Ukraine Uncovers Embezzlement Ring Involving Defense Ministry Officials

Published: 30 January 2024

Ukraine SBU EmbezzlementUkraine's authorities inform the suspects of the investigation. (Photo: Служба безпеки України, License)

By Zdravko Ljubas

Ukrainian investigators have accused current and former high-ranking officials of the Ministry of Defense as well as employees of an arms supplier company of embezzling nearly US$40 million designated for the purchase of mortar rounds the country needs to fight off Russia's aggression.

One of the five suspects was arrested as he tried to leave the country. Precautionary measures were implemented against the other four, Ukraine’s Security Service (SBU) said in a statement on Friday.

The SBU stated that the suspects have been notified of the charges for which they could end up in prison for up to 12 years.

“The suspects sought to misappropriate approximately 1.5 billion Ukrainian hryvnias ($39.68 million) designated for acquiring 100,000 mortar rounds for the Ukrainian Armed Forces. In August 2022, authorities entered into a contract for the bulk procurement of artillery shells with the supplier – Lviv Arsenal,” read the statement.

The Defense Ministry had transferred the full amount to the company and upon receiving the funds, the management of Lviv Arsenal purportedly transferred a portion of the money to a foreign commercial entity tasked with ammunition delivery.

At the same time, another portion of the funds was redirected to the accounts of an associated entity in the Balkans, with the remainder retained in the bank account of the Ukrainian company, as reported by the SBU.

Earlier last week, before the SBU released its statement on the investigation, Ukraine’s Defense Ministry announced that a court in Kyiv had ordered Lviv Arsenal to reimburse more than 1.5 billion hryvnias ($39.68 million) to the ministry.

“On January 24, 2024, the Northern Commercial Court of Appeal affirmed the decision of the Kyiv Commercial Court dated September 26, 2023, which ordered Lviv Arsenal LLC to pay the Ministry of Defense 1,340,465,698 hryvnias ($35.40 million) as an advance payment, 90,683,623.06 hryvnias ($2.39 million) in penalties, and a 96,734,638 hryvnias ($2.55 million) fine for the non-delivery of paid ammunition,” the ministry said Thursday in a statement.

It stated that the decision has become legally binding and is now subject to enforcement.