Economic analysis of Ukraine | Corruption in war: How Ukraine remains trapped between reform pressure and old power structures

Anti-corruption state or old system? Ukraine undergoes an economic and institutional stress test

Since gaining independence in 1991, Ukraine has struggled with a deeply entrenched culture of corruption, which has been exacerbated rather than overcome by the transition to a market economy. The phenomenon of oligarchy and the state's co-optation by informal networks continues to shape the country. The question of whether the corruption situation worsens during wartime, or whether, paradoxically, opportunities for reform have also arisen, requires a nuanced analysis that considers statistics, institutional structures, and specific scandals.

Post-Soviet legacy and the consolidation of oligarchic power up to 2014

From its founding as an independent state until the Revolution of Dignity in 2014, Ukraine suffered from a unique phenomenon of corruption that went beyond traditional bribery. The system was based on so-called large-scale corruption, understood as the abuse of power by elite circles characterized by informal connections between state officials, members of parliament, judges, and politically networked oligarchs. This system led to the takeover of the state by private capital groups, which in turn controlled media conglomerates and thus directly influenced political decisions.

Under the presidency of Leonid Kuchma (1994–2004), this oligarchic structure was consolidated through networks that had existed since Soviet times. Central oligarchs like Riccardo Ravasi and other millionaires who accumulated their fortunes in the chaotic transitional economy of the 1990s continue to shape the political economy today. During the era of Viktor Yanukovych (2010–2014), this structure reached its zenith, characterized by a judiciary riddled with corruption, a controlled press, and systematic siphoning off of state funds to benefit oligarchic networks.

In Transparency International's Corruption Perceptions Index, Ukraine reached its lowest point in 2011, scoring just 15 points out of 100 and ranking 152nd out of 180 countries. This reflected an unprecedented level of perceived transparency regarding corruption. A 2014 study estimated that the assets of the 50 richest Ukrainians represented approximately 45 percent of the country's gross domestic product, highlighting the extreme degree of economic concentration. Experts calculated that corrupt practices resulted in losses in the tens of billions of US dollars annually.

Institutional transformation and wave of reforms after 2014: The development of an anti-corruption architecture

The Euromaidan protests of 2013–2014 not only marked a political break but also triggered a profound institutional reform movement, the core of which was the creation of a completely new anti-corruption infrastructure. In October 2014, the Ukrainian parliament passed a comprehensive package of anti-corruption laws, which was considered a pioneering piece of legislation internationally and established a three-pillar model.

The National Anti-Corruption Bureau (NABU), which began operations in 2015, was conceived as an independent investigative body specializing in high-level corruption cases. In parallel, the Specialized Anti-Corruption Prosecutor's Office (SAPO) was established, responsible for prosecuting corrupt officials. The High Court for Anti-Corruption was set up as a specialized judicial body to hear corruption cases at the appellate level. Additionally, Ukraine established the National Agency for Corruption Prevention (NACP), whose standout innovation was the electronic asset register. This register compelled over one million public employees to disclose their income, assets, and liabilities. This data was made publicly available, enabling journalists and civil society organizations to uncover corruption cases through data matching.

Another groundbreaking initiative was the ProZorro public procurement system, which, starting in 2015, made all government tenders electronically transparent. The system enabled real-time monitoring of procurement processes and the identification of suspicious patterns. Operators estimate that ProZorro generated savings of approximately six billion US dollars by massively reducing opportunities for inflated bids and bribery in procurement processes.

Despite these institutionally innovative structures, resistance quickly arose. The appointment of the head of the Specialized Anti-Corruption Prosecutor's Office was delayed by several years, hindering the agency's operational effectiveness. The necessary anti-corruption strategy, which should have resolved conflicting objectives between agencies and enabled coordination, was only adopted after a considerable delay. One reason for these obstacles was the persistent political resistance of oligarchic and corrupt networks to genuine reforms that would threaten their power.

