Business

22 May, 06:26 PM

Ukrainian business families at war over scandal involving humanitarian supplies for army

Epicenter construction hypermarkets chain owned by the influential businessmen from the Gerega family has announced it will stop its cooperation with Veneto Group, a company owned by the Brodsky family. The reason is bulletproof vests.

Russia's war against Ukraine – the main events of May 22

Epicenter said the reason was the scandal over a consignment of bulletproof vests that had been intended as free-of-charge humanitarian assistance, but which were sold in Epicenter stores at a market price.

Epicenter chain made a public statement on the halting of all the sales of military-related products supplied by Veneto until investigators finish studying the deal.

The Gerega-family-owned company made their decision after learning that supplies of goods from Veneto Group might have been a humanitarian assistance and not products from a regular business deal.

“If this information is confirmed by investigators, Epicenter plans to sue Veneto Group in court to make it pay compensation for all the material and reputational losses made by deals around the humanitarian assistance,” reads an Epicenter press release.

In April, Epicenter signed a contract with Veneto Group on purchasing bulletproof vests after Veneto Group presented documents that proved the vests had been certified.

Фото: Epicenter

Veneto Group, in its turn, said that it is having an internal investigation on the matter, while company’s employees are providing evidence to investigators.

"We believe that our employees couldn’t have had anything to do with selling humanitarian goods," a Veneto Group press release read.

Earlier, another scandal rocked the business community in Lviv, a major western Ukrainian city. According to media reports, the Epicenter chain was selling the ammunition that was supposed to be free-of-charge.

Meanwhile, Ukraine’s State Security Service announced that it had finished its investigation into a massive corruption scheme to make money on humanitarian assistance that was supposed to be provided for the needs of Ukrainian army and self-defense.

“According to the investigation, shadowy dealers were trying to sell 1,000 bulletproof vests that were worth more than UAH 12 million (EUR 390,000). These items were produced in Ukraine by a civilian organization. Cherkasy Military Administration was expected to transfer those vests to the army. However, instead of this, bureaucrats involved in the scheme made an attempt to sell the bulletproof vests through commercial entities and supermarket chains,” Ukraine’s SBU security service reported.

“The SBU learned about the deal and confiscated a part of a supply line from a supermarket,” an SBU press release read.

“(The goods) will be transferred for the needs of the Ukrainian army. As of now, we are continuing to conduct an investigation to find the rest of the supply line and find out the names of the individuals who were organizing illegal schemes.”

According to Interfax-Ukraine, a news agency in Kyiv, Veneto Group is owned by Svitlana Brodskay (75%) and Yuriy Brodsky (25%). Svitlana is a wife and Yuriy is a son of Mykhailo Brodsky, a well-known entrepreneur in Kyiv. He owns Obozrevatel, a popular news website, while previously he owned Kyiv Basket, an award-winning basketball club.

In the 2010s, Veneto Group was trading orthopedic mattresses that were promoted on local television channels and websites. As of now, Veneto Group continues to produce and sell furniture, mattresses and bed sheets. The company is based in Cherkasy Oblast.

Epicenter is owned by Oleksandr Gerega (51.3%), Galyna Gerega (47.97%) and Tetyana Surzhyk (0.73%). Oleksandr Gerega is a member of Ukrainian parliament who sits on the taxation subcommittee, even though his company is a subject to government’s fiscal measures.

Galyna Gerega, his wife, formerly led the Kyiv City Council. Prior to the war, the couple owned more than $1 billion in assets.

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