On Jan. 21, the Ukrainian outlet ZN (Mirror Weekly) revealed an alleged scam involving officials at the Ministry of Defense who used a dummy corporation to overprice food products for the army.

The newspaper story was based on a leak from a source within the Armed Forces of Ukraine (AFU). According to the publication, a contract price was Hr.13 billion, or about $330 million.

It was written by investigative reporter Yuri Nikolov, a co-founder of the Nashi Groshi online news platform known for investigating the illicit allocations of public funds.

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According to ZN, a private company involved in a scam was operating on the market without clearance from the state tax service of Ukraine. It was officially registered in an apartment block, often a red flag for a front company.

“The most common products turned out to be overpriced two to threefold,” ZN claims. “That is most likely a phony company created by professionals supplying products for the military.”

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“This company already had small state orders in previous years, but its star came to shine only now, when information about the purchases of the Ministry of Defense was completely hidden.”

The Defense Ministry has denounced the claim and announced an investigation into this leak.

“The Ministry of Defense is preparing materials for the Security Service of Ukraine for the purpose of investigating the publication of false information that harms the interests of defense,” a formal statement on Jan. 21 said.

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Final Suspect Arrested in Defense Procurement Corruption Scheme

Roman Hrynkevych, along with his father Ihor and three others, stand accused of large-scale fraud that has left the Defense Ministry out of pocket to the tune of $32 million.

On Jan. 23, Defense Minister Oleksii Reznikov posted on social media that the contract leaked to ZN had a “technical mistake.” He also stated that the one who leaked it “would be brought to responsibility.”

Nikolov, the author of the story, told Kyiv Post that Reznikov’s announcement gives him cause for worry.

“I cleaned my house, just in case, put the documents in full view, so that they would not make a mess of my house,” Nikolov told Kyiv Post. “I don’t doubt that there will be a reaction from law enforcement officers since Reznikov is demanding to find the whistleblower.”

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The National Anti-Corruption Bureau (NABU) reported that possible abuses of the Ministry of Defense in the purchase of food for the military are being investigated in the framework of criminal proceedings, which were initiated even before the publication of such information in the media.

“We inform you that the information provided [about possible abuses] is known to NABU and SAPO [Specialized Anti-Corruption Prosecutor’s Office] and is being investigated in the framework of criminal proceedings initiated according to their own experience, before being published in the media,” the report says.

It’s not the first time that Ministry of Defense has come into the spotlight in the alleged case of overpricing the foods and other products for the AFU.

In 2021 Ukrainska Pravda reported on a high-ranking official in Ministry of Defense implicated in a scam involving the purchase of munitions.

Ministry denied the claims.

The same weekend Nikolov published his story on the alleged corruption within the Ministry of Defense, NABU announced arrests due to the investigation of corruption in the Ministry for Infrastructure.

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According to NABU, in the summer of 2022, the Cabinet of Ministers allocated Hr. 1.68 billion (about $42 million) for the purchase of generators and other equipment.

“As the investigation found out, a number of officials of central and regional executive bodies decided to appropriate part of state funds. To do this, they conspired with a group of intermediaries and ensured the conclusion of contracts… Those, as the investigation found out, were supposed to give the amount mentioned above to civil servants as a reward for this,” NABU reported in a statement.

According to Ukrainian news outlet Ukrainska Pravda, one of the suspects in this scam, Deputy Minister of Infrastructure Vasyl Lozynsky, was arrested by NABU officers.

The agency claims that Lozynsky received $400,000 for lobbying the contracts for purchasing equipment and machinery at inflated prices.

That very night one of the accomplices in the alleged crime, who was trying to flee from Ukraine, was arrested by Ukrainian officials.

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