Operation "Midas": the biggest corruption scandal in Zelenski's surroundings

On 10 November, the National Anti-corruption Office of Ukraine (NABU) and the peculiar Anti-corruption Prosecutor's Office (SAP) reported the detection of a corruption scandal in the energy industry. Over 70 searches were carried out in the course of the 15 months of Operation "Midas" and operations included, among others, a friend of the president and his erstwhile business partner Timur Mindicz, Minister of Justice (formerly head of the energy department) Herman Haluszchenka and the seat of Enerhoatom (a company of a atomic power plant operator). 7 people were charged, and six were detained.

According to the NABU, there was a criminal group operating in Enerhoatom that obtained illegal benefits from counterparties of 10–15% of the contract value by blackmailing them with the possible of blocking payments for the services provided or products supplied or depriving them of supplier status. At least $100 million were embezzled. Mindicz was to organise the process (he fled the country a fewer hours before the search) and was supported by people associated with Hałuszczenko. The Bureau published tapes (part of almost a 1000 hours of recordings), which indicate that the erstwhile Deputy Prime Minister Alexey Chernyszov besides benefited illegally.

On 11 November, the government resigned the Enerhoatom Board of Supervisors and dismissed Hałushenko from her duties. A day later, he passed a proposal to the National safety and Defence Council (RBNiO) to impose sanctions on Mindich, among others. Volodymyr Zelenski expressed his support for anti-corruption services, stressed the inadmissibility of specified acts in the energy sector and called on the ultimate Council to resign Hałuszczenko and energy minister Switlana Hrynczuk. The vote is scheduled to take place on 18 November.

The affair is simply a powerful image problem for the president, whom he and Mindich have a close social relationship. It besides undermines the credibility of Ukraine in the West and the legitimacy of Zelenski within the country. At the same time, it is another installment of the President's Office (BP)'s ongoing confrontation with anti-corruption services for respective months.

Comment

• The allegations made by Zelenski's surroundings are a large burden on the head of state. Mindicz has been part of the President's closest ellipse for years, including being co-owner of the studio 4th 95. He besides ran business with Oligarch Ihor Kolomojski, who facilitated Zelenski's triumph in the 2019 election. During the war, his political and business influences increased importantly and became an object of interest to the service: in August of this year, NABU investigated his relation with the drone-producing company Fire Point, suspected of overpriced prices and setting bids for the transportation of unmanned workers to the military.
• Negative effects on Zelenski will not halt the announcement of resignation in the government. For 4 years, the president tolerated the presence of Hałuszczenko, criticized, among others, for lobbying for the acquisition in Bulgaria of utilized Russian reactors, or removing Volodymyr Kudrycki from the function of head of Ukrenerho (see. Kudrycki's arrest – an effort to intimidate representatives of the state apparatus in Ukraine). His cooperation with Mindich and BP head Andrij Jermak made him almost unto date untouchable, as evidenced by his taking over the ministry of justice after the last reconstruction of the cabinet. The want to be cut off by the leader from the figures of the case is evidenced by the request he authorized to impose sanctions on Mindicz (including blocking assets), adopted by RBNiO on 13 November.
• NABU's disclosure of details of the investigation is intended to make it hard for BP to further restrict the independency of anti-corruption authorities. Proceedings involving close relatives of the head of state, including Mindicza and Chernyszów, led in July to attempts to reduce the independency of this institution and then to conflicts of anti-corruption services with those subordinate to the president (see IP/10/05). Service vs. Service: fight for control over corruption in Ukraine). 1 of the detectives active in Operation "Midas" was arrested in June this year by the Ukrainian safety Service on suspicion of alleged ties with Russia, which may indicate a desire to suppress the investigation.
• The corruption scandal is going to be spreading. According to media reports, 3 more ministers were recorded. The case will besides be addressed by officials with contacts with Mindicz, e.g. the current secretary of RBNiO Rustem Umorov. At the same time Mindich's escape from the country just a fewer hours before the start of the search shows that BP can inactive receive leaks from anti-corruption organs.
• The scandal will lead to a decline in the credibility of Zelenski in the West and in the country. The President's reputation suffered in July. Ukraine: ultimate Council restores independency of anti-corruption bodies) and the current scandal will give extra fuel to opponents of Ukraine's accession to the EU and its further assistance. The case was besides badly received in society, especially as it was revealed shortly after Russia's severe attacks on energy infrastructure on 8 November. There are comparisons to state treason and there are expectations of extremist action to combat corruption. The scandal may demotivate soldiers, which will negatively affect the situation on the front.