The private company’s director allegedly routed procurement through shell companies to mask illicit activity and launder the inflated profits through accounts they controlled.

Three organizers have been charged with misappropriation, abuse of office, money laundering, and official forgery, with the main suspect already in custody in related mortar shell investigations.

During searches, authorities seized documents and computer equipment related to the scheme.

Preventive measures for other suspects are being considered as the investigation continues.

Ukraine’s law enforcement agencies, led by the SSU and NABU with help from the SBU and the SAPO, have dismantled a large-scale embezzlement scheme tied to defense procurement, centered on reactive armour kits for tanks and related armor components.

The former head of the defence plant, already under investigation for defective mortar rounds, remains in custody, with related probes tracing to April 2025.

The operation uncovered a defrauding scheme worth over 102 million hryvnias, with funds diverted from defense orders and inflated margins funneled through a network of linked companies.

Investigators identified the principal actors as the plant’s former head, its commercial director, and the founder of the contracting company behind the scheme.

Expert examinations show the illicit proceeds were siphoned through a web of affiliated firms, resulting in significant losses to the state budget.

The 120mm mortar ammunition contract from early 2024 reportedly delivered about 120,000 unusable shells due to substandard materials and defective production.

The case highlights systemic risks in defense procurement, including overpricing and complex corporate structures used to siphon state funds.

The scheme allegedly involved inflating armor component prices to roughly three times their real value and routing the excess through a network of linked companies for distribution among conspirators.