Top Defense Ministry official arrested for $40 million embezzlement in Ukraine

The Ukrainian Security Service reported that a senior Defence Ministry official was arrested for embezzling 1.5 billion Ukrainian hryvnia ($40 million) from an artillery shells contract.

Last December, the SBU says the official agreed to buy wholesale artillery shells from a special export company.

A better supply contract with the same manufacturer without intermediaries was later signed. The SBU said this significantly reduced delivery time and product cost.

According to the SBU, the defense official extended the original, more expensive contract and transferred 1.5 billion Ukrainian hryvnia ($40 million) to an affiliated foreign intermediary firm.

SBU says it found documents proving illegal activity. The official could serve 15 years if convicted.

The Ukrainian Ministry of Defense said it was trying to recover the funds.

Illarion Pavliuk, Head of the Ukrainian Ministry of Defense's Press and Information Department, said the contract was paid for but not delivered. He said lawyers were considering terminating the contract and recovering the funds.