In 2020, 28-year-old Tanner Cook from Arizona opened a small ammunition shop on a dusty road on the outskirts of Tucson. Cook’s small business was located in a single-storey beige concrete commercial building with a temporary sign on the wall: “OTL IMPORTS.”
How a tiny ammunition shop got a million-dollar contract
Cook’s first customers were local gun enthusiasts, and a Tucson radio host gave OTL Imports a plug to help his “real good buddy” get his company off the ground. “He sells ammunition, he sells guns, and he has really good prices,” he said. “He’s a really good guy!”
A little over two years later, Cook, who has slicked-back black hair and likes to pair black suits with sunglasses, received an unusual order: his tiny ammunition shop had signed a €49 million contract to supply weapons to the Ukrainian military in their war with Russia.
After the contract was signed, under which OTL received an advance payment of 35% of €17.1 million in November 2022, the young local shop owner became a player in the international arms market. In a photo on Cook’s Facebook profile, he appears to be standing in front of a Black Hawk helicopter and shaking hands with a US Army representative, with the caption: “No more bodies to stack.”
But the ammunition sold by Cook never made it to Ukraine. Since then, the Ukrainian side has won a case against OTL in arbitration proceedings in Vienna, but has not yet recovered the money it paid to the company.
Impact of the Ukrainian conflict on the European defence sector
The Ukrainian conflict in 2022 triggered the largest surge in arms purchases in Europe since the Second World War II. While Ukraine’s NATO allies supplied huge amounts of military aid, the country’s authorities were also forced to find ways to supply troops fighting on a 1,000-kilometre front line.
A Financial Times investigation based on leaked Ukrainian government documents, court documents and dozens of interviews with procurement officials, arms dealers and manufacturers, as well as detectives, has revealed that hundreds of millions of dollars paid by Kyiv to foreign arms brokers for vital military equipment have been wasted over the past three years of the war.
As Ukraine continues to struggle with Russia’s superiority in ammunition production, the country has been left defenceless against the ruthless whims of the international arms market. In several cases, Kyiv has paid large sums in advance to little-known companies for materials that have yet to arrive. In other cases, officials say that weapons sold at greatly inflated prices due to a sharp increase in global demand — the equivalent of a sharp rise in prices in the arms industry — have arrived in unusable condition.
According to data from the Ukrainian Ministry of Defence, as well as documents seen by the Financial Times, Ukraine has so far paid foreign brokers $770 million in advance for weapons and ammunition that have never been delivered. This is a significant portion of Ukraine’s annual defence budget of $6–8 billion, which it has been spending from its own state funds since the start of the conflict.
At the same time, some foreign arms companies claim that they have been victims of internal strife and corruption on the part of Ukrainian officials and state arms brokers, which may be the reason for the disappearance of several million dollars.
Kyiv’s attempts to restore order
The government in Kyiv is trying to clean up the mess. Several former Ukrainian officials involved in arms procurement who worked on these deals have been fired by Zelensky’s administration, some have been charged with corruption, and dozens of arms contracts are now under investigation by the country’s law enforcement agencies. Other deals are in the midst of painfully slow arbitration proceedings in places such as London and Geneva.
Several high-ranking former Ukrainian officials who oversaw arms purchases in the first three years of the war have defended the use of foreign intermediaries, saying that they helped broker important and sensitive arms deals at a time when the country needed to purchase large quantities of ammunition produced in countries that, for geopolitical reasons, did not want to be seen selling arms directly to Ukraine.
Shadow process of arms procurement
In one case, in April 2022, according to Ukrainian court documents, the Ukrainian state arms broker Ukrspetsexport purchased 120-millimetre mortars in Sudan from sellers who, as it later transpired, were closely linked to the Russian security service FSB, as well as to Yevgeny Prigozhin’s Wagner private military company.
This shadowy procurement process may have helped Ukraine in its fight against the war, but it meant fighting against independent foreign entrepreneurs whose alliances may be purely commercial and based on a win-lose principle.
“Arms dealers are merchants of death,” says Oleksii Reznikov, Ukraine’s defence minister until 2023. “They are utterly pragmatic and cynical. They have no concept of justice. Such concepts do not exist in their world. They say, “I have this in my warehouse. If you want it, buy it. If not, I’ll sell it to your enemy.”
