Ukraine’s Secret Military Audits Expose $1.2 Billion in Fraud, Waste and Mismanagement

Secret Ukrainian military audits reviewed by The New York Times have revealed repeated overpayments, failed deliveries and questionable contracting practices in the country’s wartime weapons procurement system.

According to the audits, which were conducted by Ukraine’s State Audit Service and an internal auditing department of the Ministry of Defense, Ukraine lost approximately $1.2 billion in 2024 because of fraud, waste and mismanagement.

The findings are detailed in more than 700 pages of financial tables and internal reviews covering 2024 and 2025. The New York Times reported on the documents in a Sept. 6, 2026 article by Andrew E. Kramer, Bianca Pallaro and Evelina Riabenko.

Repeated overpayments

The audits found multiple instances in which Ukrainian military procurement officials paid more than necessary for weapons and ammunition.

A 2024 State Audit Service report, cited by The New York Times, criticized the widespread use of arms traders as intermediaries. According to the audit, these intermediaries typically charged markups of at least 3 percent, increasing procurement costs and generating tens of millions of dollars for the companies involved.

Despite that criticism, an additional audit in early 2025 found that officials continued to award contracts to intermediaries even when cheaper offers were available directly from manufacturers, according to the newspaper.

In one example, Ukraine needed hundreds of millions of dollars’ worth of rockets in 2024. The Defense Procurement Agency awarded a contract to a Czech intermediary even though it had received substantially cheaper offers, including one directly from the manufacturer, the audit found.

Failed contractors continued receiving contracts

The audits also identified repeated cases in which companies that had failed to fulfill previous contracts were awarded new business.

According to the audits reviewed by The New York Times, seven of the Defense Ministry’s 10 largest contractors received new contracts despite having previously defaulted on agreements or having senior executives under criminal investigation.

Auditors identified 18 companies with histories of failing to fulfill contracts. Six had failed to complete a single contract but continued to receive additional contracts, according to the documents.

One company, for example, failed to deliver any of the 600 specialized drones it had promised. It later received a contract for 1,950 additional drones, of which only 50 were delivered on time, the auditors found.

The audits did not establish why these companies continued to receive government contracts. However, The New York Times quoted former officials and experts who attributed much of the procurement system’s dysfunction to corruption.

Weapons purchased without adequate verification

The audits also documented concerns about whether some weapons could actually be supplied in the quantities promised.

In one case, Ukraine’s Defense Procurement Agency contracted with an intermediary to obtain 70-millimeter unguided aviation rockets from Turkey. The Turkish manufacturer warned Ukrainian officials that it could not provide the quantity promised by the intermediary, according to the audit.

The government nevertheless proceeded with the contract. The weapons were purchased without evidence that they had been adequately tested, the auditors found.

One of the rockets subsequently exploded inside a launch tube, severely damaging a Ukrainian Mi-8 helicopter during a combat operation. Ukraine’s domestic intelligence agency opened a criminal investigation into the incident, according to the audit and The New York Times.

Defense companies benefit while Ukraine bears the losses

The newspaper also reported that the war has generated significant profits for weapons manufacturers and traders in Ukraine and abroad.

The Czechoslovak Group, a major European weapons manufacturer and trading company, told investors after going public that it had benefited substantially from sales to Ukraine. Meanwhile, Ukraine’s Pavlohrad Chemical Plant, an explosives supplier, reportedly returned to profitability after years of losses as military demand increased.

But while defense contractors have benefited from increased wartime demand, the audits indicate that Ukraine has suffered substantial financial losses because of procurement failures.

Former Defense Procurement Agency adviser Tamerlan Vahabov, quoted by The New York Times, said waste and overspending had direct consequences for Ukraine's military effort, reducing the money available to purchase additional weapons and ammunition.

The audits therefore offer a detailed account not only of financial losses but also of how procurement failures can affect Ukraine’s ability to obtain the weapons and ammunition needed for its war against Russia.

Source: The New York Times