The contracts for ammunition supply to the Armed Forces of Ukraine smack of a new scam

The contracts for ammunition supply to the Armed Forces of Ukraine smack of a new scam

The director of the information and consulting company Defense Express, Serhiy Zgurets, noted that the Cabinet of Ministers on November 29 issued an order to allocate UAH 23 billion to the State Border Guard Service for the procurement of ammunition for the Armed Forces of Ukraine, bypassing the MOD’s Defence Procurement Agency.

He told about this on the air of the Espresso TV channel.

Serhiy Zgurets emphasized that the Armed Forces of Ukraine are not receiving the necessary scarce ammunition, and the authorities are extremely irrational in using state funds to strengthen defence capabilities. “At least this is the preliminary conclusion that can be drawn in light of the extremely strange order No. 1191-r signed by the Prime Minister of Ukraine, Denys Shmyhal, on November 29, 2024,” he says.

The order states that with the consent of the Ministry of Defence of Ukraine, the State Border Guard Service Administration has been delegated the authority to implement budget program 2101150 “Development, procurement, modernization, and repair of weapons, military equipment, means, and equipment” in the amount of UAH 23 billion to purchase defence-purpose goods for the needs of the Defence Forces. It is about ammunition with a range of scarce nomenclatures.

“We have been studying this story for several days. It feels like we are on the verge of a major scandal with the possibility of buying weapons for the Armed Forces through the State Border Guard Service. Because we are talking about UAH 23 billion, which are supposed to be allocated to the SBGS to allegedly purchase ammunition for transfer to the Armed Forces. I say these are scandalous matters because, according to the law, we cannot talk about the volumes of this contract or contracts, who will execute them. But I will try to speak in ‘Aesopian language.’ This Cabinet’s order appeared on November 29, literally two days after the head of the SBGS received an offer from one intermediary company on November 27 that it is possible to purchase these ammunitions through the SBGS and then transfer them to the Armed Forces,” commented Serhiy Zgurets.

The expert added that he is presenting only the main reservations about this transaction, having conducted conversations with a number of specialists familiar with its details beforehand, as well as “considering the restrictions in war conditions regarding the disclosure of detailed information about arms contracts or intentions.”

The starting point of this transaction was a letter that the head of the State Border Guard Service of Ukraine, General Serhiy Deyneko, sent to the Minister of Defence, and other power ministers, informing them that the administration of the SBGS had received commercial proposals from one intermediary company regarding the possibility of supplying ammunition for rocket and barreled artillery. Following this letter, the Cabinet’s decision to allocate funds for these potential large-scale procurements appeared two days later in response to these commercial proposals from a Polish intermediary company. And the Ministry of Defence agreed to this.

“Contrary to the established procurement infrastructure of the Ministry of Defence of Ukraine, which is already working effectively, the desire to transfer the relevant powers of ammunition procurement to the SBGS, which has never made ammunition procurements in such volumes and which lacks the necessary specialists and competencies for inspecting existing ammunition and analyzing production capabilities, is surprising,” remarked Zgurets.

Why the received offer is suspicious

According to the director of Defence Express, based on the above, questions arise that need answers—at least at the level of control bodies that accompany this process.

1. The Ministry of Defence of Ukraine and Defence Minister Rustem Umyerov have repeatedly talked about the importance of weapons procurement specifically through the Defence Procurement Agency. The Defence Procurement Agency did not receive such unique offers as the SBGS leadership.

Because the agency, at least per the statements of its leadership, to minimize risks and costs, focuses on contracting weapons and ammunition from direct manufacturers, or at least official representatives. But the proposals from the Polish company, which do not belong to these two categories of suppliers, satisfied everyone so quickly but bypass the agency.

2. In the commercial proposal from the Polish intermediary company, five types of ammunition are mentioned. Moreover, it is about new items and deliveries in quite limited terms. From 120-mm mines to mortars, rockets for MLRS, and extremely scarce Soviet standard artillery shells of 122 mm and 152 mm.

The volumes of delivery of this new production, supposedly for 2024-2025, are as high as the full annual production of shells by a large arms factory. But it is worth remembering that all European or Eastern European manufacturers of this nomenclature are already fully loaded with orders for the next year and physically cannot produce such an additional volume of products.

3. The prices proposed by the Polish intermediary are higher in some nomenclatures than those previously procured by Ukraine. Of course, in conditions of total scarcity and high demand, it is extremely difficult to talk about market prices. However, raising the advance payment requirement of 100%—not only for existing ammunition but even for those planned for delivery in 2025 from production—is abnormal, and demanding 100% prepayment immediately after signing the contract, to put it mildly, is not typical procurement practice.

Usually, even a 10% prepayment undergoes several before-the-contract work stages (the manufacturer is identified, technical inspection of the enterprise’s production capabilities is conducted, the availability of goods at the seller’s warehouse is confirmed, etc.). Such a commercial proposal from the Polish company would not even be considered by the Defence Procurement Agency as worthy of attention, especially when timely payments for domestic weapons manufacturers are ignored, blocking the development of the local defence industry.

“We looked at the prices of these ammunitions, which are 5% or at least 8% higher than the average market, of course, if it is even possible to talk about average market prices in such conditions. But all this is done bypassing the Ministry of Defence, in which there is a Defence Procurement Agency created to conclude contracts with suppliers, minimize costs, and control the presence of such ammunition at manufacturers or intermediaries’ warehouses. However, this is done bypassing the procurement agency based solely on one letter from the head of the SBGS,” noted the military expert.

4. The Polish intermediary company is not new in the arms environment. It, as I was explained, already has unfulfilled contracts for the supply of new ammunition to the Ministry of Defence—or more precisely, canceled due to force majeure. At the same time, according to preliminary data, more than a third of the border guards’ budget for the procurement of weapons and military equipment for their own needs since the start of the full-scale invasion accounts for supplies through this Polish company.

