid.

The Heads of the Ministry of Health construction department Vasily Shubich told us that Karanik made a deal with a contractor way before the tender started. “Inkamed”, belarusian company, was assigned for this job.

– He built upon the project of a radioisotope machine, the one that they did. – Yes, this one.

– For the tender?

– Yes. But we were obliged to run the tender as it was supposed to be.

The scheme was surprisingly simple. All the participants had to obtain a certificate for equipment adjustment and installation issued in Belarus. Not only none of the participants had it, but even “Iskamed”, the tender winner, received it one year after the procurement contract was signed. Vasily Shubich confirmed this fact:

– They got the license post factum.

– It’s quite common, that’s all I can say.

– Did they let all of them in without the license? – No, not all.

Graphics: Belsat

Once Vladimir Karanik became the Minister of Health, a scheme around equipment to cure Covid-19 purchases appeared.,which we will cover in our next investigation.

Now Vladimir Karanik is in charge of the Grodno region. Lukashenko called him a possible candidate for the presidential election.

So the corruption schemes go on despite the fact that the official in charge is aware of it. It means that money laundry is agreed with the authorities. If we catch them on overpayments, they charge the companies for the budget loss (this is what happened when “Nativita” had to supply the government with medications worth 40 mln. rubles.). Anyway, new schemes with the same people in charge substitute the old ones.

The full text of the investigation is available in pdf, mobi, epub formats.

belsat.eu

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