Ukraine’s Defence Scandal: Embezzlement, Procurement Fraud, and the Battle Against Corruption

In a shocking revelation, Ukrainian officials have been implicated in a massive embezzlement scheme, diverting approximately $40 million earmarked for the purchase of ammunition for the military. The country’s internal security service, the Security Service of Ukraine (SBU), disclosed this disconcerting development on Saturday, confirming a significant procurement fraud that has broader implications for Ukraine’s international standing, especially with its supporters in Washington and Brussels.

Ukraine’s Defence Scandal Unveiled

While the embezzled funds were derived from state coffers, not foreign aid, the scandal underscores the persistent challenge of corruption in Ukraine. The country has been at the forefront of a conflict with Russia for nearly two years, and allegations of corruption have fuelled scepticism among detractors about providing continued financial and military assistance to Kyiv. Ukrainian officials, however, assert that they are taking robust measures to combat corruption and ensure transparency in their defence procurement processes.

Ex-defence minister accused of corruption

The SBU’s investigation points fingers at current and former high-ranking Defence Ministry officials and managers of Lviv Arsenal, an arms supplier entrusted with utilizing the funds to acquire 100,000 mortar shells for the military. The money was advanced to Lviv Arsenal in August 2022, but the contracted shells never materialized. According to the SBU statement, the funds were transferred to a foreign commercial structure purportedly responsible for delivering the ordered ammunition to Ukraine. However, not a single artillery shell reached the country, and the money was clandestinely funneled to the accounts of an affiliated structure in the Balkans.

Transparency Under Scrutiny

The SBU has taken decisive action, seizing the stolen funds and working towards their return to the Ukrainian budget. The fraud occurred during the tenure of former defence minister Oleksii Reznikov, who faced allegations of corruption related to inflated purchases of food and jackets for the military. Although Reznikov was not personally implicated in the embezzlement case, he was ousted last year amid a cloud of corruption allegations. A defence official familiar with the matter revealed that the ministry filed a criminal report about the stolen $40 million in May 2023, following the non-delivery of the shells. Ukrainska Pravda, a Ukrainian news outlet, had previously reported many details about the case in July.

Ukraine

Five individuals from the Defence Ministry and Lviv Arsenal have received “notices of suspicion,” marking the initial stage in Ukrainian legal proceedings. The SBU disclosed that one suspect has been detained while attempting to cross the Ukrainian border, and those involved could face up to 12 years in prison. Among the accused are prominent figures such as Oleksandr Liev, the former head of the Department of Military-Technical Policy, Development of Weapons and Military Equipment at the Ministry of Defence; Toomas Nakhkur, the current head of the same department; and Yuriy Zbitnev, the head of Lviv Arsenal, who is a former member of Ukraine’s parliament and a presidential candidate in 2004.

Oleksii Reznikov’s Tenure

Rustem Umerov, Reznikov’s successor as defence minister, has vowed to prioritize the eradication of corruption within the defence establishment. In a Facebook statement, Umerov emphasized the ministry’s commitment to cleansing the system from unscrupulous participants, both inside and outside the institution. He acknowledged the resistance encountered in this effort but expressed determination to overcome it.

This latest corruption scandal couldn’t have surfaced at a more critical time. The White House’s request for an additional $60 billion related to the ongoing war in Ukraine has encountered obstacles in Congress. Lawmakers opposing further aid to Ukraine have called for increased oversight, questioning the appropriate utilization of U.S. funds. Since Russia’s invasion of Ukraine in February 2022, the United States has committed at least $44 billion in security assistance. The scandal underscores the need for stringent oversight to ensure that financial support is directed toward the intended purposes.

Ukraine’s Anti-Corruption Battle

Corruption is a deeply sensitive issue in Ukraine, where citizens often have personal connections to military personnel and frequently contribute their own funds to support the purchase of weapons and other necessities for soldiers. Anticorruption activists view the announcement of impending criminal action against the alleged perpetrators as a positive step in reforming the defence ministry. Vitaliy Shabunin, the director of operations for the Anti-Corruption Action Center in Kyiv, characterized it as another significant blow to the corrupt and incompetent military ‘deep state’ that has undermined the country’s defence capability for decades.

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Shabunin expressed cautious optimism, noting that the battle against corruption within the military is far from over but praising Umerov’s team for their efforts. He highlighted the ongoing fight against the entrenched deep state and emphasized the importance of continued vigilance in upholding transparency and accountability within Ukraine’s defence establishment.

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