The share of the Polish company in supplies to the SBGS can, of course, explain such limitless trust, but such an explanation can also be qualified under the Criminal Code of Ukraine. Regarding new supplies, the SBGS has never made ammunition procurements in the volumes proposed now, and it lacks the necessary specialists and competencies for inspecting existing ammunition and analyzing production capabilities. Incidentally, the Polish company did not even specify the origin of the goods.

5. The total ammunition supply volumes from the Polish company, which is identified by the SBGS leadership as particularly important for the elements of the Defence Forces of Ukraine, are approximately five times larger than the UAH 23 billion already recorded in the government decision signed by the Prime Minister. This means that financial continuation was planned for this story.

“Once the first tranches are transferred based on this strange government decision, don’t say you weren’t warned about the risks of such a deal—much larger in its negative consequences than those already existing with contracts for mines through the Alpha company. And don’t wait for force majeure this time. Because it already is,” added Zgurets. “I think this government order requires great attention from the expert community, understanding all the risks of publicizing information concerning these contracts. But I repeat, there are quite serious doubts about the possibility of fulfilling this contract and using state funds that are supposedly going to be directed towards munitions. We will return to this topic within the possibilities of our legislation, and there should also be public disclosure of this story,” summarized Zgurets.

The biggest ‘one-time’ scam of the year

The founder of the publication ‘Nashi Hroshi’ Yuriy Nikolov believes that this is ‘the biggest “one-time” scam of the year.’ Here is what he wrote on his Facebook page regarding this:

This is the biggest “one-time” scam of the year that I have seen. Skipping ahead, I will immediately say what I think about all this—it’s about “cut and run” plus “it’s for the elections, in case we win.”

So, UAH 23 billion in one go they want to divert to an overseas ‘proxy’ with 100% pre-payment for weapons that no one has seen. Not only are the prices inflated, but there is also the risk of never seeing this pile of billions again. Then, wander through foreign courts pleading for the money back and continue the already overdue contracts like Reznikov’s defence ministry does.

A lot about this was told by the armed expert Serhiy Zgurets today (video in the comments, recommended). The main points are as follows. Recently, a commercial offer came to the State Border Guard Service from a Polish company X (we won’t mention its name, ̷so ̷Putin doesn’t find out through whom we steal money, and suddenly the SSU accuses of treason for revealing sensitive information about money theft).

The Poles offered the border guards a bunch of shells, mines, and ammunition for rocket artillery. Although the border guards don’t even have enough weapons to fire so many munitions, and the Poles have no production of their own. It’s just “buy-sell” with an already tarnished reputation due to failed supplies to Ukraine during the war (more on that later).

On November 26, the head of the border guards informed Minister Umyerov about this. He said, there’s an offer—let’s take it.
And at this point, the Ministry of Defence should have had a reflex—to hand the matter over to its “Defence Procurement Agency.” It exists precisely to buy weapons in large volumes, push prices down, verify who they’re dealing with—scammers or honest offers of available arms. Then transfer it to the Armed Forces.
They could then talk about the existing cooperation experience with these Poles. About how the “DPA” of Pikuzo in 2023 made a deal with this X for the supply of shells for UAH 3 billion. But later, the Poles started dancing. They said, different parts of the shells are made in other countries. And there is something wrong with the shell fuses, so let’s replace them with others, and not even say exactly which ones.

Then the Ukrainian purchasers were shocked, started talking with our military whether this can be done. And then they also replaced Pikuzo with Bezrukova, and these Poles eventually, after three months of fooling around, simply reported that they were refusing supplies. Thank God no advance payment was made to these crooks then, so there were no losses. We just spent some time in vain counting on 25,000 shells, enough for a couple of weeks of war.

Obviously, at Bezrukova’s now, the Poles would be met with an especially passionate reception. And pictures of boxes with shells who knows where—they wouldn’t be able to avoid that. So this time they did not send their offer to the “DPA” at all. But they found border guards who had never dealt with matters of such magnitude.

But Umyerov did exactly the opposite. The Ministry of Defence personally referred to the Cabinet to ask to take UAH 23 billion from their ‘Agency’ and give them to the border guards. So they could make a deal with the Poles.

I, like all of us here, have no way of verifying whether the Poles will even bring those shells and mines someday. There is no time machine. But given the scale of the story—I don’t even want to check. Because the money from the “DPA” is taken away from already planned(!) and developed(!!) projects. And the Poles’ requirement is 100% prepayment not only for what they allegedly can bring immediately. But also for what they will only start making in 2025 at foreign factories. With those whom they will still have to negotiate.

Once again. 100% advance was not demanded even by Ukroboronprom manufacturers of mines, who eventually made whatever came their way. There, at least, only 75% of the money was taken away. And they are located in Ukraine. So here we would at least find the ends. And what about the Poles? Has Umyerov recovered many delayed deliveries from Reznikov’s suppliers? Doesn’t he want to share this very interesting figure?
Why do I say Umyerov here, because it is the old department of the Ministry of Defence that continues to lead the old contracts for about UAH 400 billion. They have not been given to any “DPA.”

So let’s sum up: for the sake of moving UAH 23 billion to the dubious Poles, Umyerov requested to take money from their own “Defence Procurement Agency” created specifically to weed out suspicious suppliers.

And there is clearly an agreement from the President’s Office for this. Because to believe that Shmyhal simply agreed to the horizontal scam of Umyerov-Deyneko of such a size as UAH 23 billion—I could never believe it. Our authorities are now arranged so that the Cabinet executes instructions from Bankova. Not heads the executive power of the country.