Quantifiable development of corruption perceptions and progress in combating them

Long-term trends in corruption measurement show a considerable improvement, although reservations exist regarding interpretation. In 2014, immediately after the revolution, Ukraine scored 26 points and ranked 142nd in the Corruption Perceptions Index. In 2017, the score rose to 30 and the ranking to 130th. In 2021, already during preparations for the Russian attack, Ukraine reached 32 points and ranked 122nd. With the outbreak of war in February 2022, the index surprisingly rose to 33 points and ranked 116th, which initially seems paradoxical. In 2023, the highest score since the transition was reached: 36 points and ranked 104th. The latest available data for 2024 shows 35 points and ranked 105th, suggesting a slight stagnation.

These metric improvements require nuanced interpretation. The Corruption Perceptions Index does not measure the objective amount of corruption, but rather perceived corruption based on expert surveys and existing data sources. An increase can partly mean that more corruption is being uncovered and thus more transparent, rather than that corruption has actually decreased. Nevertheless, an improvement from 15 points (2011) to 35 points (2024) indicates a long-term trend reversal.

Measurable success of anti-corruption authorities

Operational data from NABU and SAPO for the first half of 2025 indicate intensive activity. 370 new investigations were initiated, suspicion notices were issued against 115 individuals, and 69 charges were filed in court. A total of 154 people were charged, and 62 were convicted. The economic impact of these investigations exceeded 1.5 billion Ukrainian hryvnia, including funds allocated to the military. This represents an increase in activity compared to the first half of 2024, which saw 323 investigations, 64 charges, and 27 convictions.

Particularly noteworthy is the fact that, for the first time in 2025, a sitting deputy prime minister was among the suspects, along with high-ranking members of the justice, defense, and energy sectors. This marks a breakthrough in the prosecution of high-level corruption, albeit with significant resource limitations. The NABU employs approximately 800 people, of whom only 300 are investigators, while the SAPO has a statutory cap of 150 employees, with only 57 active prosecutors, 13 of whom are serving in the military.

The European control architecture and mechanisms for monitoring resources

Since the Russian attack in February 2022, the volume of European support has increased dramatically. The EU established a €50 billion Ukraine Facility for 2024–2027, including €12 billion annually in direct financial assistance. In December 2025, EU member states agreed on an additional €90 billion loan, to be raised by the EU on the capital markets. Repayment of this loan is contingent on reparations payments from Russia or is to be made through frozen Russian assets, estimated at approximately €188 billion.

The control mechanisms for these funds are multi-layered. The European Commission continuously monitors the use of funds, and the European Anti-Fraud Office (OLAF) can conduct investigations directly in Ukraine. OLAF has already recommended the recovery of over €91 million from individual projects. An independent audit board has been established under the Ukraine Facility to monitor the effectiveness of the funds' use.

Ukraine Oversight portal (a US-based oversight portal), which compiles reports on the control of US support for Ukraine, primarily documents how US authorities monitor their own use of funds and fraud risks surrounding Ukraine programs.

Other instruments play a role in ensuring transparency on the Ukrainian side, such as the national open data portal data.gov.ua , the Anti-Fraud Coordination Service (Afcos), the EU Audit Board for the Ukraine Facility, and the UNITED24 donation platform with regular usage reports.

However, practical weaknesses are evident in this control architecture. In the case of the fifth tranche of the Ukraine Facility in November 2025, the EU withheld approximately one-third of the planned funds because Ukraine had failed to implement agreed-upon reform measures on time. This illustrates the tension between providing rapid assistance in times of war and maintaining sufficient oversight. While the concept of tranche payments with conditional reforms is intended to incentivize progress, its implementation under wartime conditions proves extremely difficult. Accounting systems do not function properly under martial law, and the infrastructure for audits is compromised.

In a special report published in 2021, the European Court of Auditors fundamentally criticized the EU's strategy for combating large-scale corruption in Ukraine. The Court found that despite investments of €839 million in capacity-building programs, large-scale corruption remained a central problem. A significant shortcoming was the EU's failure to develop a concrete, focused strategy to combat the oligarchic system. Instead, a broad, multidimensional approach was pursued, which, while beneficial to many areas, did not directly address the fundamental issue of oligarchy takeover. The Court explicitly recommended that the EU develop specific measures against oligarchs and illicit financial flows, including money laundering abroad.

