Kyiv under fire: War, corruption and frontline collapse

Ukraine is facing one of the most difficult moments of the war, as a convergence of corruption scandals, political turbulence, financial uncertainty and intensifying Russian offensives places unprecedented strain on the country’s ability to defend itself.

A series of investigations by Ukraine’s National Anti-Corruption Bureau, NABU, and the Special Anti-Corruption Prosecutor’s Office has exposed a vast kickback network allegedly operating inside the country’s strategic energy sector. Operation “Midas”, which lasted around 15 months and relied on more than a thousand hours of wiretaps, uncovered an estimated 100 million dollars siphoned from Energoatom’s contracts during wartime. Investigators conducted dozens of raids and seized large quantities of cash. Among the key figures named in the case are former Energy Minister Herman Halushchenko, his adviser Ihor Myroniuk, Energoatom security director Dmytro Basov, former Deputy Prime Minister Oleksiy Chernyshov, and businessman Timur Mindich, a longtime partner of President Zelenskyy from his Kvartal 95 entertainment years.

Mindich is suspected of playing a central role in the scheme before fleeing Ukraine just ahead of the raids. Politico notes that investigators are examining how he learned of the operation in advance. Some elements of the corruption schemes appear to trace back to former MP Andriy Derkach, later unmasked as an FSB agent, with parts of the operation allegedly run from property linked to his family.

The revelations come at a time when Ukraine’s anti-corruption institutions themselves have come under pressure. In the summer, the government attempted to reduce the independence of NABU and SAPO, moves that coincided with investigations into Zelenskyy’s close associates. According to the Kyiv Independent, this triggered public protests and raised concerns among civil society and international partners about growing political interference.

Parallel to these developments, the defence sector is also under scrutiny. Fire Point, a drone manufacturer that has rapidly become one of Ukraine’s largest military contractors, is the subject of a separate NABU investigation. The company, which only three years ago was a casting agency for film production, has received around one-third of Ukraine’s drone procurement budget. Its revenue reportedly jumped from four million dollars in 2023 to over one hundred million the following year, with approximately one billion dollars in contracts in 2025. Both the Kyiv Independent and The New York Times report that investigators are examining allegations of inflated prices, irregular contracting procedures and potential links to Mindich. A government audit cited by the Times found that the company avoided mandatory price negotiations, potentially costing the state an additional 16.7 million dollars. Fire Point denies wrongdoing.

These governance crises unfold as the European Union struggles to secure long-term funding for Kyiv. The European Commission’s plan to use frozen Russian state assets to underpin a 140-billion-euro loan has been blocked by Belgium due to legal and financial concerns related to Euroclear, the institution holding most of the assets. Brussels has floated alternative options, including joint EU borrowing or separate national contributions, but many member states are wary. Politico reports that Ukraine could run out of financial resources as early as spring unless a breakthrough is found.

Meanwhile, the military situation is deteriorating. Russia is close to capturing Pokrovsk, the most significant Ukrainian city to come under threat since the fall of Bakhmut in 2023. According to The New York Times, Russian forces now control the southwest of the city and have penetrated its centre and western districts, turning much of Pokrovsk into a contested grey zone. Ukrainian troops are heavily outnumbered, by as much as eight to one, according to President Zelenskyy, and overstretched as brigades are moved across the front line to plug gaps. The nearby town of Myrnohrad risks being cut off, and the fall of Pokrovsk could open the way towards Sloviansk and Kramatorsk, the last major Ukrainian strongholds in Donetsk.

The Institute for the Study of War reports that Russia has adopted a new operational model combining prolonged air interdiction, tactical strikes and small-group infiltration. This approach has already forced Ukrainian withdrawals in areas such as Novouspenivske, Nove and Rivnopillya, and is contributing to the encirclement risk around Pokrovsk.

As Russia intensifies drone and glide-bomb attacks across the country, Ukraine faces the difficult reality of fighting a major war while grappling with corruption scandals, weakened institutions, budget uncertainty and a severe manpower shortage. Together, these pressures are shaping what analysts describe as the most serious moment for Ukraine since the outset of the full-scale invasion.

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