Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

8 mins

На русском языке: Госзакупки. Как департамент финансов и тыла МВД закупает автомобили
На беларускай мове: Дзяржзакупкі. Як дэпартамент фінансаў і тылу МУС закупляе аўтамабілі

The editors of motolko.help looked at how the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars (special, patrol, for the transportation of convicts and persons in custody) through electronic auctions. In the period from February 2020 to February 2021, 6 electronic auctions were held for the purchase of 9 lots for a total estimated amount of more than 5 million BYN.

Diagram № 1 presents the estimated costs (hereinafter all the amounts are indicated in BYN), the actual cost, the number of lots won, depending on the winner of the auction.

Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

As can be seen from The Diagram №1, the winners were 4 companies: the most victories and earned budget money from LLC ParadAuto (4 pcs) and LLC PraktikServis (3 pcs).

Comparing the difference between the estimated costs (the cost determined on the basis of the analysis of market conditions) and the actual cost (the winning rate according to the results of the auction), we can draw the following conclusion: budget money are saved by LLC ParadAvto most of all. But cooperation with LLC DM-Leasing and LLC Plant of automobile trailers and bodies «MAZ-Kupava» is completely unprofitable for the state.

Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

The greatest difference between the estimated and actual costs according to the results of the auction belongs to the company ParadAvto. This indicates the presence of competition in the auction with its participation, and hence its honesty. Conversely, with a minimum difference between the estimated and actual costs of products, there’s no need in talking about competition — this is typical for LLC Plant of Automobile Trailers and Bodies «MAZ-Kupava» and LLC DM-Leasing.

The competitive difference (shown in Diagram №3) shows the product of indicative values by the market multiplier, which in turn is the arithmetic mean of the differences between the indicative and actual values in percentages.

Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

The connection between the estimated costs and the competitive difference is directly disproportionate: the greater the first, the greater the second.

Diagram №4 compares the actual values of the products (i.e. the winning bid in the auction), the actual values in the competitive environment, and the difference between the two values.

Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

The actual cost in a competitive environment was calculated as the difference between the estimated cost and the competitive difference (Diagram №3).

Public procurement. How the Department of Finance and Logistics of the Ministry of Internal Affairs buys cars

Diagram №5 presents the dependence of the values of budget loss, which was calculated both between the actual cost and the actual cost in a competitive environment, as well as the percentage of the occupied market, which, in turn, was calculated as the ratio of the estimated cost to the sum of all estimated values from the winner of the auction.

So, what does this mean in plain language?

In the conditions of competition, suppliers on average are ready to reduce the estimated cost at auction by 2.52%. However, the company LLC Plant of automobile trailers and bodies «MAZ-Kupava» won the auction, reducing the estimated cost of the lot by only 0.1%. It is clear that in conditions of fair competition, its victory would be impossible.

At the same time, if «MAZ-Kupava» Automobile Trailers and Bodies Plant LLC honestly participated in the auction, it would sell its goods not at a price of 928,550 BYN, but at a price of 908,274 BYN. 20,000 BYN would remain in the budget and could go to something more important than the profit of LLC Plant of Automobile Trailers and Bodies «MAZ-Kupava».

We can see a vivid example of how the lack of competition at auctions wastes budget funds.

Who and how is enriched during the procurement of the Ministry of Internal Affairs?

Let’s learn a little more about the winners of the auction and start with the company LLC Plant of automobile trailers and bodies «MAZ-Kupava».

The participants of LLC Plant of automobile trailers and bodies «MAZ-Kupava» are OJSC JSCB PRIORBANK (7.63%) and OJSC Minsk Automobile Plant — the management company of the holding BELAVTOMAZ (92.37%). Their ultimate beneficiaries are the state and the Austrian company. In this regard, it is difficult to find out any connection between the company’s participants and the customer of the auction. However, a number of names, including current and former leaders, are of interest.

Vitaly Yakubov (currently the director of the enterprise) is a deputy of the Minsk City Council of Deputies of the 28th convocation in the Zavodsky district of Minsk, the Golodedovsky constituency №6.

Companies LLC DM-LEASING and LLC ParadAvto are not manufacturers of any cars, but only dealers. Both companies, according to the legal documentation, have the code of the type of activity according to OKED 45111 (Wholesale of cars and light trucks). Directly manufacturers of vehicles are:

  • LLC ParadAvto company’s manufacturer is LLC RUSAVTOPROM;
  • LLC DM-LEASING company’s manufacturer is LLC Automobile Constructions.

The companies LLC ParadAvto and LLC RUSAVTOPROM are owned by Igor Kushnersky and his wife Larisa Kushnerskaya. Igor Kushnersky, according to the rating of the Belarusian «Yezhednevnik», was in the top 200 most successful businessmen of Belarus in 2013. His assets include: KM-Group, holding company, Eurocad, investments in office real estate and logistics in Minsk and Vitebsk; Rusavtoprom, distribution of vehicles of Russian plants, dealer network in Belarus, ParadAuto, distribution of Great Wall cars; ProfitMarket, distribution of food group goods and household chemicals in the Borisov region. Larisa Kushnerskaya until 2019 was the founder of the Russian company LLC AVTOTECHKOMPLEKT, located in the city of Dzerzhinsk, Nizhny Novgorod region.

The same LLC AVTOTECHKOMPLEKT was one of the owners of LLC ParadAvto in 2006-2007. The current head of LLC ParadAvto is Alexander Zaharchenko, concurrently the Deputy Chairman of the Board of the FC BATE.

The former founder of LLC RUSAVTOPROM is Irina Pestova, who is currently listed as the contact person of LLC ProfitMarket (Kushnersky’s company located in Borisov). We recall that LLC ParadAvto and LLC RUSAVTOPROM are also located in Borisov.

The company LLC DM-LEASING is located at the address: Minsk, Melezha Str., 5-2. At the same address is located LLC Midivisana, which, like the organizations mentioned above, is engaged in the production of special purpose vehicles «Lyubava». The general director is Dmitry Mishuto, who in 2017-2018 was a shareholder of DM-LEASING LLC and is currently a shareholder of Automobile Constructions LLC (36% of shares). Another former shareholder of LLC DM-LEASING Stanislav Mishuto was presented to the medal «For Impeccable Service» of the I degree (number 95). His daughter Natalya Mishuto is a shareholder of LLC Automobile Constructions (10% of shares).

What unites these citizens? That’s right, proximity to the regime. As you can see, the heads of enterprises have an administrative resource, or, more simply, links. Obviously, it is the links that allow the Ministry of Internal Affairs to win public procurement without any problems, such as, for example, fair market competition. After all, without close ties at the very top, it is impossible to do business with law enforcement agencies in today’s Belarus.

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