Russian-language outlet RBC-Ukraine, citing an investigation by The New York Times, reported that in 2024 alone Ukraine lost roughly $1.2 billion due to fraud, embezzlement, and mismanagement in the defense procurement sector. According to the outlet, these conclusions were reached through audits by the State Audit Service and the internal audit unit of the Ministry of Defense, as well as court documents that came into the NYT editors' possession. The American publication's article, titled "In Ukraine, Fraud and Embezzlement Are Rewarded With New Weapons Supply Contracts," documents a systemic problem: companies whose products failed to meet requirements or whose executives were detained on corruption charges continued to receive new state orders.
Scale of Losses According to Audits
Government audits covering 2024 and 2025 recorded that in 2024 alone the volume of losses amounted to approximately $1.2 billion. According to the NYT, these figures were not officially disclosed because the relevant documents are marked confidential. Auditors identified several mechanisms of loss: about $126 million was lost due to the rejection of cheaper offers and overpayment for weapons, and in one case companies are in litigation over a prepayment of at least $100 million under a contract that ultimately fell through. It was also established that 18 companies concluded new agreements without fulfilling previous ones, with six of them having failed to fulfill a single contract.
Pavlohrad Chemical Plant: A Case of Systemic Failure
One of the key examples cited by the NYT is the Pavlohrad Chemical Plant, which, according to court documents, sold 233,000 unfit mortar mines to Ukrainian military forces, some of which had problems with fuzes or propellant charges. The plant's director, Leonid Shiman, was detained in April 2025 and charged with fraud amounting to approximately $68 million; in August of the same year he was sentenced to five years in prison in a separate case involving the organization of a scheme to sell explosives at inflated prices. At the same time, as auditors note, officials were aware of the problems with the products, yet the Defense Procurement Agency (DPA) continued to conclude new contracts with the plant — in particular, the enterprise received orders to supply nearly all 122mm artillery shells for Ukrainian forces in 2025. According to audit data, seven of Ukraine's ten largest military contractors received new orders despite open criminal cases, unfulfilled previous contracts, or the arrest of executives on corruption charges.
Procurement Through Intermediaries: Missiles from Turkey and Serbia
The NYT devotes separate attention to the procurement of Turkish-made artillery missiles. In a 2024 tender, three companies participated with offers of approximately $4,200, $4,600, and $5,100 per missile, with all missiles produced at a single Turkish factory. The lowest price was offered by the direct manufacturer, Arca Defense, yet the contract was awarded to a subsidiary of the Czech Czechoslovak Group, acting as an intermediary. According to the NYT's assessment, choosing the most expensive offer increased Ukraine's spending by approximately $130 million, while auditors found no justification for this decision, and preliminary reviews had recommended avoiding procurement through intermediaries. A second example concerns Soviet-pattern missiles from a Serbian manufacturer: due to Serbia's position toward Russia, Ukraine used a chain of intermediaries. The contract was concluded with the state company "Spetshtekhnokhexport," which, according to auditors, had a history of unfulfilled contracts, and whose former executives were implicated in an investigation into possible theft and money laundering; at the same time, the company did not hold a Serbian export license for the missiles. Instead of a license, a "letter of guarantee" from Ukrainian military intelligence was provided, which auditors considered an unjustified preferential treatment. Later, "Spetshtekhnokhexport" concluded a subcontract with the American firm Regulus Global, led by former Merrill Lynch broker William Somerindyk Jr.; this agreement was one of several between the companies totaling $1.7 billion, but the deliveries began to fall apart. Somerindyk stated that then-Minister of Defense Rustem Umerov sought to eliminate intermediaries in defense production and asked Regulus to interact directly with the state customer.
Contradictory Data
The materials contain several inconsistencies that must be honestly reflected. First, regarding the Pavlohrad plant case: Leonid Shiman has already been sentenced to five years in one case, but his lawyer stated that he intends to appeal the verdict and denies guilt in the case concerning the mortar mines — that is, one part of the charges is contested, while another has been confirmed by the court. Second, the key figure of $1.2 billion relies on confidential government audit documents that were not officially disclosed; consequently, independent public verification of these amounts is limited to the NYT's access to the materials. Third, there is a clear contradiction between the auditors' findings (on identified problems and unfulfilled contracts) and the actual practice of the DPA, which continued to conclude new agreements with these same enterprises — the publication interprets this as a systemic control failure rather than isolated errors.
Context: Digitalization of Tenders and External Financing
Against the backdrop of these publications, Ukrainian media are noting attempts to reform the procurement system: the transfer of defense tenders, including for FPV drones, into a digital format is being discussed to lower prices and increase transparency. In parallel, external donors continue large-scale financing of the sector — the European Commission has approved the allocation of €6.1 billion to Ukraine for defense procurement. It is precisely the combination of enormous cash flows and limited transparency, according to the logic of the NYT investigation, that creates the conditions for the losses that auditors have estimated in the billions of dollars.
