September 2026 brought yet another political scandal in the sphere of European security. Its essence is that as European capitals, under the slogan “we must arm ourselves faster than Russia,” ramp up defence spending, large-scale schemes of abuse, waste and intermediary mark-ups have come to the surface.
In early September 2026, The New York Times published data from closed audit reports of Ukraine’s Ministry of Defence and the State Audit Service. According to these documents, in 2024 alone the country lost approximately $1.2 billion due to fraudulent schemes, inefficient management and inflated prices in defence procurement. The main beneficiaries of this chaos turned out to be not only domestic operators, but also European intermediaries who secured contracts worth billions. Against the backdrop of ongoing hostilities and rising international tensions, billions of euros from the European Peace Facility (EPF) and national NATO budgets are literally “burning” in grey intermediary chains.
With the start of the full-scale war in Ukraine, the European defence industry faced surging demand for its products, while EU financial instruments such as the EPF became the main channels for compensating European states for weapons transferred to Ukraine and for the purchase of new ammunition. National procurement structures and the NATO Support and Procurement Agency (NSPA) sharply increased the volumes of funds they managed. However, haste and the regime of “military secrecy” led to the neglect of basic due-diligence procedures for counterparties. This created a fertile environment in which intermediaries embed commission mark-ups of 20–30%, while purchases are made at the upper price limits even from companies with questionable reputations.
One of the most striking examples reflected in closed Ukrainian audits of 2024–2025 concerned the procurement of Turkish-made missiles. During the tender, Ukrainian structures received three price offers from the same manufacturer: $4,200, $4,600 and $5,100 per unit. Under normal circumstances the choice would have been obvious. Instead, the contract was signed at the maximum price of $5,100 per unit and through a subsidiary of the Czech defence holding Czechoslovak Group (CSG). According to auditors’ estimates, the direct overpayment on this single deal amounted to around $130 million. CSG Holding, which has been actively involved in implementing the “Czech ammunition initiative” for Ukraine and NATO, has repeatedly come under scrutiny from investigators at Hunterbrook Media and investigace.cz. Journalists pointed to regular mark-ups on the reactivation of old Soviet ammunition, the concealment of key information about real production capacities ahead of an Initial Public Offering (IPO), and close political ties of the holding’s executives in European capitals.
On 3–5 September 2026 a political scandal erupted in Estonia, triggered by the publication of a State Audit report on contracts of the Estonian Centre for Defence Investment (RKIK) and ending with the resignation of Defence Minister Hanno Pevkur. The scandal originated in 2024, when RKIK signed four contracts for the supply of artillery shells for the Ukrainian Armed Forces, financed from EPF funds. The contractor was the Italian company Datasel SRL, controlled by the Indian structure Neco Defence Munitions, which received advance payments of approximately €70 million.
Deliveries planned from November 2024 were disrupted; the ammunition that was sent turned out to be defective and lacked the necessary quality certificates. As a result the contracts were terminated, and Estonian authorities launched court proceedings and arbitration in Strasbourg. Auditors found that RKIK partially lacked documents on the initial vetting of the supplier. The European Public Prosecutor’s Office (EPPO) intervened, opening an investigation into the misuse of European Union budget funds.
No less resonant was the international investigation into the NATO Support and Procurement Agency (NSPA), whose headquarters are in Luxembourg. Belgian and Luxembourg law-enforcement authorities uncovered a large-scale scheme involving the bribery of officials, the leakage of confidential tender information and money laundering through a network of shell companies. At the centre of the scandal were contacts between NSPA officials and military brokers as well as representatives of major defence contractors, including the Israeli giant Elbit Systems and its subsidiary Orion Advanced Systems, as well as the Spanish plant Fábrica de Municiones de Granada, owned by the same Czechoslovak Group. The total volume of bribes is estimated in millions of euros. In July 2025 NSPA suspended 15 contracts, 13 of which were linked to the Israeli giant Elbit Systems. The Spanish CSG plant also came under suspicion. In September 2025 a Belgian judge issued an international arrest warrant for the Italian consultant Eliahu Eluasvili, believed to be linked to lobbying for Elbit’s interests. According to investigators, approximately €1.9 million in bribes may have passed through one of the key figures, former NSPA employee the Belgian Guy Moerart. The agency manages procurements worth billions of euros annually, and any manifestation of corruption here strikes at the entire system of collective defence. This case has become the most serious blow to the reputation of the Alliance’s procurement structures in its entire history.
The paradox of the European defence sector is that the grey zone operates in both directions. While European intermediaries skim the cream off aid to Ukraine, other European firms continue to participate in supply chains of dual-use goods to Russia.
Journalistic investigations by the Organized Crime and Corruption Reporting Project (OCCRP) and Follow the Money show how CNC machine tools, microelectronics and chemical components continue to reach enterprises of the Russian military-industrial complex through shell companies in Germany, Switzerland and Turkey. Thus, the absence of strict control over intermediaries creates a dual threat: European taxpayers simultaneously overpay for weapons for Ukraine and indirectly finance technology leaks to Russia.
Analysis of the examples cited clearly demonstrates that the problem that has arisen is systemic in nature. At the heart of the issues exposed across the entire European military procurement system lies a fundamental conflict between the extraordinary regime of secrecy and basic principles of transparency, when defence ministries, under the pretext of military necessity, massively bypass open competitive procedures. This creates fertile ground for the “parasitism” of numerous intermediaries in the form of long chains of three or four resellers who inflate the final cost of products by 20–50% and more, while adding no real value to the goods themselves. The situation is aggravated by chronic neglect of obvious legal and reputational risks, because of which seven out of Ukraine’s ten largest military contractors continued to receive new multi-million contracts without hindrance, despite open criminal cases, past delivery failures and unfulfilled obligations.
In response to the crisis of trust, the role of the European Public Prosecutor’s Office (EPPO) has been strengthened at EU and NATO level, and initiatives for joint centralised procurement (the CORPUS project) are under discussion.
War in Europe has become a severe test for the transparency of arms-procurement structures. The build-up of military budgets in the absence of independent oversight and under the dominance of politically lobbied holdings has led to a significant portion of resources burning in corruption schemes. If European states and NATO do not limit the role of grey intermediaries and introduce end-to-end independent auditing, rising military expenditure will not deliver the expected security but will only fuel grow public distrust of the authorities.
