The Economist: While Ukraine is under fire, corruption and political chaos abounds

Pic.: FT

When Ukraine’s anti-corruption investigators released their latest tranche of wiretap recordings of senior officials on August 19th, it was the chutzpah that shocked most. “He says defeating corruption is the wrong approach,” says the voice of Iryna Mudra, deputy head of Zelensky’s presidential office, referring to an unknown man. “It needs to be systematised and controlled.” Underhand schemes are rushed through because “someone up there is stamping their little feet”.

Bankers initially cold on the idea of breaking the law turn into “darlings... crawling in like little kittens” once senior officials talk to them. Corruption is treated not as exceptional scandal but as routine workflow. The tapes could hardly have surfaced at a worse time, with Russia escalating its brutal air campaign and Ukraine’s president facing the most direct challenge yet to his leadership — from a man who was once part of his core team, The Economist writes.

The investigations centre on two linked operations, codenamed “Forrest Gump” and “Femida”. Detectives say members of the presidential office ran a money-laundering scheme to raise 150m hryvnia ($3.4m) in bail for Herman Haluschenko, a former justice minister charged in an earlier anti-corruption case. Officials hacked the state register to take over ownership of several companies, then used them to raise funds. Senior managers at Sense Bank, a previously Russian-owned bank that was nationalised in 2023, turned off money-laundering prevention software to allow the transactions to complete, according to sources at Ukraine’s national bank.

The investigations are uncomfortable for Kyrylo Budanov, the head of the presidential office and Ms Mudra’s immediate superior. Neither Mr Budanov nor Ms Mudra were obvious beneficiaries of Mr Haluschenko’s release; indeed the latter was a sworn rival. Mr Haluschenko had been in jail for months, and reports suggested he might be about to co-operate with investigators.

Ukraine’s anti-corruption bodies, a triumvirate of investigators (NABU), prosecutors (SAPO) and a special court (VAKS), have in recent years grown into a formidable independent force. In July 2025 they survived an attempt by the president to fold them into more pliable institutions just as they were probing those closest to him. Protests forced Mr Zelensky to make a U-turn. But the pressure never stopped, falling especially on Oleksandr Klymenko, SAPO’s bullheaded director. The tapes reveal a particular fear of Mr Klymenko, with Ms Mudra apparently worried about his re-election: “He’ll dig in for a second term, seven more years, and we’re all fucked, I’m telling you.”

Supporters think the country’s anti-corruption bodies have risen to balance Mr Zelensky’s centralised presidency. Parliament, the cabinet and the opposition are weak. But others worry the referees have become a law unto themselves, deciding when and how to destabilise the government. “They are essentially a parallel government,” complains a senior official. Even those close to NABU say the agency is becoming increasingly politicised, noting there was no procedural reason to release the tapes on the day of the vote for Mr Fedorov’s successor. “The law has given them access to the most intimate moments of politics and people’s lives,” says a former detective. “The danger is that it becomes a political weapon.”

Political battles will probably intensify in the coming weeks. “Once we get to October it will turn colder and everything will go wrong at once,” says the senior official. “A number of key people here are idiots, and plenty of people understand that.” The president, he says, remains bullish, but “has begun to understand” that the situation is worsening. Ukraine will enter its fifth wartime winter much more vulnerable than in previous years, with few air-defence missiles as it faces a vicious Russian escalation to destroy infrastructure and civilian business.

Russia’s recent targeting of civilian ships has shut Ukraine’s deep-sea ports just as its harvest needs to be exported. If, as is likely, diplomacy fails to reopen the shipping lanes, the damage to the economy might reach $10bn-12bn (close to 5% of GDP). At a press conference on August 22nd Mr Zelensky revealed a shortfall of $27bn in the defence budget…

(…which Kiev wants to receive from the EU)

read more in our Telegram-channel https://t.me/The_International_Affairs