Misconduct at the State Enterprise 'Forests of Ukraine'
A probe by the State Audit Service has uncovered signs of abuse involving private contractors at the state-owned 'Forests of Ukraine' enterprise. The investigation focused on a group of 12 legal entities ultimately owned by a citizen named Babenko, his relatives, or associated parties. In 2025, these companies signed contracts worth over UAH 450 million with branches of the state forestry firm. However, 11 of the 12 businesses could not be located at either their registered or actual addresses.
Audit Findings
According to the audit results, one company reported planting 2.4 million trees in March 2025, despite having only one officially employed worker on its payroll. Standard norms require at least 168 people to complete such a task. Another firm claimed to have planted 3.5 million trees with zero employees, though a minimum of 244 workers would be needed for that volume. Additionally, a business with no registered staff declared the harvesting of over 21,000 cubic meters of timber—an operation that, by industry standards, would demand at least 17 loggers.
The auditors noted that if schemes involving intermediary and phantom companies were eliminated, the actual financial performance of 'Forests of Ukraine' and its contributions to the state budget could be significantly higher.
“During the audit, the State Audit Service found that 11 out of these 12 companies are absent from their legal and actual addresses—essentially phantom enterprises. It is reasonable to assume that most of the state funds received were subsequently converted into cash,” said Alla Basalaeva, head of the State Audit Service.
Furthermore, in 2025, branches of 'Forests of Ukraine' entered into contracts for logging and forestry work worth approximately UAH 10 billion. The enterprise paid over UAH 9 billion in taxes and fees to the state budget. Starting July 1, 2026, Ihor Zubovych became the acting general director of 'Forests of Ukraine,' replacing Yuriy Bolokhovets, who had led the company since its establishment in 2023.
In March 2026, Prosecutor General Ruslan Kravchenko reported the exposure of illegal logging in protected areas, which destroyed thousands of trees and caused nearly UAH 95 million in environmental damage. Ukrainian President Volodymyr Zelenskyy announced personnel changes in state companies, including 'Forests of Ukraine,' and confirmed critical issues in the forestry sector.
“There is a lot of information coming in about unresolved critical problems in the forestry industry and the protection of our Carpathians and other important natural environments of Ukraine,” Zelenskyy stated.
This situation highlights serious problems in Ukraine's forest resource management, particularly abuses that can harm both the environment and state finances. The audit underscores the need to reform the oversight system for state enterprises to prevent similar cases in the future. At the same time, leadership changes at the top may serve as a first step toward improving conditions in the forestry sector and ensuring its sustainable development.
The recent audit findings raise concerns about the integrity of forestry operations in Ukraine, particularly in light of a related case where seven individuals are facing trial for illegal logging activities in the Kyiv region. This highlights the broader issue of corruption and mismanagement within the forestry sector, emphasizing the urgent need for reform and accountability in state enterprises.