Liiev and Lviv Arsenal Case: What is known about the case of supplying mortar rounds to the Armed Forces of Ukraine

It has been a year since law enforcement officers served a notice of suspicion to former Defense Ministry official Oleksandr Liev and a group of others in the case of failure to supply mortar rounds to the Armed Forces of Ukraine under a contract with the Lviv Arsenal company. The editorial board of UNN decided to find out what has happened this year and whether the military has already received the ammunition under this contract.

How the contract was signed

Back in the fall of 2022, the Ministry of Defense of Ukraine and the Lviv Arsenal company signed a contract for the supply of 100,000 mortar rounds worth almost UAH 1.4 billion. The contractor for the supply of ammunition from the Elmech plant in Croatia was the Slovak company SEVOTECH.

After all the checks and approvals, based on the decision of the working group, Oleksandr Liev, as a representative of the Ministry of Defense, and Yuriy Zbitnev, as director of Lviv Arsenal LLC, signed a contract. However, initially, this document did not provide for the transfer of funds, and an additional financial agreement could be signed only after Lviv Arsenal granted a license to export weapons from the Slovak company SEVOTECH. 

After the Ministry of Defense received the required package of documents from Lviv Arsenal, including an export license, and conducted the necessary checks, Liev and Zbitnev signed an additional agreement on financial obligations on November 10, 2022. According to this document, the Ministry of Defense was to transfer an advance payment to Lviv Arsenal in the amount of UAH 1,340,465,698.

The first batch of ammunition was supposed to be delivered to Ukraine on December 20, 2022. When it was not delivered, Oleksandr Liev began sending claims to Lviv Arsenal, demanding that it pay a fine for the delay and deliver the ammunition. In total, the Ministry of Defense sent five claims to Lviv Arsenal, but the company did not respond to them and did not return the money.

The Ministry of Defense tried to return the funds, but has not yet succeeded in doing so, as most of them - UAH 818 million - have been seized in the accounts of Lviv Arsenal as part of criminal proceedings. The other part of the funds - 30% of the amount transferred by the Ministry of Defense to the accounts of Lviv Arsenal - was transferred abroad by the Ukrainian company as an advance payment.

It is not known for certain where the money of the Ministry of Defense went abroad. However, according to investigative journalists, part of the funds that Lviv Arsenal transferred to SEVOTECH's accounts was transferred to the account of the Croatian company WDG Promet, owned by Matias Zubak.

"Loud" suspicions

At the end of January 2024, the case of non-fulfillment of the contract between the Ministry of Defense and Lviv Arsenal gained new momentum. On January 27, 2024, former Defense Ministry official Oleksandr Liev was detained.

On the same day, the Security Service of Ukraine reportedthat it had uncovered a scheme to embezzle public funds and that five people involved in the criminal proceedings were suspected. Investigators believe that the defendants created a criminal group to embezzle almost UAH 1.4 billion from the Ministry of Defense. 

Oleksandr Liev spent a month in a pre-trial detention center as part of this criminal proceeding, but he completely denies any accusations and notes that there were no facts of corruption or official negligence in his actions.

The director of the Lviv Arsenal, Yuriy Zbitnev, has been under house arrest for a year , and in a pre-trial detention center, and has been released on bail. Oleksiy Khoroshayev, co-owner of the Slovakian company SEVOTECH, which was supposed to organize the delivery of ammunition ordered by the Lviv Arsenal, has been in custody in the Czech Republic since September 2024.

What has changed over the year 

This year, law enforcement officers served two more suspicions as part of the criminal proceedings - to Matias Zubak, owner of the Croatian company WDG Promet, and Oleh Yevdochenko, a representative of the Lviv Arsenal company who was looking for suppliers.

Importantly, the emergence of these new suspects may indicate a change in the direction of the investigation. While initially the focus was on the Ministry of Defense and the officials who signed the contract, now the attention of law enforcement is shifting to those who directly received the funds but did not fulfill their obligations.

It is also known that the prepayment under the contract, which was supposed to be used for the purchase of ammunition, remains frozen on the accounts of the Lviv Arsenal, which is almost a billion hryvnias. This means that funds that could have been used to purchase other weapons are still blocked.

Interestingly, all this time, both the Ukrainian company Lviv Arsenal and the Slovak company SEVOTECH have been sending official appeals to the MoD, claiming that the ammunition is available and can be delivered for the full amount of the prepayment. Why these deliveries have not yet taken place remains an open question.

Oleksandr Liev's position

Oleksandr Liev recently statedthat after his dismissal in 2022, his activities at the Ministry of Defense were subjected to thorough scrutiny, including numerous searches, interrogations and polygraphs. He emphasized that at the beginning of Russia's full-scale invasion of Ukraine, all contracts were concluded under conditions where suppliers demanded full prepayment, and the Department was operating under martial law.

According to him, in 2022, the Department of Military and Technical Policy, where he has worked since May 2022, concluded 435 contracts worth UAH 519 billion. Of these, 385 contracts have been fully executed, 32 have been terminated and the money returned (or not paid), and 18 are problematic contracts that are currently being considered by commercial courts.

Of the paid contracts, 98% of the total payment was made during 2022-2024. These are contracts that were concluded in 2022, when no supplier even considered deliveries without full prepayment, and the Department operated under the terms of the PPP. I am confident that the remaining 2% will be delivered, or the state will return the money with fines and penalties (as provided for in the contracts),

The investigation has now been completed, and the case file is open for review, which may indicate that it is approaching trial. At the same time, the question remains whether the contract could have been implemented with a delay, ensuring the supply of ammunition to the Armed Forces, rather than keeping the shots and money blocked for so long

Recently, law enforcement officers announced another suspicion to former Defense Ministry official Oleksandr Liev. Details of the case are available at.

Add

The other day, another wave of news about last year's trial was released. "The Anti-Corruption Action Center published a photo of HACC judge Yaroslav Shkodin, with a post in which, among other things, he mentioned the Lviv Arsenal case and Liieva in particular. The post emphasizedthat "...Shkodin, while considering a motion to change the measure of restraint for former Defense Ministry official Oleksandr Liev, violated the Criminal Procedure Code and the Code of Judicial Ethics." 

All these accusations were denied by lawyer Andriy Slyusar.

In administering justice, a judge is independent and guided by the rule of law (Article 129 of the Constitution). Criminal proceedings are conducted in compliance with the rule of law, according to which a person, his/her rights and freedoms are recognized as the highest values and determine the content and direction of the state's activities (Article 8 of the CPC),

The lawyer explained that initially, the police served Oleksandr Liev with a suspicion under a corruption article, after which he was placed in a pre-trial detention center. However, the SAPO prosecutors later concluded that there were no signs of a corruption crime in this case, and it should be transferred back to the police. During the consideration of the issue of Liev's detention in court, a situation arose: he was not brought from the pre-trial detention center, and prosecutors did not appear at the hearing. The judge, taking into account the situation, decided to hold the hearing online and, after examining all the documents, decided to release Liev from the pre-trial detention center, as the prosecutor's office itself no longer saw any signs of a corruption crime in the case.

The other day , an open meeting of the Second Disciplinary Chamber of the High Council of Justice took place, where Mykhailo Yurevych, the senior prosecutor in the criminal proceedings, admitted that the change of the measure of restraint against Liev had no impact on the course of the pre-trial investigation.

"Since the pre-trial investigation against these persons was nevertheless completed, and if we take Liiev specifically, the risks according to which the preventive measures were chosen were not realized - that is, he did not hide during the investigation, and there is no evidence of any influence on the course of the pre-trial investigation," the prosecutor said.