Former British Prime Minister Boris Johnson has called for urgent action to address an alleged criminal network involving UK companies that is accused of siphoning nearly £200 million from Ukraine's finances. Johnson described the situation as an "absolute scandal" and urged a crackdown in both Ukraine and the United Kingdom.
Two companies registered in Watford, England, are reportedly major shareholders in a suspected illicit factory located in Ukraine. This operation is accused of producing and distributing illegal cigarettes throughout Ukraine and Europe, allegedly evading approximately £180 million annually in taxes. Critics, including Johnson, argue that this revenue, equivalent to 6% of Britain's annual military aid to Ukraine, should be bolstering Kyiv's resources for its defense against Russia.
"At a time when this heroic country needs every penny of its tax revenue to fight Putin’s armies, we need to end such operations and bring those responsible to justice," Johnson stated.
Yaroslav Zhelezniak, a Ukrainian Member of Parliament and deputy head of the parliamentary tax committee, echoed these concerns, urging Ukraine and the UK to act swiftly. "Ukraine and the UK must act now to stop this suspected industrial-scale tax evasion, which shames our nation and deprives us of millions we urgently need to support our soldiers on the frontline," Zhelezniak said. "How can we expect friends and allies to continue supporting Ukraine if we are not prepared to do what is necessary to stop these operations?"
Tobacco taxes constitute 7% of Ukraine's state budget, representing a critical source of revenue. The Economic Security Bureau of Ukraine has warned that counterfeit cigarettes, which account for one in five packs sold in the country, cost the treasury nearly half a billion pounds in lost tax revenue in the past year. According to retail research firm Kantar, Ukrainian manufacturer Marshall Finest Tobacco produced 37% of these counterfeit cigarettes in 2025.
An investigator noted that under the guise of a legal cigarette producer, Marshall "established an illegal scheme of production of unaccounted tobacco products." According to a 2024 Ukrainian pre-trial court ruling, these cigarettes were allegedly sold illegally within Ukraine using counterfeit excise tax stamps and were also smuggled into the EU, where they were sold for cash. Officials confirmed that criminal proceedings are ongoing, with a pre-trial investigation underway.
Despite the ongoing investigation, Marshall Finest Tobacco remains operational. The company's website states it holds a license for the production and wholesale trade of tobacco products, and photos depict its facilities in Ternopil, Ukraine. Public corporate registry records identify three shareholders for Marshall, two of which are UK-registered firms with headquarters listed at offices in a former NatWest branch in Watford. Both UK companies are reportedly owned by a firm based in Belize. Ukrainian residents are listed as directors for both UK entities.
When approached, individuals at the serviced office block in Watford stated they had not heard of the companies or their named directors. Marshall's third shareholder is a company registered in Seychelles.
Igor Bratchenko, director of Marshall Finest Tobacco, has denied any involvement in illegal activities. He stated that the firm operates in full compliance with Ukrainian laws and regulations and is classified as a "large taxpayer." Bratchenko also denied that Marshall manufactured counterfeit cigarettes bearing their brand and asserted that the company works with Ukrainian authorities to identify and prevent circulation violations.
This situation emerges as Ukraine's military leadership faces internal challenges, with President Volodymyr Zelensky having recently dismissed his defense minister, prompting protests within the country.