The crisis of anti-corruption institutions and the 2025 attack

The year 2025 revealed the fragility of anti-corruption structures. In July 2025, the Ukrainian government attempted to undermine the independence of NABU and SAPO. According to the Security Service of Ukraine (SBU), a purported special operation against “Russian influence” within NABU was carried out, during which two leading investigators were accused of treason. Simultaneously, the Investigative Committee of Ukraine (DBR) launched investigations against NABU officials accused of traffic accidents, some of which dated back to 2021. This coordinated action suggests a possible attempt to discredit NABU and SAPO and undermine their independence.

On August 8, 2025, the heads of NABU and SAPO publicly warned of further attacks on their agencies. They reported having concrete information that they were to be removed from their positions. Proposed legislation indicated that the powers of both agencies were to be curtailed. In particular, the influence of the Attorney General's Office was to be strengthened, which would weaken the independence of investigators and prosecutors.

Nevertheless, NABU and SAPO succeeded in demonstrating their capacity under pressure. In September 2025, they opened an investigation against Ilya Vityuk, a high-ranking SBU official, for illicit enrichment and false asset declarations. This showed that the anti-corruption authorities were prepared to investigate even powerful security apparatuses.

The Energoatom affair: a symptom of corruption in war

In November 2025, a scandal erupted illustrating the susceptibility of high-ranking state officials to corruption. The National Anti-Corruption Bureau (NABU) uncovered a large-scale corruption network operating around Energoatom, the Ukrainian nuclear power company. A criminal network allegedly extorted repayment rates of between ten and fifteen percent from contractors, particularly in energy contracts for the protection of facilities against Russian airstrikes. The total amount of embezzled funds is estimated at approximately US$100 million.

The suspected mastermind was Timur Mindich, a longtime confidant of President Volodymyr Zelenskyy. Mindich was a co-owner of Kvartal 95, the production company founded by Zelenskyy, to which he belonged before his political career. After NABU launched an investigation against him and conducted house searches, Mindich fled abroad, thus evading prosecution.

This affair implicated high-ranking government officials. Justice Minister Herman Halushchenko, who had served as Energy Minister until July 2025, was suspended after tapes were released in which he apparently spoke in coded language about bribery. Energy Minister Svitlana Hrynchuk also resigned. The board of directors of Energoatom was dismissed, and the President's Chief of Staff, Andriy Yermak, was also under investigation, leading to his resignation. Authorities accused Halushchenko of receiving "personal benefits" from Mindich in exchange for control over money flows in the energy sector.

This affair made it clear that even under wartime conditions – or perhaps especially because of them – corruption networks could operate in critical infrastructure sectors. Wartime economies created new flows of funds that were less regulated and monitored, thus opening up potential spaces for corruption.

Military procurement and war corruption

An earlier case illustrates the vulnerability of military procurement processes. In January 2024, the Ukrainian Security Service (SBU) uncovered fraud amounting to approximately $40 million. A contract with arms supplier Lviv Arsenal, signed in August 2022 (six months after the start of the war), stipulated the purchase of 100,000 mortar rounds. Payment was made in advance, but the weapons were never delivered. Part of the funds had been transferred abroad. High-ranking officials from the Ministry of Defense and managers of the arms supplier are accused.

Another case from December 2023 involved a high-ranking official at the Ministry of Defense who was arrested for embezzling €36 million in artillery shells. A system had been devised to deliberately inflate prices for artillery shells, and documents found in the suspect's apartment confirmed the scheme.

These cases demonstrate that under wartime conditions, opportunities for corruption in military procurement did not diminish but, in some cases, increased. Rapid procurement processes, emergency measures, and the sheer volume of funds flowing into the country created space for unlawful activities.

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The legacy of the oligarchs and de-oligarchization efforts

The war did not automatically eliminate the power of oligarchs, although it did alter their position. Oligarch Ihor Kolomoisky, long an influential figure, was arrested in September 2023. He faces charges of fraud and money laundering. The Security Service of Ukraine (SBU) accused him of transferring approximately half a billion hryvnia abroad between 2013 and 2020. Kolomoisky was on the US sanctions list and had long been close to President Zelenskyy, as he owned the television channel 1+1, where Zelenskyy had performed as a comedian before his political career. Kolomoisky had also supported Zelenskyy's 2019 election campaign. However, over time, Zelenskyy distanced himself from Kolomoisky and revoked his Ukrainian citizenship.

