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Ukraine lost $1.2 billion in 2024 due to defense procurement fraud and mismanagement

Ukraine lost approximately $1.2 billion in 2024 due to fraud, embezzlement, and mismanagement within its defense procurement sector. Government audits for 2024 and 2025 revealed that the Defense Procurement Agency frequently awarded contracts to unreliable suppliers and ignored warning signs of overcharging or failed deliveries. Auditors identified 18 companies that received new contracts despite failing to previous obligations, including six that had not successfully completed a single contract. In one instance, the government paid a Czech subsidiary of the Czechoslovak Group to act as an intermediary for Turkish-made artillery rockets, despite the Turkish manufacturer, Arca Defense, offering the lower price. This decision added approximately $130 million to the cost of the rockets. Another significant case involved the Pavlohrad Chemical Plant, which supplied the military with thousands of defective mortar shells. The director, Leonid Shyman, was arrested and accused of fraud involving $68 million. Despite the known defects, the Defense Procurement Agency continued to award the plant new contracts, including an order for nearly all 122-mm artillery shells for 2025. Additionally, the government sued the state-owned company Spetstechnoexport for failing to fulfill contracts and lacking a Serbian export license for rockets. The company was eventually removed from the process by then-Defense Minister Rustem Umerov, who sought to eliminate intermediaries.

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