Pentagon inspector general warns of Ukraine’s ‘endemic corruption’

The Department of Defense’s Office of Inspector General warned that Ukrainian corruption is a persistent challenge as the war against Russia has created new opportunities for it.

The corruption risks include possible bribes, kickbacks, and inflated procurement costs, especially for lethal procurements within the Ministry of Defense, according to the inspector general’s second quarterly report to Congress on Operation Atlantic Resolve, the name of the administration’s operation to arm Ukraine.

“Working hand in glove with our oversight partners, we are committed to ensuring comprehensive oversight over all aspects of American taxpayer resources provided in support of Ukraine,” Inspector General Robert Storch said.

The report, released on Thursday, came several weeks after Congress passed President Joe Biden’s supplemental funding request that included roughly $61 billion in military aid for Ukraine. A select group of isolationist House Republicans held up the aid package for several months, which Ukrainian and U.S. officials said had demonstrable impacts on the battlefield.

The shortages are being felt most acutely in the area around Kharkiv, a major Ukrainian city near the country’s northeastern border. 

“Russia has begun a new wave of counteroffensive actions in this direction,” Ukrainian President Volodymyr Zelensky said this week. “Ukraine has met them there with our troops, brigades, and artillery.”

Secretary of State Antony Blinken announced a $2 billion aid package on Wednesday during his surprise trip to Ukraine.

As of March 31, there were a total of 62 open investigations into allegations of grant and procurement fraud, corruption, theft, program irregularities, and counterproliferation of technology of weapons system components. Nearly half of the investigations are related to the diversion of aid, while corruption and procurement fraud were second and third most common among those categories.

Twelve of those investigations were initiated during the second quarter, while two were closed.

To date, none of the investigations related to Operation Atlantic Resolve have resulted in indictments or convictions, though the majority of investigations are still ongoing, Pentagon OIG spokeswoman Mollie Halpern told the Washington Examiner.

The report, citing the State Department, described Ukraine’s “corruption and rule-of-law concerns” as the “greatest challenge for post-war economic recovery and attracting foreign investment.”

The inspectors general from the Pentagon, State Department, and U.S. Agency for International Development are leading the federal government’s oversight of approximately $113 billion in aid and funds marked for Ukraine.

Ukraine’s Office of Defense Cooperation-Kyiv told the inspector general’s office that 88% of defense articles were compliant, while 12% were unaccounted for or “delinquent.” It represents a 13% increase in compliance from the previous quarter.

In January, Defense Secretary Lloyd Austin said there was “no credible evidence of the misuse or illicit diversion of American equipment” provided to Ukraine, but there have been other corruption allegations during the war.

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Ukraine’s Security Service announced in January it discovered a mass corruption scheme involving the purchase of 100,000 mortar rounds for its armed forces in the fall of 2022. Ukraine’s defense ministry paid Lviv Arsenal for the ammunition, but it was never received. Instead, some of those funds ended up being transferred to foreign accounts.

In December, a senior Ukrainian defense ministry official was accused of embezzling the equivalent of $40 million in a separate case involving a contract for artillery shells.

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