“13% of the fine per month is the murder of the defense industry”: Yanchenko explains the abolition of triple sanctions for arms manufacturers
10 January 12:56
EXCLUSIVE
The Verkhovna Rada of Ukraine has adopted draft law No. 6013 “On peculiarities of regulating business activities of certain types of legal entities and their associations during the transition period.” An amendment to this document by MP Galina Yanchenko exempted from a triple fine the companies that delayed the supply of weapons to the frontline,
As the author of the amendment explains, the legislation previously provided for a triple sanction in the form of three fines for such cases. After the amendment, there will be only one fine.
Scandal from Shabunin
Vitaliy Shabunin, head of the Anti-Corruption Action Center, accused the MPs who supported the amendments of legally forgiving all those who failed to supply weapons to the frontline.
“These changes are being promoted by the ‘servants’ in the interests of, for example, Spetstechnoexport (from the Tkach investigation), which did not supply weapons worth 6 billion hryvnias. Or the Lviv Arsenal, for which 1.5 billion was withdrawn from the Ministry of Defense, but no ammunition was delivered,”
– shabunin wrote on Facebook.
He argues that MPs are destroying the mechanism that stimulates the timely fulfillment of contracts.
“Currently, according to the Commercial Code, suppliers are given 30 days to resolve problems with the supply. And if they fail to fix them, a fine of 7% of the contract value is imposed,”
– says the anti-corruption activist.
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Yanchenko’s response
According to her, the activist simply did not understand the intricacies of the law.
“The person just opened the law and saw that the fine was canceled. The person does not understand either public procurement of specific weapons or weapons production. Most likely, they don’t know about the regulatory limitation of profits for enterprises. He does not know that there are three fines for missing delivery deadlines for one violation,”
The MP claims that the anti-corruption activist simply decided to “hype” in his own style with loud accusations, but this time it was to the detriment of the entire national defense capability.
“That is, I suspect him of simple incompetence. But, unfortunately, this incompetence does not help, let’s say, with this incompetence. He does not help either Ukrainian defense capability or the development of the defense industry,”
– the MP responded to the accusations.
The essence of the changes
Halyna Yanchenko claims that the working group on investments in the defense industry has developed significant changes to legislation and bylaws aimed at improving the state of affairs in the industry. This work was allegedly carried out in close cooperation with all defense associations in Ukraine and is aimed at attracting investment in defense and, accordingly, improving the situation with weapons at the front.
According to Yanchenko, the provision abolishing the triple penalty for late delivery of weapons is part of this package of changes.
“One of the points in it is the revision of some fines. As it turned out, in public procurement of weapons, in some cases, three penalties are provided for one type of violation. In particular, different laws provide for three different fines for violation of delivery terms. And since they exist and they work, the state customer simply applies all three at once. But this is contrary to the legal logic, which should be consistent, that is, one violation – one punishment,”
– notes the MP.
Thus, according to her, today 3 fines are applied simultaneously for violation of the terms of arms delivery:
- 7% – a one-time fine for a month of delay;
- 3% – a monthly fee for the use of money;
- 3% – a monthly penalty, namely 0.1% for each day of delay.
The situation is further complicated by the fact that today there is a regulatory limit on profits for arms suppliers. And the fines imposed, she said, exceed this profit margin.
“State customers limit the profit of Ukrainian arms manufacturers to an average of 5-7% for the entire contract. However, even in the case of a delay for objective reasons, they immediately impose 13% of fines for the first month. This is two and a half times more than the maximum profit that a company can make,”
– emphasizes Yanchenko.
The MP argues that with this approach, the state is pushing arms manufacturers to choose between bankruptcy or being placed under arrest and ceasing cooperation with it.
“Under these conditions, we are actually bringing the production of Ukrainian weapons to a standstill and killing this sector ourselves. Because either companies will simply not want to sign contracts with the state anymore and will relocate more and more, or companies will go bankrupt. Because when you sign a contract for a year or two, you cannot foresee everything that can happen,”
– says the MP.
Therefore, she believes that the penalty for disruption of supplies should be adequate to the situation in which Ukrainian defense companies find themselves. According to her, the first step in this direction was taken yesterday.
“One of the three fines was canceled. In the near future, we also need to review the amendments to the Civil Code and cancel the second of the three fines so that the only, most effective fine remains. This is a daily fine. That is, it will be a progressive fine charged for each day of delay. It will encourage us to deliver the contracted weapons on time and not to run away from our obligations,”
– summarized Galyna Yanchenko.
