Billions on the Target List: Defense Corruption and District Heating as Ukraine's Communal Serfdom

I wrote about this in the article "War Strikes at Monopolies: Why Decentralization Has Become Ukraine's Only Survival Strategy". But physical vulnerability is only half the diagnosis. The other half is worse: concentration breeds not only targets for the occupiers, it breeds corruption. Because you can only steal where the money is gathered in one place and distributed from one office. The two most vivid illustrations of this law today are the defense industry and centralized district heating.

Billions That Smell

Let us see what happened to the drone money the moment it was concentrated. In 2023, the State Special Communications Service received 30 billion hryvnias to purchase drones for the Defense Forces. The result is known: in the autumn of 2025, NABU and SAP announced they had uncovered a large-scale scheme in which officials of the service, together with private companies, arranged drone deliveries at inflated prices. Victory for the "right" firms at tenders was secured by controlled companies that simulated competition, while the prices were justified with distorted marketing studies. In parallel, detectives were counting the embezzlement of over 90 million hryvnias on purchases of Mavic and Autel alone, that is, on the simplest mass-produced Chinese drones whose price is known to every volunteer. The Bureau of Economic Security, meanwhile, exposed a supply network for bomber drones in which components were run through shell intermediaries with a markup of two to three times.

And now about the architecture inside which all of this became possible. The "Army of Drones" program is the flagship project of Minister of Digital Transformation Mykhailo Fedorov. The fundraising platform United24, from which the program was financed, operates under his curatorship as well. Procurement ran through the State Special Communications Service, an agency that institutionally sat in the orbit of the Ministry of Digital Transformation, and through that same procurement department the government later channeled another 48 billion hryvnias to continue the program. In other words, one person simultaneously shaped state policy for the industry, managed a public fundraising operation, oversaw the procurement agency, and publicly promoted specific manufacturers as the face of the program. I am not a court and I accuse no one of anything: whether this construction contains a crime is for the High Anti-Corruption Court to decide. But as a journalist I am obliged to call this construction by its proper name: it is institutionalized lobbying of manufacturers' interests, built into the state vertical. Which is why from here on I operate exclusively with the dates of official procedural decisions. On November 20, 2023, NABU and SAP announced a notice of suspicion to the then head of the State Special Communications Service, Yurii Shchyhol, and his deputy in a case concerning 62 million hryvnias in software procurement; on November 23, 2023, the High Anti-Corruption Court remanded Shchyhol in custody with an alternative of 25 million hryvnias bail, the bail was posted, and the case has reached the stage of awaiting a verdict. In October 2024, journalists at Hromadske calculated that on Autel drones, which the State Special Communications Service was buying at nearly 500 thousand hryvnias apiece while a charitable foundation was getting identical ones for 212 thousand, the state overpaid roughly 600 million hryvnias; Fedorov himself stated that he learned of the inflated prices in September 2023, after which the Ministry of Digital Transformation turned to NABU. The Bureau opened a criminal proceeding in January 2024, yet notices of suspicion in it appeared only on October 28, 2025. On May 29, 2026, NABU detectives conducted searches at the State Border Guard Service as well: once again drone procurement, once again "creating conditions for obtaining unlawful benefit." In parallel, the State Bureau of Investigation is pursuing a proceeding on the possible artificial inflation of the cost of drones delivered to a state customer in 2025. These are not accusations. This is a chronology, and it speaks for itself: everywhere drone money was concentrated in a single vertical, detectives followed.

Note the common denominator of all these cases. Not one of them would have been possible in the garage model of 2022-2023. You cannot cartelize ten thousand workshops. You cannot "distort a marketing study" where the price is known to everyone who has soldered a circuit board himself. You cannot mark up components threefold where they are bought by hundreds of independent teams that instantly compare receipts. Corruption is a tax on concentration. First the market is consolidated "for the sake of scaling," then the consolidated cash flow becomes the prey of those who consolidated it, and then the consolidated production becomes the prey of Russian ballistics. The missile and the prosecutor hunt at the same address; the missile simply gets there first.

