Defense company's production blocked by Bureau of Economic Security's investigation

The Bureau of Economic Security (BEB) is effectively blocking the work of a body armor manufacturer due to ongoing investigations of tax evasion, Forbes Ukraine reported on July 16, citing the company's senior executive.

This complicates the supply of bulletproof vests to the military as the Ukrainian Armor (Ukrainska Bronia) company is one of the few certified producers in the country.

According to Forbes, the Bureau of Economic Security carried out searches at the company's facilities in May 2023, seizing products worth Hr 40 million ($970,000) and freezing the firm's accounts.

"These products have already been paid for, and Ukrainian soldiers are waiting for them," said Denys Milinevskyi, the company's commercial director, in a comment for Forbes.

"If we do not receive them back, we will go bankrupt."

Milinevskyi himself was charged by the bureau on July 1 with fraud and tax evasion, Forbes wrote. He dismissed the bureau's accusations as "baseless."

Representatives of Ukraine's business sector have repeatedly complained about growing pressure from the authorities, particularly from the controversial bureau. The government promised steps that would mend the relationship between the business and the state.

According to the bureau, the company imported defense goods into Ukraine between April and June 2022 by using falsified documents and then resold the product in Ukraine without paying Hr 30 million ($725,000) in taxes.

As the investigation is ongoing since August 2023, the company's work is effectively blocked as it cannot participate in public procurement, Milinevskyi said.

Authorities told Forbes that there are only six Ukrainian manufacturers capable of producing body armor that meets the Defense Ministry's technical requirements. Ukrainian Armor was also the first one to receive a license for the production of body armor for female military personnel.

While the company's work is blocked, the Defense Ministry's procurement agency is struggling to find enough suppliers to cover its demand.

The bureau has launched four similar cases regarding defense suppliers, its representatives told Forbes.

The bureau was established in 2021 as the key agency for combatting economic crimes. Several media outlets and civil society organizations have complained since then that the body fell under the unofficial influence of Oleh Tatarov, a controversial deputy head of the Presidential Office.

The parliament approved a bill on the bureau's reform in June in an effort to "meet the requirements of international partners, businesses, and the public.

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