Weapons procurement during the war: how Ukraine lost hundreds of millions through intermediaries
16 May 2025 20:15
According to an investigation by the Financial Times, since the start of Russia’s full-scale invasion in 2022, Ukraine has lost about $770 million in prepayments for weapons that it has not received. These funds were paid to foreign suppliers who failed to fulfill their obligations or provided unsuitable products, "Komersant Ukrainian" reports, citing the media outlet’s material.
The journalists found information about three dozen problematic contracts.
Key cases
OTL Imports (USA). In 2022, the Ukrainian state-owned company Progress signed a €49 million contract with the American firm OTL Imports, founded by 28-year-old Tanner Cook. Ukraine paid an advance of €17.1 million, but the ammunition was not delivered. Although the Ukrainian side won the arbitration in Vienna, the money has not yet been returned.
Regulus Global (USA). The company signed a contract with Spetstechnoexport worth up to $1.7 billion to supply 155-mm artillery shells. Ukraine paid an advance of $162.6 million and €14 million, but the delivery did not take place. In September 2024, Regulus stopped communicating with the Ukrainian side. “Spetstechnoexport filed a lawsuit in London for $346 million.
Causes of the problems
After the outbreak of war, Ukraine abolished standard procurement rules, which led to contracts with little-known companies without proper verification. This created conditions for fraud and inefficient use of funds.
Currently, Ukrainian law enforcement agencies are investigating dozens of contracts related to arms procurement. Some officials have already been fired or prosecuted. The Ministry of Defense of Ukraine is trying to recover $309 million through litigation and another $460 million through pre-trial negotiations.
Read also: Dismissal in the Defense Ministry: Klimenkov accused of failing to procure weapons
The $500 million contract: what Ukraine and the American supplier Regulus did not share
Much of the controversy in the Regulus and Spetstechnoexport case is caused by the legal interpretation of the content of contracts and payment schedules. Both parties interpret the agreements differently, and due to the lack of a clear mechanism for monitoring and auditing previous agreements, Ukraine has faced serious risks of losing money. The arbitration in London, which has already begun, should become a precedent for international practice of regulating arms supplies in times of war.
At the same time, the Ministry of Defense of Ukraine has released general figures on advances paid to foreign suppliers that have not been converted into actual deliveries. The total amount is over $770 million. According to representatives of the Defense Ministry, they will try to recover a significant portion of these funds through international courts, although the process is complicated, in particular, by jurisdictional restrictions and the unwillingness of some suppliers to cooperate.
The use of intermediaries – companies that do not produce weapons but organize their procurement and logistics – is the most heavily criticized. They often receive contracts worth millions of dollars without being fully liable. Experts emphasize that such a scheme increases the cost of procurement and creates risk areas for public finances.
In response to the situation, the Ukrainian parliament is already discussing the possibility of legislative restrictions on the participation of intermediaries in strategic defense procurement. In addition, a new register of transparent suppliers is being created with a list of companies that have passed integrity checks and have real experience in the defense industry.
The conflict has also exacerbated tensions with some foreign partners. Some EU companies have already announced the suspension of contracts with Ukraine, citing “high legal risks.” The government responded by saying that it would increase international legal support, including through diplomatic channels and specialized law firms.
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