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Ukrainian Investigators Say They Uncovered Fraud in Arms Procurement

by Reuters

   Ukraine's SBU security service and the Defense Ministry said Friday
   they had uncovered a scheme for fraudulent purchase of artillery shells
   that involved embezzlement of the equivalent of nearly $40 million.

   Corruption in Ukraine, more than 30 years after the end of Soviet rule,
   has become an even more crucial issue as Kyiv proceeds with its
   application to join the European Union.

   Incidents of corruption in the military, including in procurement, have
   sparked several prominent scandals.

   A contract to secure the artillery shells at higher-than-market prices
   had been abandoned by the defense ministry's recently created
   procurement agency and a new deal struck that eliminated intermediaries
   and significantly reduced the price.

   But a senior ministry official, the procurement agency said, extended
   the previous contract and funds totaling nearly 1.5 billion hryvnias
   ($40 million) were deposited in accounts belonging to the intermediary
   firms.

   The unnamed official, the main suspect in the case, was removed from
   his duties, legal proceedings have been launched against him and
   attempts are underway to recover the money.

   A Defense Ministry statement said that the scheme was uncovered last
   week and that an audit confirmed the illegal activity. Searches were
   conducted within the ministry and at other premises.