Ukraine arrests senior Defense Ministry official accused of embezzling $40 million

BAKHMUT REGION, UKRAINE - DECEMBER 8:  A Ukrainian T-64 tank goes on combat duty in the area of Bakhmut district on December 8, 2023 in Bakhmut Region, Ukraine.  Ukrainian forces continue to fight to retake Bakhmut, which was captured by Russian forces in May, following a yearlong war battle. Over the summer, Ukraine regained territory north and south of Bakhmut but Russia has held the city itself. (Kostya Liberov/Libkos/Getty Images)

A Ukrainian T-64 tank on combat duty in Bakhmut district on December 8.Kostya Liberov/Libkos/Getty ImagesCNN — 

A senior Ukrainian Defence Ministry official has been detained over allegations he embezzled 1.5 billion Ukrainian hryvnia ($40 million) relating to an artillery shells contract, according to the Ukrainian Security Service (SBU).

The SBU says the official signed an agreement with a special export company to purchase a wholesale batch of artillery shells in December last year.

However, a more favourable contract for the supply was later signed with the same manufacturer – one that did not involve intermediaries. The SBU said this significantly shortened the delivery time and reduced the cost of the products.

According to the SBU, the defense official extended the original – more expensive – contract and funds totalling 1.5 billion Ukrainian hryvnia ($40 million) were transferred to the accounts of an affiliated foreign intermediary firm.

The SBU says it has found documents confirming the illegal activity. The official faces up to 15 years in prison if found guilty.

The Ukrainian Ministry of Defense said it was taking measures to try to recover the funds.

According to the Head of the Press and Information Department of the Ukrainian Ministry of Defense, Illarion Pavliuk, the contract was one in which payment was made, but no deliveries had taken place. As a result, he said lawyers were looking at options to terminate the contract and recover the funds.

In September, Ukrainian President Volodymyr Zelensky fired his Defence Minister, Oleksii Reznikov, citing the need for “new approaches” amid a number of corruption scandals involving Ukraine’s Ministry of Defense.

Rustem Umerov, the former people’s deputy of Ukraine, was appointed as his replacement.

The following month, CNN reported that the US was increasingly urging Ukraine to do more to combat governmental corruption. Officials said Washington had issued several notices to Kyiv indicating that certain kinds of US economic aid will be linked to Ukraine’s progress in reforming its institutions.

Zelensky sought to address concerns about corruption when he travelled to Washington DC and met US Senators this month. The issue has also become more pressing after the EU agreed to open membership talks with Ukraine.

CNN’s Natasha BertrandAlex Marquardt, Josh Pennington, Jonny Hallam and Tim Lister contributed reporting.

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