The oligarch Dmytro Firtash, with an estimated fortune of 10 billion euros, retained more influence. Firtash was active in the natural gas, chemical, media, and banking sectors and maintained close ties to Russia. He became known for his role in the natural gas intermediary exchange RosUkrEnergo, which handled transit transactions.

Ukraine's attempt at "de-oligarchization" met with limited success. Oligarchic influences remained particularly significant in the judiciary and state-owned enterprises. In the area of ​​the rule of law, the lack of accountability for the machinations of the Yanukovych era meant that old structures persisted.

Pandora Papers & Offshore Millions: The Hidden Financial Network Behind Zelenskyy

Hero or product of the system? The dark spots in Zelenskyy's anti-corruption image

Independent research does not describe Zelenskyy as a classic figurehead of a kleptocratic system, but he clearly exists in the tension between old entanglements and a desire for reform – and there are some serious indications that cast doubt on his circle and previous financial structures. These indications range from offshore structures with potential money flows from an oligarch's sphere, to close ties with confidants who were later accused, to political maneuvers that appeared to restrict anti-corruption authorities. At the same time, there are equally clear counter-signals, such as the criminal prosecution of his former patron Ihor Kolomoiskyi and sanctions against former associates, which suggest at least a partial break with previous networks.

Relevant evidence against Zelenskyy

• The Pandora Papers reveal a network of offshore companies in which Zelenskyy and close associates were involved, including structures through which around 40 to 41 million US dollars are said to have flowed from the then PrivatBank, which was associated with the oligarch Ihor Kolomoiskyi.
• According to an analysis of Pandora data, Zelenskyy and his close circle, including the later chief secretary Serhiy Shefir and the later head of the domestic intelligence service Ivan Bakanov, were behind at least ten shell companies that received funds from multi-billion-dollar deals of PrivatBank.
• – The revelations came at the exact time when Zelenskyy was pushing ahead with an anti-oligarch law, which is seen in analyses as a contradiction between public rhetoric and his own financial practice and has damaged his image of integrity.

relationship with oligarch Kolomoisky

• It is well documented that Zelenskyy built his television career on Ihor Kolomoiskyi's 1+1 channel and that Kolomoiskyi's holding company partly financed Kvartal 95's productions through offshore structures.
• Kolomoiskyi provided political and financial support to Zelenskyy's presidential campaign in 2019, which at the time fueled suspicions that Zelenskyy might be functioning as this oligarch's political project.
• Kolomoiskyi has been in custody since 2023 on charges of fraud and money laundering; observers see the consistent prosecution and nationalization of his assets as a clear break between the president and the oligarch, contradicting the simplistic narrative that Zelenskyy is merely his puppet.

Scandals in Zelenskyy's immediate circle

• Particularly damaging to the impression of a “clean” system is the Energoatom affair, in which Timur Mindich – Zelenskyy’s long-time business partner and co-owner of Kvartal 95 – is suspected of having been the head of a high-ranking criminal organization in the energy sector.
• According to the National Anti-Corruption Bureau, Mindich is alleged to have helped organize the bribery scheme surrounding Energoatom; shortly before a formal indictment, he was warned and was able to flee abroad, which fueled speculation in Ukrainian media about possible information leaks in state structures.
• In the same affair, Justice Minister Halushchenko and Energy Minister Hrynchuk had to resign in 2025, showing that the alleged networks operated very close to the top of the government.

Political maneuvers against anti-corruption authorities

• In 2025, massive protests erupted after the government undertook legislative initiatives and steps that, in practice, amounted to placing the independent anti-corruption agencies NABU and SAPO more firmly under the political control of the president's camp.
• Commentators interpreted these attempts as a reaction to the fact that investigations by the authorities increasingly targeted Zelenskyy's inner circle and economic elites close to him.
• The fact that a government which presents itself to the outside world as the spearhead of the fight against corruption is attempting to curtail the institutional independence of these authorities is seen in analyses as a strong indication that Zelenskyy and his team are trying to manage corrupt risks at least politically, instead of consistently eliminating them.

