Contracts were awarded to unreliable suppliers despite criminal proceedings and inflated prices
In 2024, Ukraine suffered losses of approximately $1.2 billion due to ineffective management and fraudulent schemes in weapon procurement. According to secret government audit results, the Defence Procurement Agency continued to cooperate with subjects of criminal investigations. This was reported by Economichna Pravda citing New York Times, according to the portal PromPolitInform.
Analysis of government reports from 2024 and 2025 points to systemic problems in the field of defence orders. Despite existing evidence of corruption, failure to meet obligations, or arrests of executives, the specialized agency systematically signed new contracts with problematic contractors.
One example was cooperation with the Pavlohrad Chemical Plant, which supplied the army with defective shells. After the arrest of director Leonid Shyman on corruption charges, the state signed another agreement with the enterprise for $280 million while the executive was out on bail.
Investigators found that seven of the ten largest defence manufacturers received orders while having open criminal proceedings. In total, 18 companies were identified that signed contracts without appropriate licences or following repeated cases of failed prior deliveries.
Overpayments due to intermediary schemes
Specific audit findings concern opaque tenders where advantageous offers from direct manufacturers were ignored. In the case of procuring rocket artillery, government funds were directed to the Czech company Czechoslovak Group, although the Turkish plant Arca Defense offered similar products significantly cheaper.
The intermediary markup in this deal amounted to approximately $130 million. Auditors were unable to find any documentary justification for the overpayment, as direct contracts allow for avoiding such costs.
Another episode involves an attempt to purchase Soviet-style missiles via a Serbian intermediary, as direct cooperation with Serbia is complicated by political factors. The contract with the state-owned enterprise Spetstechnoexport collapsed after the intervention of Defence Minister Rustem Umerov, who demanded direct negotiations with the American supplier Regulus.
The state is currently attempting to recover penalties from Spetstechnoexport for breach of obligations. At the same time, the systemic lack of consequences for price gouging or failure to meet delivery deadlines remains a key obstacle to the effective use of budget funds for defence.
Photo: Economichna Pravda
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