Ukraine’s Luch Design Bureau, a major state-owned defense contractor, has appealed to the government and National Security and Defense Council (NSDC) after an inspection by the State Audit Service (SAS) classified any profits made by the contractor as state losses, the bureau said in a Facebook post on Sept. 19.
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Luch sent official letters to PM Denys Shmyhal, NSDC Secretary Oleksiy Danilov, Minister for Strategic Industries Oleksandr Kamyshin, and head of Ukroboronprom, Herman Smetanin.
The bureau requests that the conclusions of the audit be revised in accordance with the law, as the discrepancy “complicates the carrying out of the assigned tasks of weapons development and manufacture.”
“The contrived position of State Audit Service officials regarding the prohibition of including a profit margin in the price [of our products] has created genuine threats to national security and defense,” the bureau’s statement says.
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The message adds that the SAS conclusions “raise eyebrows” and have caused discord and legal proceedings among the government bodies during a state of war. The audit materials have been handed over to the law enforcement, and criminal cases have been initiated on their basis.
In July, the Cabinet abolished a resolution that prohibited businesses from profiting from contracts with the Defense Ministry.
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Earlier, the SAS found that Luch made UAH 2.5 billion ($68 million) in profit from contracts with the Defense Ministry, classifying these earnings as improper.
At the time, then-Defense Minister Oleksii Reznikov described the audit’s conclusions as “absurd.”
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