Why Ukraine's nuclear sector is at the heart of Zelensky's biggest corruption scandal
The Rivne Nuclear Power Plant in Varash, Rivne Oblast, Ukraine, on Sept. 10, 2023. (Roman Pilipey / AFP via Getty Images)
While Russian attacks pounded Ukraine’s power system, one energy company remained mostly unscathed — becoming the cash cow that fueled the largest corruption scheme of President Volodymyr Zelensky's presidency.
Earlier this month, Ukraine's anti-corruption bureau (NABU) raided the homes of ex-Energy Minister Herman Halushchenko and Zelensky's former business partner Timur Mindich in connection with a $100 million kickback scheme involving Energoatom, the state-owned nuclear operator. So far, NABU has charged eight people in connection with the case.
Long before the investigation, Energoatom was seen as the problem child of Ukraine’s energy sector, with strong Russian influence, and very little corporate governance and transparency, observers told the Kyiv Independent. But year by year, different governments failed to root out the rot, allowing corruption to fester.
Russia’s full-scale invasion opened the door to new opportunities for exploitation. Nuclear safety took priority over corruption issues, while contracts for anti-drone constructions and repairs facilitated bribes.
It’s also one of the only profitable state-owned companies left as Russian strikes terrorize other energy firms. Moscow has avoided striking Ukraine’s nuclear plants directly, but it frequently targets infrastructure connecting plants to the grid.
"Energoatom is the last state company with huge profits that could be siphoned off," Tetiana Shevchuk, a lawyer with the Anti-Corruption Action Center, a watchdog, told the Kyiv Independent.
"Other companies are fighting for their lives."
Energoatom operates Ukraine’s nuclear power plants, which produce around 50% of Ukraine’s energy generation, making it the largest single source of generation. Ukraine has three operating plants and the Zaporizhzhia nuclear plant — the largest in Europe — which has been occupied by Russia since the early days of the war.
The NABU investigation into Energoatom shocked Ukraine as cash-strapped energy companies have struggled to buy equipment after devastating strikes plunged the country into blackouts. It also took down more some of Zelensky’s key allies in one fell swoop and eroded trust in his administration.
One of those allies is Halushchekno, who worked at Energoatom for years before heading the Energy Ministry in 2021 until July 2025. He maintained close ties with the company, lobbied nuclear interests, and appointed his own people within the company, who helped facilitate the scheme, people who spoke to the Kyiv Independent for this article say.
Desperate to do some damage control after the corruption scandal broke, Zelensky pressured Halushchenko to step down from his position as justice minister and announced a full reset of Ukraine's state-owned companies, including Energoatom. The nuclear firm’s supervisory board was expelled, and a new competition to find members by the end of the year is underway with help from foreign partners.
"It is critical how Zelensky deals with this scandal. He has to deal with it as a systemic problem, not just an isolated case," Viesturs Liegis, managing partner at Amrop, a supervisory board consultant that works with Ukrainian state-enterprises, told the Kyiv Independent.
Reforms? No thanks
Energoatom slipped through the gaps of corporate governance reforms to tackle corruption introduced after the 2014 EuroMaidan Revolution. Supervisory boards were implemented to monitor and manage the big state players. But unlike its counterparts, Energoatom never established a fully functional supervisory board.
For some companies like Ukrenergo, the state-owned grid operator, reforms were critical for EU integration in order to switch to European specifications. But since Brussels doesn’t have a policy for nuclear energy, Energoatom’s reforms weren’t a major priority for Kyiv or its partners, Olena Pavlenko, president of DiXi Group, an energy think tank, told the Kyiv Independent.
With little oversight, Energoatom’s problems were left unchecked. One glaring issue was the infestation of pro-Russian officials, Shevchuk said.
The leadership, like ex-Energoatom chief and current Russian senator Andrii Derkach, named in the NABU investigation, had close ties with Russia’s nuclear sector as the two countries worked closely together for decades, she added. They pushed back against efforts to drag Energoatom towards Europe and away from Moscow.
