You're reading: Agricultural tycoon explains why he is suing government

Mystery company gets OK to export much of grain crop.

Just last year, Oleksiy Vadatursky was the agrarian king, flying high as one of Ukraine’s 10 richest people, worth more than $1 billion and looking to invest to help keep his company, Nibulon, as one of Ukraine’s top grain traders.

But the government’s decision to ignore Nibulon when handing out quotas to export grain this year has caused huge losses to the company. Meanwhile, authorities granted a huge export quota to a previously unknown company that is partly owned by the state and partly by unknown private investors.

Now Vadatursky, a 67-year-old former Soviet collective farm worker, is fighting back, taking the state to court for what he and others say are opaque decisions about who is allowed to make huge profits through grain exports.


We have sued in order to draw the attention of the country’s authorities to non-transparent allocation of quotas.”

– Oleksiy Vadatursky, agrarian.

Through groups such as the American Chamber of Commerce and Ukrainian Grain Association, domestic and top international grain companies operating in Ukraine have threatened numerous times in the past months to sue the government for damages caused by protectionist and non-transparent policies.

But so far, Vadatursky’s company is the only one of Ukraine’s large grain market players to act on such a threat.

“We have sued in order to draw the attention of the country’s authorities to non-transparent allocation of quotas,” Vadatursky said in a telephone interview from the southern city of Mykolayiv, where Nibulon is based.

Nibulon woes are a cautionary tale about a company that had invested large sums in infrastructure, and planned to put up further capital, only to be cut out of the market by the government’s increasingly heavy-handed intervention.

The government decided to restrict grain exports last year, citing a worse-than-expected harvest and the need to keep domestic food prices in check.

But grain traders, agricultural experts and business groups say the export restrictions are unjustified and claim the process of handing out quotas was done unfairly and opaquely.

Vadatursky wouldn’t put a figure on Nibulon’s losses from not receiving export licenses in a second round of allocations (it received quotas the first time round), but said they were “very big.”
Volodymyr Lapa, an agribusiness expert at the Ukrainian Agribusiness Club, said it looked “at least strange” that the No. 1 exporter didn’t get quotas, as it was obvious the company had sufficient grain to export.

Vadatursky, whose company is regarded as a showcase of transparency, goes further, calling the government decisions illegal. To prove his case, he is taking the Economy Ministry and Agriculture Ministry to court.

Vadatursky said he can’t understand why the government gave his company nothing, as a little-known partly-state-owned firm, Khlib Investbud, got the lion’s share of the quotas.

“We have serious suspicions that this company didn’t even have the requisite stock of grain that was needed to receive the quotas,” Vadatursky said, He suggested the company had received political favors because of insider connections, saying it was “closeto thehighestauthorities.”

The agriculture minister has said he doesn’t know who the firm’s private owners are.

Khlib Investbud has not responded to requests for comment, but has earlier said quotas were received fairly. The Agriculture Ministry has also said allocations were decided fairly.

We also have to pay for storage of the grain we planned to export.”

– Oleksiy Vadatursky, agrarian.

Lapa, the agribusiness expert, said Nibulon is a unique company in Ukraine thanks to its investment activity.

“Nobody else launched such a large scope of investment in agrarian infrastructure,” he said.

Vadatursky said Nibulon is now struggling to pay back loans taken to buy grain and to invest in the construction of grain silos and elevators.

“We also have to pay for storage of the grain we planned to export,” he said, adding that this grain is now rotting in silos.

As a result, Vadatursky said, the company has halted investment activity.

But that’s not the end of the bad news for Nibulon. Vadatursky said the government is effectively “ignoring market players” by promoting two draft laws, both of which appear to be aimed at monopolizing the market into the hands of Khlib Investbud, while squeezing traders that have invested heavily into Ukraine’s agribusiness sector out of the market.

The second bill, which is seen as having the best chance of being passed, proposes creating a privileged “state agent,” a company with a state share of minimum 25 percent.

Nibulon’s owner hopes that criticism from international organizations or intervention by President Viktor Yanukovych could stop those bills and other pressure on the grain traders.

“The president has to know about that,” Vadatursky said. “If we managetoreach him,theneverything will be fine,” he added.

Vadatursky warned that the problems with allocating grain quotas did not bode well for the sale of agricultural land, planned for two years’ time.

“If wecan’tachieveprotection ofthe rightsinthisseeminglysimpleissue ofgrain exportanddistribution of quotas, itleadstoseriousdoubtsthat such an important question astheopeningof the farmlandmarket will bedecidedin Ukraine in a civilized way,” he said.

Kyiv Post staff writer Oksana Grytsenko can be reached at [email protected].