Ukraine's Defence Intelligence's specialised importer company owes state over US$19 million

The arms importing company SpetsTechnoExport, which has been under the control of Defence Intelligence of Ukraine (DIU) since 2022, has been concluding arms purchase agreements at inflated prices, not always fulfilling billion-dollar contracts, and accumulating more than UAH 800 million (approx. US$19.3 million) in debt to the state. This is only the amount officially recognised by the courts.

Source: Ukrainska Pravda investigation Defence Intelligence is shopping. How Ukraine overpays tens of millions of euros for delayed weapons deliveries

Details: The editorial office received a letter from the head of SpetsTechnoExport, Oleksii Petrov, to the deputy minister of defence, which revealed a number of problems with arms procurement. In particular, large defence contracts are not always executed on time, and state money is not always returned after the contracts are not fulfilled.

For reference: Ukraine created the Defence Procurement Agency in mid-2022 in accordance with NATO standards. The agency was supposed to make arms procurement transparent for Ukraine and prevent billions of dollars in defence theft. It was established under the tenure of Defence Minister Oleksii Reznikov.  

At that time, NATO recommended liquidating the so-called special importers, companies that used to sell Ukrainian weapons abroad and now buy them for Ukraine.

However, the special importers were not liquidated despite Reznikov's statement that they had problems in the first year of the full-scale invasion—in particular, Western partners complained about these companies' dishonesty.

Moreover, in mid-2022, one such company, the State Self-Supporting Foreign Trade Enterprise SpetsTechnoExport, was removed from the Ministry of Defence's jurisdiction at the request of Defence Intelligence of Ukraine and transferred to DIU.

In the first days of 2023, Oleksii Petrov, who headed the Security Service of Ukraine's Counterintelligence Department from 2017 to 2019, was appointed to head SpetsTechnoExport. In 2020, after the change of government, he became the head of the Zakarpattia Oblast State Administration and then headed the list of the presidential party Servant of the People in the elections to Zakarpattia Oblast Council and eventually served as the head of Zakarpattia Oblast Council until the end of 2021.

In August 2024, one and a half years after becoming the chief of DIU's arms special importer, Petrov sent a letter to Deputy Defence Minister Dmytro Klymenkov, requesting that the company not be blocked despite its failure to fulfil all contracts and its accumulation of debts to the state.

Petrov attributed the company's difficulties to various factors, including "changes in logistics routes", "disruptions in delivery schedules by certain foreign suppliers", "irresponsible companies" with which contracts had been signed, and even "Houthis in the Red Sea".

From this document, Ukrainska Pravda learned that:

• SpetsTechnoExport has failed to fulfil numerous contracts.
• The situation has led to the state, represented by the Ministry of Defence, suing its own special importer.
• As of August 2024, SpetsTechnoExport owes the Ministry of Defence over UAH 820 million (approximately US$19.9 million) in principal debt, along with more than UAH 4.5 million (around US$109,000) in expenses related to court fees paid by the Ministry.

Ukrainska Pravda journalist Mykhailo Tkach emphasises that these debts represent only those recognised by Ukrainian courts, and the total amount of potential debts is currently unknown and could be significantly higher.

The letter further discloses that SpetsTechnoExport has refunded around UAH 9 billion (approximately US$218,000) to the state for weapons never delivered to the defence forces.

"This seems to indicate that SpetsTechnoExport undertook to supply essential weapons and received billions of hryvnias from the state for this purpose but did not consistently fulfil its obligations. After significant delays in contract fulfilment and court proceedings, the company refunded some of these funds while the military continued to wait for the promised weapons," the journalist said.

In general, Ukrainska Pravda sources reported that Ukrainian courts are currently reviewing dozens of cases involving claims filed by the Ministry of Defence against the company controlled by DIU.

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