"Prisons need rethinking." What's happening with privatized prisons?

The privatization of correctional facilities in Ukraine, which began in 2020, is ongoing. The then-Minister of Justice, Denis Malyuska, along with the State Property Fund (SPFU), announced the "Big Prison Privatization" initiative. The idea was to sell outdated correctional facilities that the state no longer uses, or uses partially. In total, they planned to sell 100 of the 183 prisons then existing in Ukraine.

In the end, in 2021, the State Property Fund managed to sell one prison in Lviv, although the Minister of Justice had announced four auctions. Three years later, they managed to sell another one in Uman. Over the next few months, the agency plans to hold two more auctions.

LIGA.net I spoke with the new owners of privatized colonies to find out what they are doing with the property they acquired, and also made a request to the State Property Fund to obtain information about which colonies will be put up for auction this year.

About "Shuvar", SoftServe, and the convicts' revolt

In 2019, Malyuska stated that the decision to sell prison infrastructure was made to obtain additional funding for improving conditions for prisoners. According to him, the budget did not include funds for improvements. One source of additional funding was the privatization of facilities that were not being used or were underutilized.

The first to be sold was the men's correctional colony No. 48 in Lviv, which was closed in 2018 after a riot by convicts.

The prison territory was divided into two plots. The larger one has an area of 10.7 hectares, and the smaller one is 0.9 hectares.

The 0.9-hectare plot was purchased by the family of businessman Roman Fedyshyn. He is the founder of the large agricultural market "Shuvar". This is a well-known wholesale market in Lviv, located in the Sykhiv district of Lviv, just like the 48th colony.

The Fedyshyn company bought part of the colony for 30 million hryvnias, while the initial price was 7.5 million.

However, four years after the auction, "Shuvar" still hasn't started work on the territory of the former colony. This was confirmed in a comment. LIGA.net Ivan Fedyshyn, the company's director, refused to disclose the reasons for this.

In the State Land Registry, the land's designated category still indicates that it is land for industry, transport, communication, energy, etc. The same category is assigned to the Lukyanivskyi Pre-trial Detention Center in Kyiv. Land type: for placement and operation of main, auxiliary, and ancillary buildings and structures of processing, machine-building, and other industrial enterprises.

The larger part, ten hectares, was purchased by the company "Development Engineering Service", which belongs to IT businessman Taras Kytsem and his company SoftServe, for 377.5 million hryvnias. The starting price of the lot was 132.5 million hryvnias.

SoftServe planned to build the company's office campus on the territory of the colony. reported then co-founder and board member of SoftServe, Oleh Denis. Currently, the project is in the rethinking stage, they reported. LIGA.net in the company's press service.

However, SoftServe has already managed to change the category and intended purpose of the land. Currently, it belongs to residential and public development, according to the State Land Cadastre. The intended purpose also includes the construction of housing, trade, entertainment and market infrastructure.

Developers from Uman are still thinking.

In the autumn of 2024, the state managed to sell the Uman colony No. 29. At the auction itself, the company "Dairy Global Expert" won, offering 28 million hryvnias for the colony, but later refused to purchase it. The company's director, Oleksandr Valebnyy, commented... LIGA.net said that the reason was the high price, which the company could not afford to pay.

The auction was won by the second bidder, the construction company "Bud Capital Group". They offered 10 million hryvnias for the colony. The founders of the company are local businessmen Ivan Gunchenko, Roman Usatyuk, and Volodymyr Tkachenko.

In 2024, Bud Capital Group's profit amounted to 34.35 million UAH, which is 2.7 times more than in the previous year, according to YouControl data. In 2024, the company actively participated in public procurement. According to YouControl, Bud Capital Group received 24.59 million UAH last year for completed government orders.

LIGA.net I managed to reach the co-owner of the company, Roman Usatyuk. According to him, there are currently no plans for this plot of land. Its fate will be decided with other partners, and, in general, it is a trade secret.

The state land register indicates that the land plot is designated for military formations (formations of the State Criminal Executive Service – ed.) and their activities. In order to build anything not related to military formations, it will be necessary to change the intended purpose of the land.

What else does the state plan to sell?

In the next few months, the State Property Fund plans to sell two more correctional facilities. These are "Irpin Correctional Center No. 132" and "Southern Correctional Colony No. 51" in Odesa. Both were unsuccessfully attempted to be sold in 2021.

The "Irpin Correctional Center" is located right in the center of the urban-type settlement of Kotsiubynske, a satellite city of Kyiv, while the "Southern Correctional Colony" is not far from the Black Sea coast.

The Irpin colony will be put up for sale this year. According to the press service of the State Property Fund, the Ministry of Justice will decide its fate. The decision will concern whether it will be divided into two plots. If divided, they will be sold at two separate auctions, as was the case with the Lviv colony four years ago.

The timing of the sale of the correctional colony in Odesa is still unknown: it may be sold in 2025 or 2026.