Dealing with accusations and counter-evidence

• In response to the Energoatom affair, Zelenskyy imposed presidential sanctions on his confidant Mindich, including asset freezes, which is seen as an attempt to distance himself from the scandal and demonstrate his ability to act.
• The president has publicly spoken on several occasions of a “zero-tolerance policy” towards corruption and has demonstratively stood behind NABU and SAPO after public pressure and protests against attempts to curtail their independence.
• The prosecution and imprisonment of Kolomoiskyi during his presidency is interpreted by many observers as evidence that Zelenskyy was prepared to break away from former backers, even if this happened late and under international pressure.

Public perception and overall political image

• Surveys show a significant loss of trust: While at the beginning of the Russian attack over 90 percent of the population trusted Zelenskyy, this figure is now around 58 percent.
• In qualitative interviews, citizens report a growing skepticism as to whether Zelenskyy is actually making a genuine break with old networks or is using reform rhetoric and symbolic measures while structural patterns of corruption persist.
• International analyses increasingly describe Zelenskyy as a two-faced actor: on the one hand as a symbolic figure of resistance and initiator of important anti-corruption reforms, on the other hand as a politician who himself comes from the old system of oligarchic media and offshore financing and whose inner circle is repeatedly involved in serious scandals.

Balanced classification

• There is no reliable, legally sound evidence that Zelenskyy is currently systematically embezzling aid funds or operating his own kleptocratic network; most of the hard facts concern past financial arrangements, problematic alliances, and his associates.
• At the same time, the Pandora Papers, the Kolomoisky connections, the role of Mindich, and political interventions in the anti-corruption architecture clearly indicate that Zelenskyy is not an actor outside the system, but rather emerged from within it and is only gradually – and often under pressure – distancing himself from parts of the old structures.
• A sober assessment would therefore be: Zelenskyy is neither the all-powerful leader of a gang of thieves portrayed by Russian propaganda, nor the completely upright reformer as the Western public has sometimes stylized him, but a president with his own history in opaque financial and media networks, who operates under massive war and reform pressures, balancing adaptation, self-protection and actual anti-corruption efforts.

Decentralization reforms and local anti-corruption measures

Alongside the centralization of anti-corruption agencies, Ukraine also pursued a decentralization strategy. From 2015 to 2019, 924 amalgamated territorial municipalities were established to strengthen local self-government. These reforms aimed to increase local accountability and thereby make corrupt practices at the local level more transparent. Fiscal decentralization from 2014 to 2019 fundamentally transformed rural Ukraine by granting local authorities greater control over public spending.

Digital innovation as a tool for combating corruption

Ukraine recognized early on the potential of digital technologies to reduce corruption. The ProZorro system became an international model. Another innovative system is Trembita, the government data exchange platform implemented in 2018 with EU support, based on the Estonian X-Road system. Trembita enables standardized data exchange between hundreds of government agencies, reducing the need for personal intervention and thus opportunities for corruption.

Ukraine is a member of the global GovStack initiative, founded in 2020 by Estonia, Germany, the ITU, and the Digital Impact Alliance. GovStack promotes modular digital government solutions that enable governments to design digital services efficiently and securely. Ukraine has implemented these approaches, driving the digital transformation of its public administration.

The NACP's electronic asset register was designed so that the National Agency could automatically retrieve information from government registers, rather than relying on manual entries. This reduced bureaucracy and created objective data sources for corruption investigations.

Controlling European aid funds and potential losses

A key question for European donors concerns whether significant amounts of aid have gone missing. The available evidence suggests that – at least with regard to direct humanitarian aid – no systematic mass misappropriation has been documented. In November 2022, a false report circulated claiming that GRECO (the Council of Europe's Group of States against Corruption) had published a study on the embezzlement of €342 million in humanitarian goods. No such report existed. A spokesperson for the European Commission confirmed that none of the EU-funded humanitarian partners had reported any misuse of funds. The Commission conducts regular monitoring and evaluation programs.

