Ukraine reveals $40mn mortar shells fraud scheme
The Security Service of Ukraine (SBU) has announced the uncovering of a major embezzlement scheme involving high-ranking Defense Ministry officials and a private arms manufacturer.
Five suspects attempted to steal 1.5 billion hryvnia (around $39.6 million) in state funds intended for acquiring mortar shells for Ukrainian troops fighting Russia, the SBU alleged in a statement on Saturday.
According to the agency, the company Lviv Arsenal, based in the western Ukrainian city of Lviv, had received an order from the Defense Ministry to provide a batch of 100,000 rounds in August 2022, six months after the outbreak of the conflict between Moscow and Kiev.
Lviv Arsenal took payment of the total sum stipulated in the contract and transferred part of the funds to a foreign firm that was supposed to supply the rounds to the Ukrainian military.
However, that firm “didn’t send a single mortar shell to our country” but instead put the money in the accounts of an affiliated company “based in the Balkans,” the SBU said.
The rest of the sum still remains in Lviv Arsenal’s accounts in a Kiev-based bank, it added. The agency also published photos, which it alleged show searches at the suspects’ homes.
Those believed to have been involved in the scheme include the former head of the Ukrainian Defense Ministry’s Department of Military and Technical Policy, Development of Armaments, and Military Equipment, Aleksandr Liiev, the department’s current head, Toomas Nakhur, as well as the founder and CEO of Lviv Arsenal, Yury Zbitnev, the SBU said.
According to the agency, one of the men had been detained by its operatives while attempting to cross the border out of Ukraine.
Facing fraud charges, the suspects face up to 12 years in prison and confiscation of property, it added.
On Friday, an appeals court in Kiev upheld a lower court decision to recover the 1.5 billion hryvnias from Lviv Arsenal in favor of the Defense Ministry due to the firm not fulfilling the contract.
The Armed Forces of Ukraine and the Defense Ministry have been plagued by corruption amid the conflict with Russia. In September, Ukrainian Defense Minister Aleksey Reznikov was dismissed from his post over graft allegations. His successor, Rustem Umerov, announced earlier this month that a probe he had initiated revealed $262 million in theft-related costs in weapons procurement.
Multiple media outlets, including RT, have also reported that arms supplied to Kiev by the US and the EU have been sold on the black market.
