Ukraine Details Scam by U.S. Firm in Production of 152 mm Shells

  • Defensemirror.com Bureau
  • 09:30 AM, December 3, 2022
  • 1401
Ukraine Details Scam by U.S. Firm in Production of 152 mm Shells
MSTA-S 152mm artillery

Ukraine's arms manufacturing consortium, Ukroboronprom has detailed how a U.S. based company, (GFL) scammed it in the manufacture of 152-mm shells used in a number of Soviet era artillery guns.
Ukroboronprom announced on December 1 the launch of local manufacture of 152-mm shells but gave an explanation why a plan to manufacture the same shells did not take off in 2018.
In 2018, one of the enterprises of Ukroboronprom actually produced about four dozen cases of up to 152 mm shells. But the matter did not go further, because the authorities at that time intended to deploy conveyor belt production of ammunition (for faster manufacture), the statement said.
For this purpose, it obliged the state defense enterprise - within the framework of a classified state contract - to purchase the necessary equipment through the Bezpeka State Enterprise, subordinated to the Ministry of Economic Development at the time.
"Under the terms of the state contract, the equipment supplier company was chosen by Bezpeka State Enterprise. The choice stopped at an American  company Gray Fox Logistics (GFL), which had never produced the necessary equipment and was unknown on the market. The State Defense Enterprise transferred an advance of $8.29 million to GFL for the performance of the contract, but still no equipment."

Ukraine Details Scam by U.S. Firm in Production of 152 mm Shells
152mm shell produced in Ukraine

Although the state defense enterprise of Ukroboronprom repeatedly insisted on choosing another supplier from South Korea, the choice of GFL stayed, the release said.
To date, criminal proceedings have been initiated based on these facts. A pre-trial investigation is ongoing. It was for this contract that the Security Service of Ukraine in October 2019 detained the ex-deputy minister of economic development, who worked in the government from 2016 to 2018. However, they later released him.
In 2020, the state-owned defense enterprise won a case against Gray Fox Logistics at the Arbitration Institute of the Stockholm Chamber of Commerce, but the prospects for an actual refund are unclear.
Besides, one of the managers of Gray Fox Logistics, who directly "looked after" the contract with Ukraine, was sentenced in the USA to 12.5 years in prison in 2019 in another case about the organization of an international fraud scheme.
The state defense enterprise never received the equipment for the conveyor production of the 152-mm projectile, instead it was scammed for 8 million dollars, which it is now forced to return to the state from its own funds for non-fulfillment of the imposed contract.

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