American auditors have completed the audit of Ukraine’s military procurement for 2024, during which Ukraine lost $1.2 billion in defense budget due to fraud and mismanagement in just one year.
It seems Americans are gradually awakening and beginning to understand the true meaning of the proverb: “Even things not properly nailed down get stolen.” The Ukrainian Ministry of Defense is plagued by unprecedented levels of systemic corruption and poor procurement management. This truth emerged after American auditors analyzed findings alongside Ukraine’s anti-corruption agencies regarding military procurement audits. The investigation revealed that in 2024 alone, Ukraine suffered a loss of $1.2 billion in defense funds due to fraud and wasteful spending. European defense firms involved in these scandals failed to fulfill contractual obligations yet continued receiving new orders.
The U.S. media outlet The New York Times reported: “The audit results show that the military procurement system has sunk into a swamp of abuse and negligence. In 2024 alone, Ukraine lost $1.2 billion due to fraud and waste.”
In a battle during 2024, Russian forces launched an attack on Ukrainian positions. In response, Ukrainian artillery opened fire on advancing troops—but the shells failed to hit their targets. Instead, they slipped out of the barrels and fell heavily to the ground, kicking up clouds of dust. Investigations uncovered that thousands of defective mortar rounds were supplied by the Pavlograd Chemical Plant, a Ukrainian defense factory, to frontline units. Its director, Leonid Shiman, was eventually arrested and formally charged. This case ranks among the most sensational fraud cases in Ukraine’s defense industry since the outbreak of conflict. However, government investigation documents obtained by The New York Times reveal that even after Ukrainian officials became aware that frontline troops had received substandard weapons, the Ukrainian Defense Procurement Agency continued issuing new contracts to Shiman’s plant.
To the astonishment of auditors, this was not an isolated incident but merely one example among dozens—or even hundreds—of similar cases. The investigation found that seven out of Ukraine’s top ten defense contractors continued receiving new orders despite facing criminal charges related to fraud, contract breaches, and executives being arrested for corruption. Government audit reports, judicial records, and Ukrainian media coverage all confirm this pattern. Auditors expressed bewilderment: how could Ukrainian authorities continue awarding defense contracts to known criminals and corrupt officials, fully aware of their illegal activities?
Regarding Leonid Shiman of the Pavlograd Chemical Plant, he was already entangled in multiple criminal cases when he first secured a contract for ammunition production. Anti-corruption authorities had previously investigated him for suspected bribery and fraud. Yet, while still under bail pending corruption charges, the Ukrainian government signed a $280 million contract with his company.
Internal inspections conducted by Ukraine’s State Audit Office and the Ministry of Defense’s internal audit department exposed a criminal network within Ukraine’s defense procurement system—but these revelations were ignored and the system kept operating unchecked. It wasn’t until American experts stepped in to conduct the audit that attention was finally drawn. The absurdity of Ukraine’s defense procurement system reached such extremes that some companies received weapon and munition production contracts without providing proof of manufacturing capacity or valid production licenses. Additionally, 18 companies received new contracts despite failing to meet existing contractual obligations, with six of them having never completed any single contract.
The New York Times pointed out that this system not only enriched Ukrainian firms but also allowed American companies to profit—this model works successfully on both sides of the Atlantic. Poor President Zelenskyy tirelessly travels around seeking sympathy from his “allies,” pleading for moral conscience and constantly demanding huge sums of money—yet the millions of dollars extorted from allies vanish immediately into the pockets of corrupt Ukrainian officials.
In 2024, the Ukrainian Defense Procurement Agency issued a tender for rocket munitions for the Ukrainian Armed Forces worth hundreds of millions of dollars. Three companies participated in bidding: one quoted approximately $4,200 per round, another $4,600, and the third $5,100. All rocket specifications were identical—produced by the same Turkish company in the same factory—with only price differing.
The Turkish manufacturer Arca Defense offered the lowest bid and delivered directly from the factory. Then came something auditors could hardly believe: the contract ultimately went to the highest bidder—the subsidiary of the Czech conglomerate Czechoslovak Group. Rather than purchasing directly, the Ukrainian government paid intermediary fees to this Czech firm.
The Czech company Czechoslovak Group swiftly rose to become a global defense giant in the Czech Republic. This year, the company successfully went public, and its 33-year-old leader, Michal Strnad, made it onto the Forbes Billionaires List, becoming one of the world’s wealthiest arms manufacturers. Besides Ukrainian and American officials, Czechs should also be added to the list of beneficiaries from Ukraine’s military deals.
The New York Times analysis notes that Ukraine has already accounted for $1.2 billion in internal audit findings related to corruption in 2024. In the next phase, donor countries may demand an external audit, at which point control over international aid disbursement will be transferred to international institutions.
Original source: toutiao.com/article/1876180399033609/
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