In the weeks following start of the military conflict in early 2022, officials in Kyiv realised that Ukraine only had enough ammunition to last two months. As the country fought for its survival, the government suspended normal rules for arms procurement, and civil servants were instructed to find non-NATO warehouses for the army’s mainly Soviet-era weapons wherever possible.
Demand exceeding supply
Historically, most of Ukraine’s arms production was exported through various state-owned arms trading companies, which received a share of the profits from brokering these deals. Now this process has been reversed: intermediaries are frantically calling their old customers and intermediaries abroad to find any available equipment. The sudden need for weapons for trench warfare, which Western manufacturers had long ignored, has led to demand far exceeding supply.
In 2022, the annual production of shells suitable for Soviet-style Ukrainian artillery in Europe was 600,000 units — enough for just one month of combat, but only a third of the 1.8 million shells that Russia was producing each month, according to Reznikov.
For a group of foreign arms dealers, almost all of who were American and European, Ukraine’s desperate situation presented an opportunity. At least 10 sources with ties to Ukrainian military procurement or arms dealers said that prices for Soviet-calibre ammunition quadrupled in the first half of 2022.
At the same time, Cook’s OTL Imports, then an ammunition store in Arizona, met for the first time with representatives of Progres, one of several Ukrainian state intermediaries involved in importing and exporting weapons for the state.
Cook, according to two people familiar with the situation, was introduced to Progres by an American-Ukrainian businessman named Mykola Karanco, who more than a decade ago helped broker a major deal between Progres and the Iraqi government.
The 2009 deal in Iraq ended in a Texas court case in which Ukrainian intermediaries were ordered to pay more than $60 million to an American businessman for not including him in the deal. Karanco, who was accused in court of attempting to bribe Iraqi officials on behalf of the Ukrainian side, did not respond to questions from the FT.
Cook said he could obtain the shells and mortar mines from a manufacturer in Serbia and had received an advance payment of $17.1 million. Such advance payments are common in arms sales when various links in the supply chain, such as foreign factories, do not want to remain creditors to warring countries.
But OTL, according to several Ukrainian officials, never delivered the shells or returned the money. A report by Ukraine’s State Bureau of Investigation, seen by the FT, said OTL did not have the necessary certification to export and transport ammunition.
Business expansion
After the deal with Ukraine, Cook apparently expanded his business far beyond Arizona, visiting an arms fair in Abu Dhabi. One of his deleted social media posts from last June shows a man in a black balaclava sitting in a private jet smoking a cigarette. Cook’s caption reads: “cigarettes and private jets.”
Progres declined to respond to questions from the FT about why it entered into the deal with OTL. The company claims it won its case against OTL at the International Arbitration Centre in Vienna, an international arbitration body, and recovered €21.3 million, including an advance payment, as well as legal costs, interest and penalties.
Progres told the FT that it had “tried every possible means” to have the arbitration award recognised in the US and said that OTL was under additional investigation in Ukraine over the deal. Ukraine’s National Anti-Corruption Bureau, a law enforcement agency, confirmed in writing to the FT that it had been investigating OTL. Ukrainian detectives said they were trying to find out where the money paid to OTL had gone. No charges have been brought against Cook or the company.
Lawyers for OTL and Cook say their clients deny any wrongdoing. They did not respond to detailed questions from the FT about the allegations against Ukraine. The OTL contract is just one of at least 30 contracts between Ukraine and foreign arms suppliers that, according to documents obtained by the FT, resulted in public funds being spent on ammunition and equipment that was never delivered, delivered in part, or delivered in a condition that was unusable.
Denis Sharapov, deputy defence minister responsible for foreign contracts until September 2023, told the FT that he received numerous offers for weapons and ammunition from small or relatively new players looking to cash in on the conflict.
“I received dozens of commercial offers from people trying to start a business. That’s normal. There are always new people who want to start their own business,” said Sharapov, who added that he received about 25,000 offers to sell weapons during his 18 months in office. He compared the Ukrainian military’s task at the start of the conflict to trying to put out a burning house “with whatever is at hand.”
