Audit reveals millions in violations: Institute of Biochemistry underfunded and overstated expenses

The Northern Office of the State Audit Service has completed an audit of the financial and economic activities of the O.V. Palladin Institute of Biochemistry, a part of the National Academy of Sciences of Ukraine. The audit results revealed violations in the amount exceeding 17 million hryvnias, which include signs of criminal acts.

In particular, during the period from 2021 to 2023, the Institute spent 5.1 million hryvnias from the state budget not on conducting applied research but on systematizing known information, which contradicts the institution’s primary objectives. An additional 624,000 hryvnias was spent on work that was not included in the approved thematic plans.

The audit also found that salaries and bonuses were paid to employees who did not formally participate in scientific projects, resulting in an unjustified overestimation of the cost of seven research works by 5.8 million hryvnias. It was found that the Institute overpaid 2 million hryvnias under contracts with employees involved in the issue.

The audit also examined how the Institute works with intellectual property objects. For example, the Institute was supposed to receive 6% under a license agreement with PrJSC “Technolog” for the drug “Metovitan”; however, the company reduced the accrual base and deducted marketing and advertising expenses that were not specified in the agreement. As a result, the Institute lost more than half a million hryvnias, while PrJSC “Technology” received an incorrect profit.

In addition, the audit revealed other financial violations of approximately 3 million hryvnias, including understated rental income, covering expenses of third-party legal entities from the budget, as well as overstated electricity costs and the writing off of fuel without proper documentation.

The audit materials were transferred to law enforcement agencies.