The SSU has gathered evidence implicating the leadership of a Ukrainian shipyard in financing and supporting Russian military efforts, including work on naval bases.
The suspects face charges that could result in up to 12 years of imprisonment.
SSU unveils alleged Ukrainian holding’s role in Russian warship construction
In a counterintelligence breakthrough, the State Security Service of Ukraine (SSU) has exposed an organised scheme involving the leadership of a Ukrainian construction holding company. The holding is accused of clandestine cooperation with Russian military and governmental entities since the onset of the full-scale war between Russia and Ukraine.
The SSU’s investigation has revealed contracts totalling nearly Rbs100bn ($722m), enabling Russia’s naval and defence sectors while bolstering the aggressor state’s economy.
The allegation involves the company’s contracts for constructing a ship repair plant designed to service Russian warships at the Novorossiysk naval base, a maritime hub for Russia.
Since Russia invaded Ukraine, Ukrainian attacks using swarms of low-cost USV platforms have inflicted losses on Russian naval assets, sinking both a corvette and a landing ship within the first two months of 2024.
Similar swarming attacks have also forced the Russian military to divert additional defensive assets to protect naval installations in Sevastopol and Novorossiysk, as highlighted by GlobalData’s “Thematic Intelligence: Ukraine Conflict Impact in Aerospace, Defense & Security (2024).”
Collaboration with Russia unveiled
One of the investigation’s findings is the potential for future projects, including negotiations regarding reconstructing a submarine shipyard in St. Petersburg. This development signals ongoing cooperation that, if unchecked, could further reinforce Russia’s maritime military capabilities.
The SSU’s investigative efforts uncovered that the Russian branch of the holding company had been systematically funnelling billions of rubles into the Russian state budget. To obfuscate their illicit activities, the Ukrainian businessmen utilised offshore companies to hide the transactions and shield their operations from Ukrainian authorities. This financial manipulation is typical of sanctioned entities attempting to continue business operations while avoiding detection.
Western sanctions on Russia, following its 2022 invasion of Ukraine, have significantly impacted the Russian defence industry, mainly by cutting off access to semiconductors and defence components.
As GlobalData’s intelligence on the Russian defence market reports, with the invasion of Ukraine, sanctions continue to impact Russian naval shipbuilding programmes.
Russia’s dependence on foreign components, exacerbated by sanctions and isolation following the Ukraine invasion, hampers its ability to produce and maintain advanced warships.
Evidence and arrests
The SSU executed search warrants across multiple offices and residences in Kyiv. Among the seized items were digital evidence, including computers, flash drives, and documents, all corroborating the unlawful activities. Investigators also discovered gold bars and nearly $700k in cash, hinting at the scale of the illicit gains.
Charges have already been brought against three individuals central to the conspiracy. The owner of the construction holding is charged under several articles of Ukraine’s Criminal Code, including organising economic activity with an aggressor state. The director of one of the holding’s enterprises and the chief accountant of the Russian branch also face similar charges for coordinating the illegal activities. All suspects could face up to 12 years in prison if convicted.
Ongoing investigations and future safeguards
The SSU’s investigations continue under the procedural oversight of the Kyiv City Prosecutor’s Office, signalling that further revelations could emerge regarding the full scope of the holding’s activities. Ukrainian authorities are now expected to reinforce measures designed to prevent future incidents of economic collaboration with Russia, as the country remains in a heightened defence against ongoing aggression.