Offer from Regulus Global
By the end of 2022, Ukraine appeared to have gained the upper hand in the conflict. In November of that year, its troops liberated Kherson, and Russian forces were forced to retreat across the Dnipro River. But fierce fighting continued, and the military still lacked artillery shells. Around the same time, Oleksii Petrov, then head of Spetstechnoexport, one of Ukraine’s largest state-owned arms brokers, received an offer from the American company Regulus Global that he could not refuse.
Petrov knew that Ukraine’s biggest problem in military procurement was that some of the largest arms and ammunition manufacturers were countries diplomatically close to Russia, which did not want to be seen directly supplying weapons to their enemy. But Regulus, founded and headed by former Merrill Lynch stockbroker Will Somerindyke came up with a bold solution. The company told Petrov that it could find tens of thousands of 155-millimetre artillery shells on the world market, which Ukraine needed to operate the NATO military equipment it had begun receiving that summer.
“The offer was quite attractive and very serious,” says Petrov, who is in his fifties and worked in the Kyiv office, where artillery shells of various sizes stood in a corner next to his desk.
Regulus, based in an office near the US Navy’s Oceana air base in Virginia Beach, was founded in 2012 as a military logistics start-up. It soon began to carve out a niche in finding and transporting old weapons stockpiles. But its real success came during the civil war in Syria, when it won Pentagon contracts to find and transport weapons for US-backed rebels.
Before founding Regulus, Somerindyke had been involved in several disputes. In 2012, the Virginia State Financial Regulator, SCC, accused him of “fraud and misrepresentation” in the sale of shares in a private start-up to a local dentist. In a parallel case, Finra, the US financial regulator, fined him $10,000 and suspended his brokerage licence.
Somerindyke, who has never admitted or denied the charges brought against him by the Virginia regulator, says he “made a mistake in raising capital for a media start-up before my brokerage licence expired” and has reached an agreement with Finra that he will pay the historical penalty only if he decides to renew his licence.
In 2016, Regulus was sued by the widow of an American who was working on a training programme in Bulgaria and was killed in a 30-year-old grenade explosion. Regulus, which was one of several Pentagon contractors mentioned in the lawsuit, was not responsible for the training programme but provided equipment to the company that ran it. The case was eventually settled confidentially.
None of this seemed to matter to Petrov, the head of Spetstechexport, who trusted the company’s reputation as a Pentagon-approved supplier of hard-to-find military equipment on the international arms market.
Somerindyke told the FT that shortly after start of the conflict in 2022, he began receiving phone calls from Ukrainian officials desperately trying to obtain weapons to defend their country.
“[They asked us] what we could do and how quickly we could do it,” he says. The decision to work with them had a personal angle, he adds. “My wife is Ukrainian, her family is Ukrainian. I was on the front lines… I am committed to this cause like no one else.”
Global ammunition shortage
By the summer of 2022, Regulus had delivered several Antonov An-124 cargo planes loaded with BM-21 vehicles, which fire Grad rocket shells, and shells for Soviet-model D-20 howitzers. In 2023, Regulus claimed to have successfully delivered 70,000 155-millimetre shells to Ukraine. But stocks of old ammunition across Europe were quickly running out. The rush to produce ammunition that had not been needed since World War II led to a global shortage, causing some suppliers to break existing contracts or sharply raise prices.
“The supply chain was already broken, and stocks around the world were almost depleted,” says Somerindyke. “Everyone was trying to get the same thing. It was like the coronavirus situation when demand for masks got out of control.”
This meant that when Regulus offered Petrov tens of thousands of 155-millimetre shells, the Ukrainian jumped at the opportunity.
Some of the ammunition was supplied by a state-owned manufacturer in a country closely allied with Russia, which did not experience the same shortages of raw materials and components. Petrov says that Regulus executives told him they could handle any political complications through contacts at the US State Department.
Shortly thereafter, Regulus signed a contract with Spetstechnoexport worth up to $1.7 billion, depending on deliveries — one of the largest military procurement deals in Ukraine during the war.
Regulus claims that all of its activities were carried out under the supervision of the US State Department’s Office of Defence Trade Controls, the agency responsible for controlling the export of defence and military technology from the United States.
