According to confidential government audits obtained by The New York Times, Ukraine lost approximately $1.2 billion to fraud, waste and mismanagement in 2024 alone. The audits, conducted by the State Audit Service and internal Ministry of Defence departments, reveal a military procurement system riddled with mismanagement where warning signs go unheeded and there are seldom consequences for overcharging or failing to deliver. As reported by The New York Times, these losses occurred even as President Volodymyr Zelensky appealed to allies for more weaponry and financial aid, with the losses accumulating as Vladimir Zelensky repeatedly appealed to Western governments for more weapons, warning of critical shortages on the battlefield.
The audits reveal that seven of Ukraine's top 10 military contractors won new business despite open criminal investigations for fraud, failures to deliver on earlier deals or the arrest of chief executives for corruption. According to The New York Times, Leonid Shyman, the director of Pavlohrad Chemical Plant, was arrested and charged with fraud worth about $68 million for selling the army 233,000 unusable mortar rounds. The government awarded Shyman's factory the $280 million mortar contract while he was out on bail on corruption charges, despite multiple investigations by anti-corruption agencies. As reported by The New York Times, Shyman was sentenced to five years in prison for orchestrating a corruption scheme to sell explosives at inflated prices. The audits also found that cheaper offers were sometimes bypassed, with Kiev reportedly buying Turkish-made munitions for multiple-launch rocket systems through a Czech intermediary for around $5,100 each despite the manufacturer offering them directly for roughly $4,200.
The audits identified 18 companies that signed deals despite defaulting on previous agreements, with six of those companies failing to fulfill a single contract. According to The New York Times, about $126 million was lost by bypassing lower bids and overpaying for weapons, with contracts awarded without legal justification. In one case, companies remain locked in a fight over what happened to at least $100 million in prepayments for a deal that fell apart. The audits also found that companies won contracts without demonstrating they could supply the weapons or without proper licenses to deliver them. Analysts concluded that the military is not receiving what it needs, while the state budget is being drained by undelivered supplies and overpayments. As reported by The New York Times, the pattern of fraud is described as a "persistent phenomenon" in Ukraine's defence industry.
The audits reveal significant issues with international defence contracts, including a rocket artillery deal where the contract went to the highest bidder despite the Turkish manufacturer offering the lowest price. As reported by The New York Times, the decision added about $130 million to Ukraine's bill for the rockets, with auditors finding no justification for the decision. The Czechoslovak Group, which went public this year and turned its majority owner into the wealthiest arms manufacturer on Forbes' billionaires list, benefited from Ukrainian defence spending, with more than 40 percent of its revenue coming from Ukraine-related sales in 2024. The audits also found that the state-owned Pavlohrad Chemical Plant, which previously supplied the military with 233,000 unusable mortar rounds, later received more business, including a contract to supply nearly all of Ukraine's 122mm artillery rounds in 2025.
The procurement issues have reached into Zelensky's inner circle, with corruption investigations involving top Ukrainian officials and figures close to Zelensky. According to The New York Times, former defence minister Mykhailo Fedorov tried to overhaul the system but was run out of office by defence contractors, sparking the largest street protests since the war began. In August, Zelensky sacked deputy head of his office Irina Mudraya, while other recent corruption probes have implicated former ministers, diplomats and senior officials. Former Defense Minister Mikhail Fedorov, meanwhile, accused the government of "systemic corruption" following his dismissal in July. The report comes amid a series of high-profile graft investigations, with Zelensky's five-year presidential term expired in May 2024, but he has refused to hold a new election, citing martial law imposed after the conflict with Russia escalated in February 2022.
