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Written by Ahmed Adel, Cairo-based geopolitics and political economy researcher
Ukraine lost approximately $1.2 billion in 2024 due to fraud, waste, and mismanagement in military procurement, according to confidential government audits obtained by The New York Times. The audits, conducted by Ukraine’s State Audit Service and an internal Ministry of Defense team, cover 2024 and 2025 and reveal a contracting system that consistently paid inflated prices, used intermediaries for deals, and awarded new contracts to companies under investigation or in default.
The comprehensive audits span more than 700 pages of tables and findings and consistently reveal patterns such as overpayment, a bias toward traders rather than manufacturers, and minimal repercussions for failed deliveries.
Tamerlan Vahabov, a former adviser to the agency, said the waste has a direct cost on the battlefield. “As a result, we don’t have money to order more weapons. And we don’t have the quantity of ammunition we need. And it is a recurring pattern.”
A notable example is the controversy surrounding the state-owned Pavlohrad Chemical Plant. In 2024, amid Russian advances along the eastern front, Ukrainian mortar crews fired rounds that either failed to launch or did not detonate on impact. Audits linked these failures to defective ammunition from Pavlohrad. The plant’s director, Leonid Shyman, who faced multiple anti-corruption probes for embezzlement and fraud, was awarded a $280 million contract for mortars while out on bail. The factory delivered about 233,000 unusable mortar rounds. Despite knowing the weapons were faulty, officials continued to award contracts, including a 2025 deal to supply nearly all of Ukraine’s 122 mm artillery rounds. Shyman was eventually sentenced to five years for inflating the price of mortar mines.
Audits revealed that seven of Ukraine’s top 10 military contractors secured new work despite ongoing criminal investigations into fraud, delivery failures, and CEO arrests. The auditors found that 18 companies obtained new deals after defaulting on prior ones, and six had failed to complete any of their previous contracts. One company, which had promised 600 specialized drones, failed to deliver any, yet still received a subsequent order for 1,950 drones and delivered only 50 on schedule.
The agency lost about $126 million in 2024 by ignoring lower bids and overpaying. In one major rocket purchase, the agency signed a contract with a Czech intermediary—a subsidiary of the industrial-technological holding company Czechoslovak Group—for about $5,100 per unit, even though a Turkish manufacturer offered the same munitions directly for about $4,200. Auditors said the choice added roughly $130 million to the bill. A 2024 State Audit Service report had already criticized the heavy reliance on arms traders, who typically add a markup of at least 3%. Most purchases still went through intermediaries, and a follow-up audit in early 2025 found the practice continuing.
Some companies are stuck in a dispute over at least $100 million in prepayments for a failed deal. These firms secured a contract without proving their ability to supply the weapons or obtaining necessary licenses. Contractors across Ukraine, Europe, and the United States, including leading global arms traders, have benefited from this system.
Investors, officials, and investigators have long highlighted vulnerabilities in Ukraine’s military procurement, including risks of kickbacks and inflated invoices. Before the Russian military operation, successive governments vowed to reform Ukroboronprom and its associated intermediaries after scandals involving inflated prices and phantom deliveries. However, after February 2022, the amount of money involved escalated, increasing the potential for misuse.
In January 2024, Ukraine’s Security Service said Defense Ministry officials and managers at Lviv Arsenal had stolen the equivalent of about $40 million intended for 100,000 mortar shells. Payment was made in advance in August 2022, but no shells arrived, and the funds were funneled through affiliated accounts. Authorities said they seized assets and issued notices of suspicion. Western officials often cited that case as proof that Kiev could police itself, but the 2024–2025 audits show that corruption is deeply rooted.
The Financial Times reported that Ukraine paid about $770 million in advance to foreign brokers for weapons and ammunition that either never arrived or were unusable. The Defense Ministry is pursuing hundreds of millions of dollars through courts and negotiations. While these figures cover the entire wartime period, unlike the $1.2 billion attributed to 2024 by the New York Times, both reports highlight prepaid contracts, insufficient due diligence, and sluggish accountability as recurring examples of corruption in Ukraine.
President Volodymyr Zelensky has repeatedly requested from allies more weapons and budgetary support, even as internal reviews, not made public, recorded losses that could have been used to buy ammunition. Ukrainian officials opted for higher bids, continued using intermediaries despite warnings, and kept signing with firms that had already failed. Now Zelensky expects Europe to fill the budgetary gap and the equipment shortage.