Ukraine accuses defense company of embezzling $40 million

Ukrainian intelligence said it had exposed a defense company's $40 million embezzlement scheme, money intended to obtain mortar shells, as the government sought to underline its commitment to fighting corruption at a time when U.S. military aid has come to a standstill.

Officials of the defense company Lviv Arsenal have tried to siphon 1.5 billion Ukrainian hryvnias, or $40 million, from the state budget earmarked for the purchase of 100,000 mortar shells, the Intelligence Service, Ukraine's security service, said. The Ministry of Defense cooperated in the investigation some of its current and former senior officials, the intelligence agency, known as SBU, said in a statement.

The company received the contract and financing for the purchases in the summer of 2022, just months after Russia launched its full-scale invasion of Ukraine.

“However, it never sent a single round to our country, while the money ended up in the shadows,” said an SBU statement posted on social messaging app Telegram on Saturday. It said five people had been charged, but their identities were not released. It was not immediately possible to contact the company, which was not well known, according to Ukrainian news media.

The war and the tens of billions of dollars in military aid that have accompanied it have proven to be a boon for defense companies in Eastern Europe, but Ukraine's allies in the United States and Europe have increased pressure on Kiev to show that it country can watch. against graft. Proving that Ukrainian institutions are capable of effectively combating corruption is also crucial to the government's strategic goals of joining NATO and the European Union.

The issue has become more urgent for Kiev's government as a standoff has emerged in Washington over sending additional aid to Ukraine, with Republicans in the House of Representatives linking the funding to efforts to close the United States border with to secure Mexico. Some U.S. lawmakers have also demanded stricter accountability for the funds.

Ukraine's President Volodymyr Zelensky replaced his defense minister in September and fired the heads of military recruitment agencies a month earlier. According to experts, these measures aimed to demonstrate that the government was aggressively dealing with mismanagement and possible corruption within the powerful ministry.

The need to improve government institutions has increased given the lack of progress of the Ukrainian armed forces in the war against Russia. The failure of last year's Ukrainian counteroffensive to make significant progress has made a protracted conflict more likely. Ukrainian analysts say that with Ukrainians under increased pressure on the battlefield, it has become imperative for the government to ensure that its key warfighting institutions are properly managed.