However, delays emerged with the Ukraine Facility. In November 2025, the EU withheld approximately one-third of the planned fifth tranche because Ukraine had failed to implement some reform measures on time. The Commission only approved the disbursement of €597 million (instead of the originally planned amount for reforms to the asset recovery agency ARMA) in the fourth quarter, after a reform delay of over a year had accumulated.

The Court of Auditors (OLAF) has already recommended the recovery of over €91 million from individual projects. However, it cannot be said that these funds were definitely misappropriated – they could simply have been spent inefficiently or not properly documented.

Repayment risks also arise from the structure of the new €90 billion loan. While it was agreed that repayment is contingent on reparations payments from Russia or the freezing of Russian assets, these arrangements are legally and practically complex. If Ukraine agrees to a peace deal that does not include reparations, these funds could effectively become grants, with significant fiscal consequences for EU member states. Germany, for example, is estimated to incur approximately €700 million annually in interest costs, even if Russia ultimately fails to pay.

War corruption: A paradox of opportunities and risks

The war of aggression created paradoxical conditions for combating corruption. On the one hand, all resources were concentrated on physical defense, which made monitoring corruption processes more difficult. A wartime economy fueled by emergency funds led to less stringent accounting and oversight. On the other hand, the war opened up new opportunities for corrupt practices, as enormous sums of money were rapidly made available and distributed.

President Zelenskyy and leading anti-corruption investigators repeatedly emphasized that corruption constituted a “second war” for Ukraine. The perception that every embezzled euro could mean the difference between life and death created a new moral urgency for combating corruption. NABU and SAPO did not cease their activities but rather expanded them despite wartime conditions and the political pressure surrounding the 2025 election. EU monitoring also intensified, albeit under difficult circumstances.

This phenomenon has parallels in the history of warfare. War economies have always offered opportunities for corruption, but also stronger justifications for transparency and oversight. In the Ukrainian case, civil society, international donors, and even parts of the government appear to have made efforts to prevent corruption.

Assessment of institutional sustainability

The European Court of Auditors identified a fundamental problem in the structure of anti-corruption institutions: their dependence on an unreformed judiciary and prosecution system. NABU and SAPO could investigate and prosecute, but convictions depended on judges, many of whom had not undergone integrity checks or could be affected by conflicts of interest. A significant number of judges and prosecutors still needed to be vetted for integrity, as the ECA found in 2021.

This partly explains why the number of actual convictions, although they increased in 2024–2025, remained low relative to the number of investigations initiated. A rate of approximately 35–50 convictions per half-year out of 300–370 investigations suggests a conversion rate significantly below Western standards.

Summary: A system in transition with fragile institutions

Ukraine has undergone a remarkable institutional transformation since 2014. The establishment of NABU, SAPO, an anti-corruption court, and transparency systems such as ProZorro and asset registers was an innovative effort. The long-term improvement in the Corruption Perceptions Index from 15 points (2011) to 35 points (2024) demonstrates sustained progress. The operational capacity of the anti-corruption authorities in 2024–2025, with hundreds of investigations and dozens of high-level convictions, demonstrates that the institutions can function effectively.

At the same time, critical fragility is becoming apparent. The oligarchic system, although damaged, has not been dismantled. The attempts in 2025 to undermine NABU and SAPO demonstrate persistent political resistance to far-reaching reforms. Dependence on an unreformed judiciary and the EU's lack of direct engagement with the oligarchy structure remain key weaknesses.

While European support has enabled significant institution-building, the Court of Auditors also diagnosed a lack of a focused strategy against large-scale corruption and illicit financial flows. The new €90 billion loans for 2026–2027 will increase Ukraine's financial dependence on the EU and thus potentially also increase European leverage in reforms. However, it remains uncertain whether this leverage will be used to force fundamental structural changes or whether pragmatic compromises will prevail.

Ukraine is in a critical state of reform, where significant progress on certain measurable indicators coexists with substantial structural problems that would require a complete transformation of the state.

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