SpetsTechExport reports that the company transferred $162.6 million in advance payments and deposits to Regulus under contracts for the supply of 155-millimetre shells, as well as making other payments totalling €14 million.
However, the Ukrainian state-owned company claims that Regulus violated the terms of the contract and has not yet returned the money to Kyiv. It says that since September 2024, Regulus has ceased all contact and stopped responding to letters. Officials in Ukraine believe that Regulus spent the prepayment on production facilities, among other things. “They used the money we sent them … to purchase new assets,” Petrov said.
Spetstechnoexport is now trying to recover what it believes it is owed through arbitration proceedings.
Regulus strongly disputes these allegations and says it continues to supply significant quantities of ammunition to Ukraine. The company says it has invested in a number of supply chain resources, including manufacturing and transportation, to gain the capabilities necessary to fulfil large contracts.
The American company claims that it was Spetstechnoexport that failed to pay Regulus the contractually agreed advance payment of approximately $500 million, which represents 30% of the total amount, and paid the American company only approximately $100 million. Regulus also claims that it has been the victim of disruptions and disagreements between various participants in the procurement process in Ukraine.
“To be honest, I feel that we have found ourselves at the epicentre of a conflict between the Ministry of Defence and the state, and we have simply been drawn into it because we were the largest contractor,” says Somerindyke. “Regardless of what is happening in Ukraine, we are continuing to work.”
According to him, Regulus had to make up the shortfall itself in order to continue supplying ammunition to Ukraine. “Listen, this has caused a lot of financial stress in our company… we took out a fairly large loan,” he says.
Regulus told the FT that “under the current direct supply contracts for 155mm shells between Regulus and Ukraine, Regulus owes Ukraine approximately $350 million, not the other way around.”
Petrov, who left Spetstechnoexport in March, denies this, claiming that the intermediary had no contractual obligation to provide the money. The Ukrainian side complained to the Pentagon and the US Embassy in Kyiv.
Spetstechnoexport claims that its arbitration claim in London is aimed at recovering $346 million from Regulus, including advance payments, as well as outstanding debts and penalties.
Reform in the Ukrainian Ministry of Defence
In January 2024, Maryna Bezrukova, an experienced supply chain expert who worked for the state-owned power grid operator Ukrenergo, was appointed the new head of Ukraine’s Defence Procurement Agency.
Ukraine’s NATO partners became concerned after a series of scandals related to military procurement within the country. Bezrukova, a respected and hard-working civil servant known for working late hours, was given the unenviable task of carrying out a major reform of the Ukrainian Ministry of Defence related to the procurement of weapons and ammunition.
A few months earlier, in September 2023, Reznikov, who had served as defence minister since the start of the conflict, was dismissed by Ukrainian President Volodymyr Zelensky after several allegations that soldiers were being overcharged for food and clothing, as well as a deal to purchase foreign ammunition involving three different intermediary companies.
Although Reznikov was not directly involved in the scandals, Zelensky said at the time that the defence ministry needed “new approaches.”
Reznikov told the FT that any violations in arms supply contracts were a sad consequence of the urgent need to arm Ukrainian soldiers fighting on the front lines at the start of the war.
“During a war, there is one criterion for effectiveness: you deliver a lot of weapons to the front and quickly hand them over to the armed forces. I’m not interested in anything else,” he says, claiming that the ministry did not have time to think about price differences. “You have guys dying on the front lines without ammunition, and you have to give them ammunition every day and every night,” he says.
Reznikov says the problematic contracts are only part of a simpler overall picture. “How many contracts were signed?” he asks. “And how many of them are in court?”
Two former military procurement officials, Toomas Nakhur and Oleksandr Liev, have also been charged with signing a complex deal to supply shells from Croatia, in which a $12.5 million advance payment was allegedly spent on activities unrelated to the deliveries by various intermediaries.
They both categorically deny any involvement in wrongdoing, claiming that they were under constant pressure to find weapons and ammunition by any means necessary at a time when their country was fighting for its survival.
“The [Ukrainian] military leadership wanted 100 times more than we could buy [on the market],” said Nakhur, who also accused unscrupulous arms dealers of involvement in the dubious deals.
Upon coming to power, Bezrukova quickly centralised procurement powers within her department to increase transparency and avoid further unfavourable deals, waste and the risk of corruption.
