Ukraine lost $1.2 billion in 2024 to defense procurement fraud, audit finds
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Ukraine lost about $1.2 billion in 2024 to fraud, waste, and mismanagement in defense procurement, according to an audit obtained by The New York Times. The Defense Procurement Agency was examined by the State Audit Service and the Defense Ministry's internal audit unit. The findings had not been previously released.
Key Facts
- Ukraine lost about $1.2 billion in 2024 to fraud, waste, and mismanagement in defense procurement, according to an audit obtained by The New York Times.
- Seven of Ukraine's ten largest military contractors received new orders despite open criminal cases for fraud, failure to fulfill prior agreements, or arrested executives on corruption charges.
- Auditors identified 18 companies that received new contracts despite failing to fulfill previous ones; six of those companies had not completed a single contract.
- About $126 million was lost because cheaper offers were rejected and more expensive bids were accepted.
- The Pavlograd Chemical Plant delivered thousands of unusable artillery mines in 2024, yet the Defense Procurement Agency continued signing contracts worth hundreds of millions of dollars with the plant after its director became a suspect in a corruption case.
Audit Findings
The New York Times obtained the results of a state audit of defense procurement for the Ukrainian army covering 2024-2025. The Defense Procurement Agency was examined by the State Audit Service and the Defense Ministry's internal audit unit. The audit found that Ukraine lost about $1.2 billion in 2024 alone to fraud, waste, and inefficient management in defense procurement. The findings had not been previously released.
Contractor Failures
Seven of Ukraine's ten largest military contractors received new orders despite open criminal cases for fraud, failure to fulfill prior agreements, or arrested executives on corruption charges. In 2024, the Pavlograd Chemical Plant delivered thousands of unusable artillery mines to the military. The Defense Procurement Agency continued signing contracts worth hundreds of millions of dollars with the plant after its director, Leonid Shiman, became a suspect in a corruption case. Auditors identified 18 companies that received new contracts despite failing to fulfill previous ones; six of those companies had not completed a single contract. One company failed to deliver any of the promised 600 specialized drones, then received a new contract for 1,950 more drones and delivered only 50 of them on time.
Financial Losses
About $126 million was lost because cheaper offers were rejected and more expensive bids were accepted. Contracts were concluded without sufficient legal grounds. In one case, companies are still disputing the fate of at least $100 million in advance payments for a failed deal.
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