New York Times Investigation Shakes Kyiv: $1.2 Billion in Defense Funds Lost to Fraud

Ukraine’s defense procurement system reportedly lost about $1.2 billion in 2024 through fraud, waste and poor administration, according to confidential government audits obtained by The New York Times. The findings arrive as Kyiv continues to rely on substantial resources to sustain its war against Russia.

The documents describe warning signs that officials allegedly ignored. Contracts continued to go to suppliers facing problems, and the army did not always receive the equipment and ammunition for which the state had paid. Seven of Ukraine’s 10 largest military contractors reportedly secured new contracts despite criminal investigations, failures to carry out earlier agreements, or the arrest of company directors on corruption charges.

Auditors identified 18 companies that signed new agreements after failing to meet their previous contractual obligations. Six of those companies had not completed even one contract. In another case, about $126 million was reportedly lost after cheaper offers were disregarded and the state paid higher prices for weapons. Auditors also found contracts awarded without the required legal justification. Separately, companies involved in a failed transaction are disputing responsibility for at least $100 million paid in advance.

The audits cover 2024 and 2025. Because they are classified, they had not previously undergone public scrutiny.

One of the most serious cases involves the state-owned Pavlohrad Chemical Plant and its director, Leonid Shyman. Ukrainian soldiers began reporting problems with mortar ammunition in 2024. Some rounds failed to work properly or fell without exploding. Police later arrested Shyman in a fraud case valued at about $68 million, covering the cost of inspecting and replacing the defective ammunition.

Court documents cited in the investigation reportedly show that the company supplied the army with 233,000 unusable mortar rounds, many with defective fuses or propellant charges. The plant initially said it lacked the capacity to fulfill the order, then changed its assessment. Auditors found no evidence that authorities verified whether the supplier could actually perform the contract. Despite the ammunition problems, the company later received further orders, including one for almost all of the 122 mm artillery shells the army needed in 2025.