Economic crimes in Russia caused nearly $4 billion in losses between January and November 2025, with the defense industry among the sectors hardest hit.
Six months ago, Moscow made an example of Deputy Defense Minister Timur Ivanov: 13 years in prison, assets seized, vintage car collection confiscated. The highest-profile corruption conviction since the invasion began. The message was clear: the Kremlin was serious about military graft.
The show trial changed nothing.
The new data from Ukraine’s Foreign Intelligence Service (SZRU) says otherwise. Losses grew even as case numbers stayed flat—meaning each scheme extracted more than before. The show trial changed nothing.
Stealing from the war machine
Seven in ten economic crimes recorded in 2025 fell into Russia’s “grave” or “especially grave” categories, according to SZRU. Not petty bribery. Systematic theft. The worst-affected sectors: construction, utilities, and the military-industrial complex.
Russia plans to spend $183 billion on defense and security in 2026—nearly 40% of federal expenditures. Billions lost to internal theft don’t buy ammunition. Embezzled construction funds don’t build barracks. The war machine leaks from within.
Alexei Navalny’s Anti-Corruption Foundation found his wife’s bills were paid by a company contracted to rebuild occupied Mariupol.
Ivanov embodied the pattern. As deputy defense minister from 2016 to 2024, he oversaw military construction while accumulating real estate and a car collection that outraged even Moscow insiders.
An investigation by Alexei Navalny’s Anti-Corruption Foundation found his wife’s bills were paid by a company contracted to rebuild occupied Mariupol—a city Russia destroyed, then used for propaganda photo-ops while pocketing reconstruction funds.
The scapegoat
The Kremlin’s anti-corruption campaign produced headlines. Ivanov arrested. Defense Minister Sergei Shoigu—Ivanov’s longtime patron—shuffled to the Security Council. Generals and procurement officials prosecuted.
UK intelligence assessed in late 2024 that Russian authorities weren’t trying to eliminate corruption—just “limit corruption to more manageable levels” that wouldn’t cripple military operations.
Remove one Ivanov, and the system produces another.
The 2025 data suggests that even that modest goal is failing.
SZRU’s analysis highlights a structural trap: corruption tends to concentrate around large cash flows controlled by the state. Officials face greater risk from refusing to participate than from getting caught. Remove one Ivanov, and the system produces another.
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Even allies see the rot
For Ukraine, the pattern offers cold comfort. Corruption degrades Russian military capacity—equipment exists on paper but not in practice, supply chains break down, the gap between stated strength and actual strength widens. But the theft hasn’t stopped Russian offensives. At least, not yet.
For investors—including “friendly” states—the data signals a system that eats its own. China has already declined Moscow’s requests for macroeconomic support.
The number of registered businesses in Russia fell to 3.17 million by September 2025—the lowest since 2010, with more companies dying than being born.
Russia enters 2026 fighting on three fronts: Ukraine, Western sanctions, and the officials running its own war economy. The Ivanov verdict was supposed to signal a turning point.
Nearly $4 billion in stolen funds says it wasn’t.