The Monster in the Pipes: Communal Serfdom by Law

The second monster is older and so familiar that we have stopped noticing it. Centralized district heating is a Soviet system that citizens were never offered as a choice. It was imposed together with the panel high-rise: the combined heat and power plant produces electricity, the "waste" heat has to go somewhere, so the city is chained to the pipe. Thus millions of people became lifelong subscribers to a system in which they choose neither the supplier, nor the temperature, nor the price, nor even the date the heating season begins. This is communal serfdom in the most precise sense of the word: you are shackled to the pipe by the fact of being born in this building.

And here is what is telling: escaping this serfdom is legally prohibited. The law "On Housing and Communal Services" allows an individual apartment to be disconnected from centralized heating only in buildings where, on the day the law came into force, at least half the apartments had already been disconnected. In all other buildings, only the entire building at once, by decision of the co-owners, through a commission at the local self-government body. The relevant ministerial order directly codifies the ban on disconnecting apartment by apartment, by entrance, or by riser. Unauthorized disconnection does not release you from payment: courts refuse to recognize even physically dismantled radiators as proof that the service was not provided. Think about it: a person has cut off the radiators, heats the home at his own expense, yet by law continues paying the monopolist for heat he does not receive. In what other industry is such luxury possible: a client who is forbidden to leave?

The answer to the question "who benefits" is obvious from the arithmetic. Centralized heat is a guaranteed cash flow that depends neither on quality nor on competition: tariffs, budget subsidies, compensation for "tariff differences," debt restructurings. Ukrainians already owe 113 billion hryvnias for utilities, there are 830 thousand enforcement proceedings in the debtors' registry, and these debts too are an asset against which the monopolists extract new budget injections. For decades, quite specific financial-industrial groups sat on this flow: suffice it to recall that the capital's heating networks were until 2018 under the management of the private company Kyivenergo, and the city spent years reclaiming its own heating infrastructure. The pipes, meanwhile, are worn out, a significant share of the heat warms the soil on its way to the apartments, and the subscriber pays for this heating of the earth as well. In Denmark, which the lobbyists of "centralized heat" love to cite, district heating systems belong to consumer cooperatives and municipalities, operate on a non-profit principle, and compete with individual solutions. In Ukraine the same technology has been turned into serfdom: not a service one chooses, but an obligation one is not allowed to flee.

Now overlay the war onto this. Every combined heat and power plant, every district boiler house, every trunk collector is a point where a single strike takes hundreds of thousands of people hostage at once. Ukraine saw this scenario even before the full-scale war: in January 2006, one accident on a heating main froze the entire city of Alchevsk, and the country spent weeks watching neighborhoods being evacuated. Russia has turned that accident into a military technology: it does not need to hit every home, it is enough to hit the pipe to which all the homes are chained by law. Centralized heating under missile war conditions is not a service. It is hostage-taking, formalized by a regulatory act.

One Principle for Two Monsters

The defense monopoly and the heating monopoly are the same mechanism in two costumes. In both cases, concentration was justified by efficiency, "scale," "manageability." In both cases, the concentrated flow of money immediately grew over with schemes, intermediaries, and the right surnames among the beneficiaries. In both cases, the concentrated infrastructure became an ideal target for Russia. And in both cases, state policy consists not in dismantling the vulnerable model but in preserving it: the defense giants will be compensated and given larger state orders, the heating monopolies will have their debts written off and receive funds for new networks with new vulnerable nodes. And to the people who simply want to get out from under the strike - to assemble a drone in a workshop or install a heat pump instead of a radiator - the state answers with regulations, exclusion, and a direct legislative ban on escape.

Because millions of free producers and millions of free consumers generate no rent. Rent is generated only by the pipe and by the registry of large taxpayers. And that is exactly where the missiles arrive.