Energoatom also hid behind an opaque procurement system, allowing it to price-gouge, justifying the lack of transparency by calling nuclear energy a sensitive security issue, Pavlenko said.
Not all schemes went unpunished. In one high-profile arrest from 2017, former Ukrainian MP Mykola Martynenko was detained for embezzling 6.4 million euros ($7.3 million) from Energoatom. He and his group made sure that Skoda, an engineering firm, won tenders for equipment in exchange for kickbacks, according to Ukraine's High Anti-Corruption Court.
As a result of its toxic reputation, foreign financial institutions like the European Bank for Reconstruction and Development (EBRD) reconsidered their cooperation with Energoatom. The bank voiced its issues with the company to the government, its president, Odile Renaud-Basso, told reporters in Kyiv on Nov. 20, but apparently to little avail.
Wartime exploitation
The outbreak of Russia’s 2022 invasion created the perfect storm for corruption to accelerate at Energoatom. With the Russians threatening a Chernobyl-level disaster after occupying the Zaporizhzhia plant, Kyiv and its allies reoriented their focus to nuclear safety. Anti-corruption reforms were put on the back burner.
International financial institutions, which had once been very involved in corporate governance oversight, began to play a less active role, said Liegis. They refrained from publicly criticizing the government, likely because they didn’t want to harm its reputation during the war, he added.
"It seemed the Energy Ministry was determined to avoid appointing someone who understands finances."
In 2023, Energoatom launched a competition for its supervisory board. But, the Energy Ministry, under Halushchenko, was able to drag out the process "to prevent the new system from actually working," Ukraine’s business ombudsman, Roman Waschuk, told the Kyiv Independent.
Energoatom eventually formed a full five-person supervisory board in June 2024, with three independent experts and two state-appointed representatives. But the Energy Ministry held back on signing the board members’ contracts until late 2024, meaning the board never reached operational capability. The first meeting was delayed until January 2025.
By that time, one board member, Timothy Stone, the only one with both a financial and nuclear background, refused to sign his contract due to the holdup.
"From my perspective, it seemed the Energy Ministry was determined to avoid appointing someone who understands finances," said Liegis.
Simultaneously, Energoatom’s profits outperformed its war-ravaged counterparts. It benefited from steadily increasing electricity tariffs, which Kyiv introduced to raise money for war-ravaged energy companies, while avoiding costly Russian strikes.
The need for defensive structures around Energoatom's infrastructure, like substations and lines connecting plants to the grid, as well as damage from attacks, also presented the company with an opportunity.
As Russian drones wrecked energy infrastructure, companies began seeking contractors for repairs and defensive fortifications. Halushchenko and his cronies were able to exploit these wartime contracts, charging contractors 10–15% kickbacks on deals, according to the NABU investigation.
Without a working supervisory board, there was no corporate oversight to catch the scheme. As a result, defensive fortifications were delayed, helping push Ukraine to the brink of an all-out energy crisis.
The NABU investigation has put pressure on the government and foreign partners to focus again on Ukraine’s corporate governance, said Liegis. But while Zelensky’s sweeping reforms of state enterprises will try to win back trust, Energoatom will likely remain a pariah for the near future.
"If there is a cleaning of the procurement processes, an anti-corruption action plan, a proper compliance office, and they establish the integrity of the management team, and if there is a project that is commercially viable within our policies, then we will consider working with Energoatom again," EBRD Vice President Matteo Patrone told the Kyiv Independent on Nov. 20.
A note from the author:
Hi, this is Dominic. I know hearing about corruption in Ukraine is frustrating, and it makes my blood boil when writing about it. But sadly, this is the reality of the whole world, not just Ukraine. I made a commitment when joining the Kyiv Independent over two years ago to write the truth, no matter how difficult it is, which is why I will keep bringing you stories like this. If you can, then please sign up as a member to help us report the facts. Thank you!
