“Ukrainian troops bleed because of faulty shells” as military corruption costs the country $1.6 billion

Ukraine lost $1.2 billion in 2024 through fraud and other abuses tied to military procurement, according to government audit records cited by The New York Times. The losses emerged as the country continued its war with Russia, while companies accused of corruption or unable to fulfill earlier contracts still secured new defense deals.

Seven of Ukraine’s 10 largest defense suppliers reportedly won new business despite facing public fraud investigations or having chief executives arrested on corruption allegations. Some companies secured contracts without proving they could supply the weapons or without holding the licenses required for delivery. Authorities also identified 18 companies that obtained contracts despite failing to complete earlier ones. Six of them had not fulfilled a single contract.

At the state-owned Pavlograd Chemical Plant, the military bought 233,000 mortar shells that could not be used because of defects in their propellant charges or fuses. Some shells reportedly fell in Ukrainian positions instead of reaching enemy lines. Plant director Leonid Shiman had faced repeated investigations for alleged embezzlement and fraud, yet the government awarded the plant a $280 million contract while he remained free on bail in a corruption case. Ukraine’s Defense Procurement Agency continued signing additional contracts even after learning that defective weapons were being delivered.

Although Pavlograd acknowledged that it lacked the capacity to fulfill government orders, the agency awarded it another contract to supply almost all of the military’s 122mm shells in 2025. Ukrainian media exposed the arrangement, prompting a parliamentary investigation. Police arrested Shiman in April 2025 and charged him with allegedly defrauding the state of about $68 million, the estimated cost of inspecting and replacing tens of thousands of defective mortar shells. Arsen Zhumadilov, who led the procurement agency when the contract was arranged, resigned in August.

Another 2024 tender for rocket artillery weapons selected the highest bid. Three companies offered the same rockets made by Turkey’s Arca Defense, at prices ranging from $4,200 to $5,100 each. Despite Arca Defense offering a direct deal at the lowest price, a subsidiary of Czech arms broker Czechoslovak Group won the contract with the $5,100 bid, costing Ukraine about $130 million extra. Czechoslovak Group later grew into a global defense company, with more than 40% of its 2024 sales linked to Ukraine. Other procurement failures included a canceled plan to buy Soviet-style rockets from Serbia through state broker SpetsTechnoExport, which lacked a Serbian export license and had a record of failing to perform contracts. Former Defense Minister Mykhailo Fedorov said defense companies had pushed him out after he tried to reform the procurement system. Investigators also obtained a recording allegedly showing President Volodymyr Zelenskyy’s former business partner urging officials to buy body armor that had not passed safety inspections. He later fled Ukraine during the investigation.