Ukraine says it uncovers mass fraud in weapons procurement

(Reuters) – Ukraine’s SBU security service said on Saturday it had uncovered a corruption scheme in the purchase of arms by the country’s military totalling the equivalent of about $40 million.

The announcement of mass procurement fraud, confirmed by Ukraine’s Defence Ministry, will have a huge resonance in a country beleaguered by Russia’s nearly two-year-old invasion.

The fight to root out endemic corruption remains a major issue as Ukraine presses its bid to secure membership in the European Union.

The SBU said an investigation had “exposed officials of the Ministry of Defence and managers of arms supplier Lviv Arsenal, who stole nearly 1.5 billion hryvnias in the purchase of shells.”

“According to the investigation, former and current high-ranking officials of the Ministry of Defence and heads of affiliated companies are involved in the embezzlement.”

The embezzlement, it said, involved the purchase of 100,000 mortar shells for the military.

The SBU said a contract for the shells was clinched with Lviv Arsenal in August 2022 – six months into the war – and payment was made in advance, with some funds transferred abroad.

But no arms were ever provided, the statement said, with some funds then moved to other foreign accounts.

The statement said five individuals had been served “notices of suspicion” – the first stage in Ukrainian legal proceedings – both in the ministry and the arms supplier. One suspect, it said, was detained while trying to cross the Ukrainian border.

Corruption within the military has been a particularly sensitive issue in Ukraine as it tries to maintain wartime public morale and present its case to join the 27-nation EU.

Defence Minister Oleksii Reznikov was dismissed last September over various corruption cases despite enjoying a solid reputation in representing Ukraine in its discussions with Western allies.

Although he was not alleged to have engaged personally in corruption, several cases hit the military under his stewardship, one for supplying troops with food, another over procuring suitable clothing for servicemen.

(Reporting by Ron Popeski and Maria Starkova; Editing by Andrea Ricci)