Embezzlement at “Ukrzaliznytsia”: One of Artem Shil’s associates pleaded guilty and agreed to cooperate with investigators
Today, September 17, at the High Anti-Corruption Court (HACC), held another hearing in the case involving a scheme to embezzle funds from Ukrzaliznytsia, in which the main defendant is Artem Shilo, a former adviser to the Office of the President and former SBU official.
Following the September 17 hearing, the panel of judges ruled to separate the case materials pertaining to one of the defendants, Oleksandr Kovalyuk, into a separate criminal proceeding.
For reference: Oleksandr Kovalyuk is a former deputy head of the state-owned enterprise “Administration of Seaports of Ukraine” and a Security Service of Ukraine (SBU) officer. He is one of the defendants in the high-profile case involving the alleged embezzlement of funds from “Ukrzaliznytsia.”
According to investigators, Kovalyuk, who previously held a position in the Security Service’s Department for the Protection of National Statehood, may have shielded members of an organized group from exposure as they misappropriated funds from Ukrzaliznytsia during public tenders. In return, he allegedly received improper benefits.
On May 2, 2023, Kovalyuk was appointed deputy head of the USPA.
The decision to release the case materials indicates that a plea agreement (or an agreement to cooperate with the investigation) was reached between the SAPO prosecutor and the defendant. The separated case has been sent to the court’s automated case assignment system to determine the composition of the panel that will separately review and approve the terms of this agreement.
For the remaining defendants, including Artem Shil, the trial continues in the main proceedings. It is expected that the testimony of the defendant who entered into the plea agreement may be used by prosecutors as additional evidence of the guilt of the other participants in the scheme.
The next court hearing in this case is scheduled for September 29.
As previously reported, during the court hearing on September 11, the court considered a motion by the defense to consolidate the case with another proceeding. The SAPO prosecutor and the defense opposed the motion, emphasizing that it would prolong the proceedings, after which the court denied the request.
The High Anti-Corruption Court (VAKS) also received a new indictment against Artem Shil and Kostyantyn Melnyk, along with a plea agreement. According to the prosecutor, the new charges relate to Article 209 of the Criminal Code of Ukraine (legalization (laundering) of property obtained by criminal means).
What is Artem Shilo known for?
As a reminder, Artem Shilo, who has been the subject of investigative reports by UA.News, has been implicated in several high-profile cases.
As established by the investigation conducted by NABU and the SAP, the organized group under his leadership operated in two main schemes, effectively becoming an informal “back office” for UZ, which controlled procurement in exchange for “kickbacks”:
- The Cable Scheme (losses of 140 million UAH): During 2021–2022, Shilo’s group created conditions for companies controlled by former MP Viktor Bondar’s group to win tenders; these companies supplied cable and wire products at significantly inflated prices.
- Transformer scheme (losses of 100 million UAH): In 2022–2024, the “back office” facilitated the procurement of power transformers through a company controlled by a Belarusian citizen with ties to Russia. To weed out competitors with cheaper offers, Shilo, while serving as first deputy head of the SBU department, personally arranged for an official letter to be sent to Ukrzaliznytsia alleging a “threat to national security.”
Beauty salons and luxury real estate: how the funds were laundered
In total, through criminal schemes, the group’s leader laundered over 175 million hryvnias (the initial suspicion cited 155 million hryvnias). The money was funneled through front individuals and legal entities under the guise of “payments for beauty salon services,” after which luxury penthouses, apartments, houses, and commercial real estate were purchased for controlled individuals.
As part of the investigation, law enforcement officials secured the seizure of the suspects’ property and assets totaling over 1.4 billion hryvnias.
Shila was dismissed from his position as head of the SBU’s Main Directorate for Counterintelligence Protection of State Interests in the Sphere of Economic Security in the spring of 2024—after charges were filed against him. In addition to corruption at Ukrzaliznytsia, the media linked the official’s name to pressure on businesses and the easing of detention conditions in pretrial detention centers for Ihor Kolomoyskyi.
The Shadow Bosses of “Ukrzaliznytsia”: A Consortium of a Security Official, a Member of Parliament, and a Businessman
According to a UA.News investigation, a coalition of politicians, security service officials, and front companies was behind the large-scale embezzlement schemes at “Ukrzaliznytsia.” Three individuals served as the architects of this corruption empire:
- Artem Shilo (a former SBU employee and former member of the Presidential Office)—the “gray cardinal” and head of the “back office,” who used his influence within the SBU to ensure the elimination of competitors;
- Viktor Bondar (Member of Parliament, former Minister of Transport)—responsible for political cover and the operations of controlled companies (in particular, the “Ukrkabel” plant);
- Volodymyr Kotlyar (businessman)—an intermediary responsible for registering shell companies, handling documentation, and distributing financial flows.
Profits were distributed clearly: two-thirds went to Kotlyar’s companies, and one-third to Bondar’s organization. In total, at least 16 people were involved in the schemes: Ukrzaliznytsia officials, lawyers, accountants, as well as those in his inner circle (for example, Galina Bondar, the mother of a member of parliament, in whose name a whole series of specialized enterprises were registered).
