KYIV, Ukraine — Internal government audits have revealed extensive fraud, waste, and mismanagement within Ukraine’s defense procurement system during the ongoing conflict with Russia. Despite multiple investigations and criminal charges against top military contractors, Ukrainian authorities have continued to award contracts to companies under suspicion, resulting in significant financial losses and concerns over the quality of weapons supplied to the armed forces.
In 2024, Ukrainian artillery units received thousands of faulty mortar rounds that repeatedly failed to function properly on the battlefield. The responsible manufacturer, Pavlohrad Chemical Plant, a state-owned facility led by factory director Leonid Shyman, was found to have delivered 233,000 defective mortars with flawed fuses or powder. Shyman, who had been investigated for fraud and embezzlement prior to the contract award, was arrested in April 2025 and charged with $68 million worth of fraud related to the mortar deal. He was sentenced last month to five years in prison on a separate corruption case involving overpriced explosives but denies wrongdoing regarding the mortars and plans to appeal.
Auditors observed that despite clear warning signs, including the factory’s initial claim that it lacked production capacity and subsequent unexplained assurances, the government did not conduct proper verification before awarding the contract. Moreover, the Ministry of Defense continued granting Pavlohrad further contracts throughout 2024 and 2025, including supplying nearly all of the military’s 122-millimeter artillery rounds. The procurement agency failed to act decisively in response to the defective deliveries, exacerbating the problem.
Government reviews covering 2024 and 2025 estimate that Ukraine lost approximately $1.2 billion due to procurement-related fraud, overpayments, and non-delivery of arms. One notable example involved the purchase of rocket artillery, where the Defense Procurement Agency awarded a contract to a Czech subsidiary of the Czechoslovak Group at a substantially higher price, bypassing lower bids—including a direct offer from the Turkish manufacturer Arca Defense. This choice added an estimated $130 million in unnecessary costs, raising questions about procurement decision-making and oversight.
The Czechoslovak Group, which benefited from this contract, has since grown into a major global defense player, with its majority owner, Michal Strnad, appearing on global billionaire lists following the company’s recent public offering.
Efforts to reform Ukraine’s defense procurement system have faced resistance. Former Defense Minister Mykhailo Fedorov attributed his removal partly to pushback from entrenched contractors, describing pervasive corruption within the industry. President Volodymyr Zelensky has acknowledged problems in the system but has yet to enact comprehensive reforms. Corruption investigations have extended into the president’s circle, including a recorded incident involving a former business partner linked to faulty armored vest contracts; however, Zelensky has denied any personal involvement and expressed support for ongoing probes.
The Defense Procurement Agency’s director, Arsen Zhumadilov, resigned in August amid mounting scrutiny. It remains unclear what measures, if any, the agency will implement in response to audit findings, which remain classified and have not been subject to public review.
Experts warn that corruption in Ukraine’s military supply chain undermines the country’s defense capability by reducing the quantity and quality of weapons available to front-line forces. As Ukraine continues to request international arms and financial support, these procurement challenges highlight ongoing vulnerabilities within its war effort.