A New York Times investigation raises serious questions about how Ukraine's arms and ammunition procurement system has been managed. According to internal government audits and court documents reviewed by the newspaper, the country may have lost as much as $1.2 billion through 2024 alone due to fraud, waste and mismanagement.
The report highlights a system where auditors' warnings about corruption, cost overruns and unfulfilled contracts have not prevented certain companies from receiving large state contracts again. According to documents cited by the American newspaper, 7 of Ukraine's 10 largest military suppliers have received new orders, despite some of them being under investigation for fraud, having problems with previous contracts or having executives involved in corruption cases.
One of the cases cited is that of the Pavlohrad chemical plant, which supplied the Ukrainian army with thousands of mortar shells. According to the investigation, during the fighting in 2024, some of the ammunition produced by the plant did not function properly. Some shells did not explode, while others reportedly fell from the mortar tubes without being activated. The plant’s director, Leonid Shiman, was later arrested and faced corruption charges. However, according to audits cited by The New York Times, even after authorities were informed of the problems with the ammunition, the Ukrainian Defense Procurement Service continued to award the company new contracts.
One of the contracts, worth about $280 million, was signed at a time when Shiman was under investigation for other alleged corruption cases. Auditors also noted discrepancies in the company's data on its production capacity. Initially, the plant stated that it did not have enough capacity to fulfill the contract, but later changed the figures without providing a clear explanation.
Despite these problems, Pavlohrad received other contracts and was later selected to supply the bulk of the 122-millimeter artillery shells needed by the Ukrainian army through 2025. Audits by the State Audit Office and the Ministry of Defense's internal audit unit have uncovered what is described as systematic mismanagement.
According to documents made public as part of the investigation, 18 companies received new contracts even though they had not fulfilled the obligations of previous contracts. More worrying is the fact that six of them had not completed any of the contracts they had taken on. Audits for the years 2024 and 2025 have also identified about $ 126 million in losses, as in some cases cheaper offers were bypassed and military equipment was purchased at higher prices.
In another case, at least $100 million in advance payments remained the subject of a legal battle after the arms deal fell through. Another case identified by the auditors involved the purchase of ammunition for missiles manufactured in Turkey. Three companies offered the same product, manufactured in the same factory. Prices ranged from about $4,200 to $5,100 per missile. The cheapest bid was from Turkish manufacturer Arca Defense. However, Ukrainian authorities awarded the contract to a company that offered the product through an intermediary, part of the Czechoslovak Group.
According to the auditors, there was insufficient justification for choosing the more expensive bid. The New York Times estimates suggest the decision cost Ukraine about $130 million more.
Serbian missile contract that ended in legal dispute
The investigation also focuses on a 2024 deal to buy Soviet-designed missiles from a Serbian manufacturer. Because of Serbia's relations with Russia, Ukraine used several intermediaries to secure the weapons. The contract was signed with the Ukrainian state-owned arms trading company Spetstechnoexport.
Auditors found that the company had a history of unfulfilled contracts, while its former executives were under investigation for embezzlement and money laundering. Another problem was the lack of a Serbian license for the export of missiles. According to the auditors, a letter of guarantee from Ukrainian military intelligence was used instead, which they said had no sufficient legal basis. Spetstechnoexport then subcontracted to the American company Regulus Global. The agreements between the two companies were worth about $1.7 billion, but the missile deal ultimately fell through.
After the termination of the agreement, legal battles began. The Ukrainian government demanded fines and interest from Spetstechnoexport, while the latter took financial action against Regulus.
The American company has denied any wrongdoing and has argued that it was caught in the middle of a process of reorganizing the Ukrainian defense procurement system. The investigation finds that, despite reforms undertaken in recent years and efforts to strengthen control over procurement, the Ukrainian system continues to have significant weaknesses. Companies with problematic histories, unfinished contracts or executives under investigation have continued to have access to high-value tenders and contracts.
The problem, according to the audit findings, is not only related to the loss of public money. In the conditions of war with Russia, mismanagement of procurement can also directly affect the supply of weapons and ammunition to Ukrainian forces. The New York Times report presents this as one of Ukraine's important challenges: ensuring a transparent and efficient procurement system at a time when the country urgently needs military equipment and any delay or financial loss can have consequences even on the front line.
