Costs of war: Ukrainian corruption threatens past and future aid

The war in Ukraine has raged for two years and has reached an impasse. It has also become a political lightning rod back home between those who believe funding is essential to keep Russian President Vladimir Putin contained and those who refuse to give Ukrainian counterpart Volodymyr Zelensky a blank check. In this series, Costs of War, the Washington Examiner will investigate the state of the war itself, the corruption involved, the U.S. states that benefit from spending, and how it’ll shape the 2024 election. Part One will take a look at the corruption.

A Ukrainian problem that long predates the war with Russia has threatened the $113 billion the United States has sent Ukraine so far — and increasingly threatens Congress’s willingness to keep the cash flowing.

Corruption in Ukraine has affected the war effort, although the U.S. has limited visibility into exactly how much. What President Joe Biden once described as a “cancer” on Ukrainian society remains a force that Ukrainian leaders have battled alongside Russian troops during the first two years of the war, to varying degrees of success.

With future aid from the U.S. on the line, Ukrainian President Volodymyr Zelensky has made aggressive moves to crack down on corruption, even as he surrounds himself with advisers who have faced their own corruption accusations.

“I think Zelensky is quite serious about that,” Stefan Wolff, political science professor at the University of Birmingham in the United Kingdom, told the Washington Examiner

“But his level of seriousness and his ability to do something about it is probably no match for these deeply entrenched networks of corruption, sort of how the institutions themselves really depend on corrupt exchanges to function,” he said.

Zelensky replaced his first wartime defense minister in September amid reports of widespread graft in the defense ministry. While Oleksii Reznikov was not personally accused of misconduct, the allegations of corruption that occurred in the agency on his watch spawned too many negative headlines for him to remain in command.

Ukrainian President Volodymyr Zelensky attends a meeting with U.S. Vice President Kamala Harris at the Munich Security Conference at the Bayerischer Hof Hotel in Munich, Germany, Saturday, Feb. 17, 2024.(Wolfgang Rattay/Pool Photo via AP)

Months before his resignation, Reznikov struggled to explain why the military was paying dramatically inflated prices for the food rations sent to Ukrainian troops, including paying more than twice the market prices for eggs. A Ukrainian investigative reporter found that the military overpaid for the food regardless of whether it was headed to the front lines, where delivery can be more expensive, or to troops positioned far from the action. Soldiers reportedly took to making jokes about “Reznikov’s eggs” as news of the contracts spread and Reznikov’s credibility took a hit.

But the allegations of corruption within the military have continued under Reznikov’s successor.

Ukrainian Defense Minister Rustem Umerov suspended a senior defense official earlier this month amid a criminal investigation that involved an embezzlement scheme targeting the military. The senior defense official and others allegedly teamed up with a Ukrainian contractor to pocket $40 million in Ukrainian funds meant for purchasing artillery shells that were never delivered.

And in August, Zelensky purged his military of all its regional recruitment heads after an investigation found widespread corruption among them, including a pervasive system of draft officials selling waivers to able-bodied men looking to avoid military service. The recruitment-related corruption has resulted in a disproportionate number of front-line soldiers who come from rural, poorer regions of the country because more affluent Ukrainian men often buy their way out of the draft, the Wall Street Journal reported in December.

“This is sort of the tip of the iceberg that we see in the media,” Wolff said.

“I’m not saying that there has been massive corruption with the aid received per se, but that’s mostly because we don’t know otherwise,” he added.

Republicans in Congress have grown increasingly concerned about the lack of oversight for Ukrainian aid as the Biden administration pushes them to approve more.

The Defense Department inspector general has just two staff members in Kyiv, according to a joint inspector general report provided to Congress last week. The State Department inspector general has just three, and the U.S. Agency for International Development’s inspector general has two.

In other words, there were fewer than 10 U.S. officials from inspector general offices physically in Ukraine dedicated to overseeing billions of dollars in aid by the end of 2023, although many more are tasked with doing so remotely.

“You need folks on the ground to actually see where these things are delivered,” Max Primorac, senior research fellow at the Heritage Foundation and a former USAID official, told the Washington Examiner. “That is the big weakness. … There’s really not that many people working at the U.S. Embassy. Obviously, there are security considerations.”

“But at the same time, it severely limits donors’ ability to actually eye-check that things that they are sending are actually getting where they need to go,” Primorac added.

Last month, the Defense Department inspector general found that Pentagon officials did not properly track 59% of sensitive military equipment, reporting that inventories for more than $1 billion of specially designated equipment sent to Ukraine “remained delinquent.” The Pentagon watchdog cited “personnel limitations” as a major factor in the tracking deficiencies.

Republicans on the House Oversight Committee and Sen. J.D. Vance (R-OH) wrote to the Pentagon earlier this month demanding answers about the equipment, which the Defense Department requires to be monitored more closely than other types of military aid because such equipment is “particularly vulnerable to diversion or other misuse.”

The Senate’s Ukraine aid bill includes a funding boost of $8 million for the Defense Department inspector general’s office in order to beef up oversight of Ukraine assistance.

But for some Republicans, the Biden administration’s oversight efforts fall far short of assuaging concerns about approving billions of dollars more for Ukraine.

“Ultimately, we’re sending enormously valuable equipment and massive sums of money to a country that is one of the most corrupt on Earth and also a war zone,” a senior GOP congressional aide told the Washington Examiner.

William Taylor, former ambassador to Ukraine, said the conflict with Russia may have actually improved Ukraine’s anti-corruption efforts. 

“I think it has had a depressing effect on corruption — that is, it has reduced corruption,” Taylor told the Washington Examiner.

“Corruption in Ukraine has been driven by two things: oligarchs and corrupt courts,” he added. “The war has reduced the influence of oligarchs dramatically by all accounts.”

Zelensky’s attempt to address the corruption problem has included a proposal that would equate corruption with treason amid the war. He has also accused some foreign allies of weaponizing corruption allegations to justify reducing their assistance.

But some of the members of Zelensky’s inner circle have faced their own corruption-related accusations, underscoring how deeply rooted the problem remains.

Andriy Yermak, Zelensky’s chief of staff, has traveled with Zelensky to the U.S. when the Ukrainian leader has come to request more aid, including during his most recent visit in December. Yermak faced a corruption accusation in 2020 after recordings surfaced that appeared to show him discussing government appointments with his brother, and Rep. Victoria Spartz (R-IN) has accused Yermak of more far-reaching corruption.

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Oleh Tatarov, a top Zelensky adviser, was accused of paying bribes by a former construction business executive who told Reuters in September that Tatarov bribed numerous Ukrainian government officials with cash in exchange for building permits before joining Zelensky’s administration. A Kyiv court reportedly closed a separate bribery case against Tatarov in December after Zelensky-friendly prosecutors slow-walked the investigation.

Rostyslav Shurma, another top Zelensky adviser, came under scrutiny last year after reports that his brother continued pocketing Ukrainian government payments for solar plants on land seized by the Russians; the plants had been cut off from the country’s energy grid for months.

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