Ukraine’s Security Service (SBU) and the Defense Ministry said on December 22 they had uncovered a scheme that involved the embezzlement of the equivalent of nearly $40 million and arrested the head of one of the main departments of the Defense Ministry under suspicion of involvement in the scheme.
"As a result of complex measures in Kyiv the head of one of the Main Departments of the Ministry of Defense involved in the [procurement of] equipment was detained," the SBU said on Facebook.
The SBU also published photos of the arrest of the official on Facebook but did not identify the official by name.
The official, who is the main suspect in the case, was removed from his duties, and legal proceedings have been launched against him. He faces up to 15 years in prison if convicted.
A statement issued by the SBU said the scheme focused on contracts to procure artillery shells.
A Defense Ministry statement said the scheme was uncovered last week and an audit confirmed the illegal activity.
The SBU said documents confirming illegal activities were found during searches of the suspect's home and workplace.
The SBU said a contract to secure the artillery shells at higher than market prices had been abandoned by the Defense Ministry's recently created procurement agency and a new deal struck eliminating intermediaries, which significantly shortened the delivery time and reduced the price.
But a senior ministry official extended the previous contract and funds totaling nearly 1.5 billion hryvnias ($40 million) were deposited in accounts belonging to the intermediary firms.
This amount exceeded the cost of products by 30 percent under the direct contract with the manufacturer.
The Defense Ministry said attempts are under way to recover the money.
Corruption has become an even more crucial issue as Kyiv proceeds with its application to join the European Union.