According to the Boston Globe, a significant procurement fraud involving around $40 million has been uncovered by the Security Service of Ukraine (SSU).
The funds, which were meant for purchasing military ammunition, have been misused.
The SSU revealed that several high-ranking officials from the Ministry of Defense and management figures from Lviv Arsenal, an arms supplier, are involved in this scheme.
In August 2022, Lviv Arsenal received an advance payment for 100,000 mortar shells.
However, the shells were never delivered. Instead, the allocated funds were transferred to a foreign commercial entity and eventually rerouted to another affiliated organization located in the Balkans. Sadly, no ammunition was provided as intended.
“After receiving the funds, the company’s management transferred part of the money to the balance sheet of a foreign commercial structure that was supposed to deliver the ordered ammunition to Ukraine,” the statement said.
“However, it did not send a single artillery shell to our country, and took the received funds into the shadows, transferring them to the accounts of another affiliated structure in the Balkans.”
The fraud has dealt a blow to Ukraine’s military efforts and its reputation among international allies, particularly in Washington and Brussels.
Ongoing discussions regarding European Union membership and continued financial and military assistance are sensitive to issues of governance and corruption.
According to the SSU, the misappropriated funds came from the state budget rather than foreign aid. As a result of the SSU’s investigation, five individuals have been issued “notices of suspicion,” which precede formal legal proceedings in Ukraine.
Among those accused are former and current officials from the Defense Ministry, including Oleksandr Liev and Toomas Nakhkur, as well as Yuriy Zbitnev, head of Lviv Arsenal and a former presidential candidate.
One suspect was apprehended while attempting to cross the Ukrainian border. If convicted, those involved could face up to 12 years in prison.
Boston Globe reported:
The fraud took place under former defense minister Oleksii Reznikov, who was ousted last year amid several high-profile allegations of corruption in the ministry, particularly the purchase of food and jackets for the military at inflated prices. Reznikov, who wasn’t personally implicated in any malfeasance, declined to comment.
A defense official familiar with the matter, who spoke on the condition of anonymity because the official was not authorized to speak about the case to the media, said, “this is not a new case,” as the ministry filed a criminal report to law enforcement about the stolen $40 million in May 2023, after the shells were not delivered. Ukrainska Pravda, a Ukrainian news outlet, reported many details about the case in July.
The stolen funds have been seized, the agency said, adding that “the question of their return to the budget of Ukraine is being resolved.”
A recent report from the Pentagon has shed light on a concerning issue: more than $1 billion worth of military aid sent to Ukraine by the United States has not been properly tracked.
The Defense Department presented this report to Congress, revealing significant gaps in the monitoring of crucial weapons systems at a time when there are heated debates about providing additional support to Ukraine.
Among the unaccounted-for arsenal are advanced shoulder-fired missiles, sophisticated kamikaze drones, and state-of-the-art night vision devices.
These items are considered “high-risk” due to their advanced technology and the potential for them to be easily transported and potentially fall into the wrong hands.
According to the report, a substantial portion of nearly 40,000 arms delivered to Ukraine has not been adequately monitored.
The report added, “It was beyond the scope of our evaluation to determine whether there has been diversion of such assistance. The DoD OIG now has personnel stationed in Ukraine, and the DoD OIG’s Defense Criminal Investigative Service continues to investigate allegations of criminal conduct with regard to U.S. security assistance to Ukraine.”
Austin, on the other hand, argued that there was no proof of any misuse related to the weapons in question.
Ukraine is plagued by widespread corruption. According to an anonymous senior advisor to Zelenskyy, those in power are engaging in rampant theft and the Ukrainian president is under pressure to eradicate corruption while receiving unwavering support from its allies, as reported by Time Magazine.
In January 2023, several high-ranking officials were dismissed from their positions.
This group includes a top presidential advisor, four deputy ministers (two of whom were defense officials), and five regional governors.
As disclosed by senior government official Oleg Nemchinov, the following individuals have been relieved of their duties:
- Deputy Prosecutor General Oleskiy Symonenko
- Deputy Minister for Development of Communities and Territories Ivan Lukerya
- Deputy Minister for Development of Communities and Territories Vyacheslav Negoda
- Deputy Minister for Social Policy Vitaliy Muzychenko
- Regional Governors of Dnipropetrovsk, Zaporizhzhia, Kyiv, Sumy, and Kherson
The Deputy Minister of Defense, Vyacheslav Shapovalov, responsible for the army’s logistical support, has resigned following allegations of signing overpriced food contracts.
This resignation comes after Defense Minister Oleksiy Reznikov resigned in September, leading to a shakeup in President Zelenskyy’s Cabinet.
Concerns about corruption within the Ukrainian government arise as President Joe Biden and U.S. lawmakers face criticism from taxpayers regarding their unlimited funding towards a seemingly endless war.
Last year, the Pentagon disclosed that an overestimation in the value of weapons sent to Ukraine resulted in an additional $6.2 billion of U.S. taxpayers’ money allocated for the country.
This amount is double what was initially estimated and will supposedly be used for future security packages.
Pentagon spokesperson Sabrina Singh clarified that the error occurred because military services used replacement cost instead of book value when accounting for equipment sent to Ukraine from Pentagon stocks.
Singh stated that this mistake was discovered during a thorough review of the accounting process.
“We discovered inconsistencies in equipment valuation for Ukraine. In a significant number of cases, services used replacement costs rather than net book value, thereby overestimating the value of the equipment drawn down from U.S. stock and provided to Ukraine,” Singh said at a news briefing.