SBU and NABU Uncover Factory Leadership Embezzling Funds for Tank Armor Purchases

The Security Service of Ukraine (SBU) and the National Anti-Corruption Bureau (NABU) have exposed the management of an armaments factory for embezzling state funds intended for purchasing armor for the Armed Forces’ tanks, the agencies reported.

According to law enforcement, a large-scale scheme for misappropriating defense resources, operating in two regions – Zaporizhzhia and Dnipropetrovsk – has been dismantled. Investigators say the suspects embezzled Hr.102 million ($21.6 million-22 million) from the state budget intended for the production of reactive armor for tanks.

Authorities identified the factory’s commercial director, its former head, and the owner of the contractor company involved. The investigation found that in April 2022, the state-owned factory signed a contract with the Ministry of Defense for the urgent procurement of reactive armor systems for domestic tanks.

The armored vehicles were to be immediately deployed to combat zones on various fronts. However, instead of fulfilling the defense order, the main suspect – the factory’s director at the time – organized the appropriation of state funds.

To execute the scheme, according to the SBU, the suspect involved the factory’s commercial director and the founder of the contractor company, signing contracts to purchase armor components at three times the market price. The illicit “profit” was funneled through a network of controlled companies for further distribution.

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Expert analyses by NABU and SBU confirmed significant damage to the state budget. Searches were conducted at the residences and workplaces of the suspects.

All three have been charged with multiple offenses:

• Misappropriation, embezzlement, or seizure of property through abuse of office, committed by a group of persons by prior conspiracy;

• Legalization (money laundering) of the embezzled property;

• Official forgery.

The former head of the armaments factory is already in custody in connection with an earlier investigation into the production of defective mortar shells – he was detained in April 2025. Decisions on preventive measures for the other suspects are pending.

According to investigators, in early 2024, the factory management signed a contract to produce ammunition for the Ukrainian Ground Forces, including bulk deliveries of 120mm mortar rounds.

However, substandard materials and defective production processes were used, resulting in 120,000 unusable shells reaching the front.