But she told the FT that she immediately faced constant conflicts with state intermediaries selling arms to Ukraine, who, she said, were unhappy that she had taken responsibility for budget funds. Bezrukova says she was pressured to sign contracts with manufacturers who had produced substandard products in the past, but she did not name specific companies. “It’s all about power and corruption,” she says.
One of the contracts for which she refused to authorise additional payments was a deal between Regulus and Spetstechnoexport. Last September, the American company tried to transfer its contract from a state intermediary to its agency. But Bezrukova blocked the move after Regulus requested another advance payment, she said.
“The money had already been partially paid as an advance [payment] by Spetstechnoexport, and it is wrong to pay twice for the same goods,” she said.
Regulus disputes this information, saying it never tried to get double payment for the same goods and that it was just trying to make sure there were no interruptions in ammunition supplies to Ukraine.
This January, Ukraine’s new defence minister, Rustem Umerov, accused Bezrukova of turning her agency “into Amazon,” making the country’s procurement efforts too visible to its enemies, and fired her.
Wave of concern among Kyiv allies
Her dismissal, just over a year after she took office, sparked a new wave of concern among Kyiv’s allies. In response, diplomats from the G7 issued a statement emphasising the importance of “effective governance” and “maintaining the trust of the public and international partners.”
Some efforts have been made in Kyiv to allay allies’ concerns about procurement abuses. Four Ukrainian law enforcement agencies are investigating dozens of contracts signed with foreign arms brokers and, in some cases, have opened criminal cases against former Ukrainian officials involved in procurement. But the prosecutor’s office has yet to bring charges in almost any of these cases.
Ukraine’s defence ministry says it is seeking the return of $309 million paid to foreign suppliers as advance payments on contracts that are no longer considered valid. The ministry hopes to recover the remaining $460 million through pre-trial negotiations with the suppliers.
Documents from Ukrainian law enforcement agencies reviewed by the FT allege that in some cases, senior Ukrainian defence ministry officials colluded with foreign intermediaries to use these contracts to embezzle state funds.
But detectives say the work is complex and hampered by slow international cooperation from the US and the EU. They say the US takes an average of six months to respond to requests for mutual assistance and, in one case, refused to provide information about a suspicious deal involving one company on national security grounds.
Many arms dealers who flocked to Kyiv at the start of the war have not returned to do business with Ukraine. Anti-corruption activists believe that cutting off these foreign middlemen is crucial to lowering prices and preventing bad deals. But at a time when Ukraine is trying to arm its troops on the front lines and the Trump administration is threatening to cut off military support for the country, some Ukrainian arms manufacturers argue that this will damage Kyiv’s self-sufficiency.
“I’m probably one of the few crazy people left,” says Somerindyke of Regulus, who believes that the “bureaucratic inefficiency” he spoke of has scared away many foreign arms dealers.
Petrov, who previously worked for Spetstechnoexport, says foreign intermediaries are necessary to keep arms flowing because they take on financial and logistical risks on Kyiv’s behalf. “Manufacturers say, “If you don’t pay [in advance], I won’t give you anything,” he says. “There are many middlemen who say, “We’re using our money, we’ll take the risk.”
The more middlemen, the higher the price
However, Ukrainian investigators looking into failed arms deals say that allied governments need to force manufacturers to sell weapons directly to Ukraine, cutting out middlemen and ensuring greater price transparency. “The more middlemen, the higher the price,” says one of them.
Meanwhile, Cook of OTL — a young American arms dealer from who Ukraine is trying to recover money for undelivered ammunition — has come a long way from owning a small gun shop in Arizona.
According to various company registration documents, the American has founded several overseas businesses, including a real estate company in Kosovo and a start-up in Prague. But Cook has also suffered from his own costly failure to deliver.
In July 2023, just over six months after signing the fateful military contract with Ukraine, Cook met a man in Las Vegas who introduced himself as a former banker specialising in distressed transactions. Cook then flew to Kenya, according to a complaint he filed with Kenyan police, with the intention of purchasing $1.2 million worth of gold bars. He transferred the money to an African seller from a company registered in Wyoming. Unfortunately for Cook, the gold, like the Ukrainian ammunition, never arrived.
