The more that authorities and current company officials dig, the more multimillion-dollar embezzlement schemes they uncover at the state-owned State Food and Grain Corporation.
Founded in August 2010 under Viktor Yanukovych’s presidency, such government agencies have since become the focus of criticism by international lenders, business associations and grain traders for widespread graft and stifling competition.
The depth and scope of corruption have only begun to surface since last year and continue to raise eyebrows.
Valery Tomilenko, the acting head of the state-run grain trader, said that the company lost Hr 100 million a month last year through fraudulent scams, according to an April 15 statement on the Agriculture Ministry’s website.
Five days later, he told Interfax Ukraine news agency that in one scheme, the state corporation lost $132 million related to the sale of grain through four offshore companies using money that China gave Ukraine as part of a loan-for-grain deal.
That scheme spanned for most of 2014, he told the Kyiv Post by phone.In the course of another investigation, the Security Service of Ukraine, or SBU, said the government-owned grain trader caused $500,000 in damages to the state in a fraudulent grain contract with a Swiss company during the last week of December, just days after Tomilenko’s appointment.
The deal was also part of the Chinese loan-for-grain deal that was sealed in 2012.Regarding the SBU’s allegations, Tomilenko said he is ready to answer “all law enforcement inquiries should they arise and provide documentary evidence of the legality of the transaction.”His predecessors who ran the state corporation in 2014 when the bulk of the scams allegedly took place, Ihor Yakubovych and Petro Vovchuk, couldn’t be reached for comment.
Tomilenko
Valery Tomilenko, the acting head of the state-run grain trader, said that the company lost Hr 100 million a month last year through fraudulent scams, according to an April 15 statement on the Agriculture Ministry’s website.
Valery Tomilenko, the acting head of the state-run grain trader, said that the company lost Hr 100 million a month last year through fraudulent scams, according to an April 15 statement on the Agriculture Ministry’s website.
Yakubovych resigned in March 2014. He’s been wanted by authorities since January on charges of embezzling Hr 177 million. He is presumed to have fled to Russia.
Vovchuk resigned in December, two months after the SBU detained him on suspicion of planning to defraud the state of $15 million over the purchase of a stevedoring company. He was subsequently released and his whereabouts are now unknown.
The state-owned grain corporation has been handling the fulfillment of the 15-year, $3 billion grain-for-loan deal with China.
The Export-Import Bank of China gave half the money to Ukraine for grain in advance, while the other half has been available as a line of credit for Ukraine to purchase Chinese goods and services for the overhaul of agricultural infrastructure.
Ukraine hasn’t used that money yet.
The terms of the deal foresee Ukraine supplying 3-5 million tons of grain every calendar year to China, according to Tomilenko.
China received its first shipment of corn on Dec. 6, 2013, according to the state-owned China National Complete Engineering Corporation, the Chinese counterpart of the deal that works directly with Ukraine’s grain corporation. By November 2014, Ukraine hadn’t delivered some 550,000 tons of grain for that year prompting a visit by Chinese company officials, according to Tomilenko’s interview with Interfax.
Ukraine fulfilled most of the order on time, while the Chinese let Ukraine postpone a shipment of 50,000 tons of corn until September 2015, Tomilenko said. Altogether, Ukraine shipped nearly 1 million tons of corn to China under the deal in 2014, Reuters reported.
So far this year China has contracted Ukraine to supply 600,000 tons of corn, 470,047 tons of which was sent in January, according to a March 17 Reuters report. The State Food and Grain Corporation has 53 affiliate companies and has the capacity to store 3.75 million tons of grain, and move 2.5 million tons through two Ukrainian port elevators, according to data provided on its website.
Founded in August 2010, the company lost Hr 2 billion over the course of the last three fiscal years, Tomilenko said based on available preliminary data.
Authorities have opened more than 60 cases at the behest of the state company to collect mainly on unpaid forwarding contracts by foreign companies, including the filing of lawsuits in international arbitration courts, Tomilenko said.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected].
