A massive embezzlement scheme at Ukraine’s Defense Ministry has been exposed in a joint operation by Ukraine’s Security Service (SBU) and top military leadership, SBU says. The agency says nearly UAH 1.5 billion (about $40 million) budgeted for 100,000 mortar shells was swindled by shady weapons contractors and complicit bureaucrats.
SBU notes the crime documentation was carried out with the full assistance of the incumbent Defense Minister, and the investigators found that former and current officials tasked with arms procurement conspired with executives of the major state-owned defense supplier Lviv Arsenal. The perpetrators set up a dodgy contract in August 2022 to purchase a huge batch of ammunition using Lviv Arsenal as a front company.
According to SBU, as soon as the full amount was transferred to Lviv Arsenal’s accounts based on the contract, its executives rerouted the money flows. Most of the funds ended up in the account of a foreign entity that was supposed to be the actual exporter of the ammo. However, not a single shell has reached the Ukrainian Army so far.
“That entity did not send any shells to Ukraine and withdrew the received funds into the shadows, transferring them to the accounts of another affiliated structure in the Balkans. The rest of the amount from the Defense Ministry remained on the accounts of the Ukrainian company in one of the capital’s banks,” SBU reported.
SBU says its officers documented the scheme of embezzlement of state funds and identified all persons involved in the scheme. As a result, five people have been notified of charges in the case including former and sitting procurement bosses at the Defense Ministry. The SBU security agency detained one suspect while trying to escape Ukraine. The rest await similar restrictive measures.
The defendants have been charged with part 5 of article 191 of Ukraine’s Criminal Code (misappropriation, embezzlement of property, or seizure of it through abuse of office, committed by an organized group).
“In particular, the notes of suspicion were received by the former and current heads of the Department of Military and Technical Policy, Development of Armaments and Military Equipment of the Ministry of Defense, the head and commercial director of Lviv Arsenal, as well as their accomplice, a representative of a foreign commercial structure,” SBU reported, adding that the suspects face up to 12 years in prison with confiscation of property.
The stolen funds have been arrested thanks to SBU’s actions, and the issue of their return to Ukraine’s budget is being resolved, the agency says.
Previously, Ukrainian journalists revealed that one of the Ukrainian defense contractors supplying food to Ukraine’s military inflated egg prices, and used profits to buy luxury hotels abroad.
Earlier, Ukraine’s National Anti-Corruption Bureau (NABU) also reported that Vasyl Lozynskyi, Deputy Minister of Infrastructure of Ukraine and former acting Minister of Development of Communities and Territories of Ukraine, was detained on 21 January 2023. The anti-graft agency suspects that he might have created an intricate embezzlement scheme that involved other Ukraine’s officials.
- Media: Supplier for Ukraine’s army acquires Croatian hotels
- Ukraine passes anti-corruption laws to advance EU integration
- Top Ukrainian officials resign in anti-corruption drive
- SBU Cybersecurity destroys Russian surveillance systems, a tank, artillery guns (video)