Ukraine says it has discovered massive fraud in arms purchases

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(Reuters) – Ukraine’s SBU security service announced on Saturday that it had uncovered a corruption scheme in connection with the purchase of weapons by the Ukrainian army, worth a total of around $40 million.

The announcement of a massive procurement fraud, confirmed by the Ukrainian Defense Ministry, will have enormous resonance in a country besieged by the Russian invasion for almost two years.

Combating endemic corruption remains a major problem as Ukraine continues its bid to join the European Union.

The SBU said an investigation had “unmasked Defense Ministry officials and executives of the arms supplier Lviv Arsenal, who stole almost 1.5 billion hryvnias when purchasing shells.”

“According to the investigation, current and former senior officials of the Ministry of Defense and executives of affiliated companies are involved in the embezzlement.”

The diversion, according to the statement, involved the purchase of 100,000 mortar shells for the army.

The SBU said a contract for the shells was concluded with the Lviv Arsenal in August 2022 – six months after the start of the war – and that payment was made in advance, with part of the funds being transferred abroad.

But no weapons were ever provided, the statement said, with part of the funds then transferred to other accounts abroad.

The statement said five people had received “notifications of suspicion” – the first step in a Ukrainian legal process – from both the ministry and the arms supplier. A suspect, according to the press release, was arrested while trying to cross the Ukrainian border.

Corruption within the military is a particularly sensitive issue in Ukraine, as the country attempts to maintain wartime public morale and present its case for EU membership at 27.

Defense Minister Oleksii Reznikov was fired last September for various corruption cases, even though he enjoyed a solid reputation as Ukraine’s representative in its discussions with its Western allies.

Although he is not suspected of having personally engaged in acts of corruption, several cases hit the army under his leadership, one for the supply of troops with food, another for the purchase of appropriate clothing for the military.

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

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