Space Scandal. The Contract with the American Company FireFly Led to the Dismissal of the Head of the Ukrainian Space Agency

The Cabinet of Ministers of Ukraine fired the head of the State Space Agency Pavel Degtyarenko. The ground for dismissal was the scandal at the Yuzhny Machine-Building Plant named after A.M. Makarov, or PA Yuzhmash, in the city of Dnipro.

Yuzhmash is a key enterprise in the space industry of Ukraine. The plant produces launch vehicles and satellites for various purposes. Due to military activities in the east of Ukraine, more than 50% of the enterprise’s capacities are idle. In recent years, the plant has been operating at a loss, and the total debt of Yuzhmash today is more than $15 million.

Yuzhmash CEO Sergey Voyt tried to go back into production and pay off a debt. In 2019, Yuzhmash began cooperation with the American company FireFly Aerospace that works with NASA and the US Air Force. Two years ago, the space startup was acquired by Max Polyakov (born in Ukraine), and soon he opened a company branch in Dnipro.

In October, FireFly Aerospace placed an order for Yuzhmash for mass production of rocket components, including 100 combustion chambers, 500 automation units, and 40 turbopumps. The total contract value is estimated at $15 million.

The information about the contract was released on October 21. And a week later, on October 30, the head of the State Space Agency, which manages the plant, signed an order to dismiss Sergey Voyt from the CEO position at the Yuzhny Machine-Building Plant. Considering the successful contract of the enterprise with the American company, the decision caused a commotion among experts and in the media community. The very next day, Pavel Degtyarenko cancelled the order to dismiss Voyt. However, the behaviour of the head of the space agency sparked interest from the Cabinet of Ministers of Ukraine.

According to our sources in the Ukrainian government, there was a corruption scheme between Pavel Degtyarenko and the senior staff of Yuzhnoye Design Office represented by Alexander Degtyarev. This enterprise creates space systems and owns all the space technologies of the country.

For a long time, Degtyarenko was working at Yuzhnoye Design Office and in 2017 he headed the State Space Agency of Ukraine using the office management connection. After taking the position, he lobbied for the interests of the design office. In particular, for a long time, the senior staff of Yuzhnoye Design Office had tried to gain control of the Yuzhmash plant. While the enterprise was idle and its debt was increasing, they had taken only limited steps towards this goal. In addition, the CEO of Yuzhmash Sergey Voyt actively opposed the transfer of plant control to the design office.

After the publication of the information about the $15 million contract with Firefly, Degtyarenko and Degtyarev decided to speed up the process and as soon as possible change the CEO of the Yuzhmash Machine-Building Plant to their protege. The scheme was exposed, and a few days later the Cabinet of Ministers of Ukraine decided to dismiss Degtyarenko.