Ukraine uncovers major fraud in ammo procurement

The suspects tried to steal almost $40 million meant for mortar shells, the Security Service of Ukraine (SBU) has said

The Security Service of Ukraine (SBU) has said it uncovered a major embezzlement scheme in ammunition procurement involving high-ranking Defense Ministry officials and a private arms manufacturer.

The five suspects tried to steal 1.5 billion hryvnia (around $39.6 million) in state funds intended for acquiring mortar shells for the Ukrainian troops, who are fighting Russia, the SBU said in a statement on Saturday.

According to the agency, the company Lviv Arsenal, based in the western Ukrainian city of Lviv, had received an order from the Defense Ministry to provide a batch of 100,000 rounds in August 2022, half a year after the outbreak of the conflict between Moscow and Kiev.

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Lviv Arsenal received the total sum stipulated in the contract and transferred part of the funds to a foreign firm that was supposed to supply the rounds to the Ukrainian military.

However, that firm “didn’t send a single mortar shell to our country” but instead put the money in the accounts of an affiliated company “based in the Balkans,” the SBU said.

The rest of the sum still remains in Lviv Arsenal’s accounts in a Kiev-based bank, it added. The agency also published photos, which appear to show searches at the suspects’ homes.

Those believed to have been involved in the scheme include the former head of the Ukrainian Defense Ministry’s Department of Military and Technical Policy, Development of Armaments, and Military Equipment, Aleksandr Liiev, the department’s current head, Toomas Nakhur, as well as the founder and CEO of Lviv Arsenal, Yury Zbitnev, the SBU said.

According to the agency, one of the men had been detained by its operatives while attempting to cross the border out of Ukraine.
Facing fraud charges, the suspects face up to 12 years in prison and confiscation of property, it added.

On Friday, an appeals court in Kiev upheld a lower court decision to recover the 1.5 billion hryvnias from Lviv Arsenal in favor of the Defense Ministry over the firm not fulfilling the contract.

The Armed Forces of Ukraine and the Defense Ministry have been plagued by corruption amid the conflict with Russia. In September, Ukrainian Defense Minister Aleksey Reznikov was dismissed from his post over graft allegations. His successor, Rustem Umerov, announced earlier this month that a probe he had initiated revealed $262 million in theft-related costs in weapons procurement.

READ MORE: Ukrainians refusing to fight for ‘corrupt government’ – WaPo

There have also been reports by RT and many other outlets of arms supplied to Kiev by the US and the EU being sold on the black market.