Ukraine stands to lose billions in arms sales to Iraq because of accusations that the first deliveries consisted of sub-standard equipment. But it also appears that insufficient bribes were paid to "agents" who had considerable influence within the Iraqi Defense Ministry. It also appears that sufficient bribes were not paid on the Ukrainian end either. Intense negotiations are underway.
Since the Cold War ended in 1991, Ukrainian arms manufacturers have been scrambling for orders. Previous customers (Soviet Union and communist nations in Eastern Europe) had stopped buying. Many Ukrainian weapons manufacturers did not survive the 1990s, and those who did, learned to do whatever it takes to make a sale. Unless this mess, and the attendant corruption, can be cleared up, these Iraqi deals may collapse, while several hundred million dollars will disappear in the process.
Over the last three years, in deals brokered by the United States, Ukraine received orders from Iraq for $2.4 billion worth of weapons. Most of these items were of Russian design, which many Iraqi military personnel are familiar with. Ukraine has, and still manufactures, lots of Russian designed weapons.
Ukraine split from the Soviet Union (and Russia) in 1991 when the Soviet Union was dissolved. Many Soviet weapons plants were in Ukraine, as well as huge quantities of military equipment. That's because Ukraine was the forward staging area for Soviet forces that were to invade Western Europe, or defend against NATO. Ukraine inherited whatever was on its territory when the dissolution took place. Ukraine has kept some of those weapons plants going by becoming the low-cost provider of new Russian designed weapons (and now much of those have been updated by Ukrainian engineers.)
While friendly with the United States, Ukraine has also cultivated good relations with China, by quietly sending the Chinese examples of advanced Soviet weapons (including some that never went into mass production). Ukraine wants to be on good terms with the U.S. and China because of the fear that Russian will try to make Ukraine, once more, part of Russia. This first happened in the 17th century, and the Ukrainians never got used to it. Actually, Ukraine had been dismembered before that by Poles, Lithuanians and Mongols. Thus Ukraine is enjoying its first period of real independence in over 500 years. They want to keep it that way, any way they can.