A number of systemic problems, large-scale irregularities and clandestine schemes involving the misappropriation of public funds have been uncovered in the financial operations of the state-owned enterprise ‘Forests of Ukraine’. These findings are the result of audit procedures that have now been completed by the auditors.
This was reported by the State Audit Service of Ukraine.
Key challenges facing the sector
The most widespread form of malpractice in the forestry sector turned out to be the outsourcing of work. In 2025 alone, contracts worth around 10 billion hryvnias were signed with contractors.
The problem lies not in the fact that contracts are awarded, but in who the foresters entrust with carrying out forestry work and to whom they pay huge sums of money. The auditors were simply unable to locate a number of companies at their registered addresses.
Some contractors simply lacked the official resources to carry out the work they had undertaken to do. For example, despite not having enough staff, the successful bidders reported that they had planted millions of trees or harvested tens of thousands of cubic metres of timber.
The problem is probably systemic
State auditors suspect that similar schemes are also being used by lower-level forestry enterprises, particularly those controlled by local authorities. The basis for these suspicions is the single regulatory framework applicable to all forest users.
The auditors will therefore not stop at auditing the central state-owned enterprise. The plan is to carry out audits and inspections of regional municipal agroforestry enterprises. It is estimated that they utilise 20 per cent of the total area of all Ukrainian forests.
The key issue the State Audit Service wants to establish is whether the funds generated from the use of forests are reaching the local communities.
"The main aim of these measures is to prevent the use of shady schemes at local level, to ensure the preservation of forest resources and to ensure that the funds (dividends) generated from the use of forest resources are paid in full to the relevant local authority budgets," said Alla Basalaeva, head of the State Audit Service.
Journalists had previously investigated who receives contracts from the state-owned enterprise ‘Forests of Ukraine’. Among them are a number of shell companies, as well as firms linked to the relatives of forestry officials.
EcoPolitic also reported that insiders had claimed a scheme was being prepared under which they planned to collect $50 million in cash every month.
In 2025 alone, crimes committed by officials in the forestry sector cost the state 546 million hryvnias. At the same time, ‘Forests of Ukraine’ continues to pay fines running into the millions due to the inefficiency of foresters, which leads to illegal logging.
