Ukraine Accuses Senior Defense Official of Embezzling $40 Million

The Ukrainian police have arrested a senior Defense Ministry official on suspicions that he embezzled nearly $40 million as part of a fraudulent purchase of artillery shells for Ukraine’s military.

The Ukrainian authorities have been working to clean up the ministry since reports of graft and financial mismanagement led to the removal in September of the minister at the time. Ukraine’s security service announced the arrest of the senior official, whose name was not released, on Friday.

President Volodymyr Zelensky of Ukraine has also made tackling corruption one of his key wartime goals, not only to reassure Ukraine’s Western allies that their billions of dollars in aid are not being siphoned off, but also to ensure an efficient allocation of resources as the country’s military runs short on weapons and ammunition in its fight to fend off Russia’s forces.

Ukrainian soldiers and commanders have said in recent days that their dearth of artillery shells has led them to scale back some military operations and has weakened Ukraine’s ability to withstand relentless Russian attacks.

“We can no longer move forward when we have nothing left to shoot,” Yehor Chernev, the deputy chairman of the Ukrainian Parliament’s committee on national security, defense and intelligence, said in an interview on Friday.

In the case announced on Friday, Ukrainian prosecutors said in a statement that the Defense Ministry official had developed a system to buy artillery shells at inflated prices.

In December 2022, they said, the official signed an agreement with a manufacturer for the purchase of a batch of artillery shells. The contract was later abandoned when a procurement agency recently created by the ministry struck a new deal with the same manufacturer that reduced costs by 30 percent and significantly shortened delivery time by eliminating a foreign intermediary.

But prosecutors say that the official nonetheless extended the previous contract and transferred nearly 1.5 billion Ukrainian hryvnias, about $40 million, to the foreign intermediary company. The Ukrainian authorities said that the shells had not yet been delivered and that the ministry was working to recover the money.

A pretrial investigation has been opened against the official, who has been removed from his duties, according to Ukraine’s security service. If convicted, he could face up to 15 years in prison.

This is not the first corruption scandal to affect Ukraine during the war. Last winter, two Defense Ministry officials were arrested over reports of the purchase of overpriced eggs for the army.

Faced with mounting pressure to deal with the misspending, Mr. Zelensky replaced his defense minister, Oleksii Reznikov, in September, although Mr. Reznikov was not personally implicated in the accusations of mismanaged contracts. The Ukrainian president also fired the heads of military recruitment offices in August amid accusations that some had taken bribes from people seeking to avoid military service.

So far, the revelations of mismanagement have not directly affected the foreign military and financial aid sent to Ukraine. But they have fueled arguments of some American lawmakers who have balked at sustaining assistance for Ukraine and demanded tight accountability for every delivery. Congress declined again this past week to pass a $50 billion security package for Ukraine, pushing back negotiations to next year.

Ukrainian officials maintain that their persistence in pursuing investigations into accusations of mismanagement and embezzlement shows their willingness to tackle corruption, even in the difficult circumstances of war.

“This is an extremely important case where anticorruption mechanisms, the Ministry of Defense, worked,” Illarion Pavliuk, a ministry spokesman, said on national television.

Tackling corruption has also become a crucial issue as Ukraine moves forward with its application to join the European Union. The bloc’s leaders officially opened accession negotiations this month, and they have stressed the need to pursue efforts to strengthen anticorruption mechanisms.

Fighting corruption was one of seven criteria that the European Commission outlined last year as a prerequisite to opening accession negotiations, which could last a decade or more. In its latest assessment of Ukraine’s progress, the commission said that Kyiv should “continue building a credible track record of investigations, prosecutions and final court decisions in high-level corruption cases.”

On taking office in September, Ukraine’s new defense minister, Rustem Umerov, told the country’s Parliament that there would be “zero tolerance for corruption” in his administration.

“Every stolen hryvnia costs the life and safety of our soldiers,” he said.