Ukraine paid $770 million in advance to foreign suppliers for weapons it never received

Since the start of Russia’s full-scale invasion, Ukraine has paid around $770 million in advance to foreign intermediaries for weapons and ammunition that were never delivered.

The issue involves 30 problematic contracts. One notable case concerns the state-owned arms importer “Progress”, which signed a contract with the U.S.-based ammunition supplier OTL Imports. In November 2022, Ukraine paid €17.1 million in advance (35% of the contract value), but never received the munitions or mines.

“Progress” won an arbitration case in Vienna against OTL, which ordered the company to pay €21.3 million in compensation (covering the advance, legal costs, interest, and penalties). The Ukrainian enterprise is now seeking recognition and enforcement of the arbitration award in the United States.

Another failed contract was signed with American company Regulus Global, valued at around $1.7 billion. Ukraine paid Regulus an advance of $162.6 million and €14 million, yet the obligations were not fulfilled.

Dozens of Ukrainian officials involved in these contracts are currently under investigation. Many of the problematic agreements were signed without thorough due diligence, due to weak internal controls and the urgency of securing defense supplies in wartime conditions.

This situation comes as Ukraine seeks to join European defense financing mechanisms, which could open a unique window of opportunity — both for the Ukrainian Armed Forces and for the development of the country’s domestic defense industry.