16.06.2024 Agro

“Black export”: or how Opposition Platform – For Life, Servants of the People and law enforcement facilitate the shadow export of grain

Two out of five tonnes of grain exported from Ukraine is illegal, bought for cash. 3 it does not pay taxes, and the currency from such sales does not return to the country. In this way, more than $10 billion of export earnings remain abroad. After all, currency control is circumvented by fictitious certificates of bankruptcy of the counterparty.

Grain is bought for cash and fictitious VAT refunds are received from the state through fraudulent companies. The scale of the problem reaches billions of hryvnias a year.

All of this is the result of numerous schemes for the “black” export of grain, which use fictitious companies registered in the names of front companies. These are set up to sell grain purchased for cash from farmers, mostly at a reduced price. And after the grain leaves Ukraine, it is resold several times, and then legally reaches the end consumer. The Ukrainian economy suffers because of this.

All of this is only approximate data provided by the Ministry of Economy and the Office of the Prosecutor General. At the same time, the impetus for the rapid disclosure and attention to the real problem with grain exports was a journalistic investigation into Deputy Prosecutor General Verbytskyi and his wealth. The investigation revealed that the income of Verbytskyi’s lover, Ilnytska, had suddenly increased, and that elite real estate had been purchased at a price 24 times lower than the market price. 

However, it is not unlikely that Verbytskyi personally controls the flow of funds coming in through black export schemes. Coming from Odesa, he has contacts and is aware of the correct distribution of business. Therefore, such speeches are just a way of diverting attention from his own wealth.

The fact remains that despite the loud statements, law enforcement officers still throw up their hands and say that they are ruthlessly fighting this phenomenon, but the criminal hydra is cunning and insidious. They cannot stop the purchase of grain for cash. But it would be more accurate to say “they don’t want to”, because all the “controllers” of strategic exports have their own corrupt “share” of each tonne of such grain.

Moreover, the dealers offer to pay right in the port, where groups of “controllers” sit and seem to see nothing of this. The imitation of fighting the schemes continues.

In our video on the grain corridor and grain export schemes, we talked about a rather convenient distribution of bribes, where

  • $7 per tonne of goods goes to the Bureau of Economic Security,
  • $7 to the Security Service of Ukraine, 
  • $7 to the State Customs Service, 
  • and the same $7 to the newly formed coalition of ex-members of the Opposition Platform – For Life, Abramovich and his friend Vyazmikin.

Abramovich and Vyazmikin, under the cover of Arakhamia, have seized the grain corridor and have already established rules that have been successfully lining their pockets for more than 2 years. At the same time, Danylo Hetmantsev, chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, like Verbytskyi from the Prosecutor General’s Office, throws up his hands and says “we are trying”.

“We have a large amount of land that is cultivated without any documents at all. Farmers take grain from this land, so it becomes ‘black’. It has no origin. The buyer registers it with a fictitious company, where the management and owners are from Luhansk and Donetsk regions, or even from another country. Then the grain is loaded onto a ship. While the ship is sailing, the owner transfers the grain to a similarly fictitious company in the Czech Republic, and that company to a normal company in France, and so on. The foreign exchange earnings do not return to the country,” said Mr Getmantsev.

So why not limit the influence of the Opposition Platform – For Life on such processes? Or will this not be beneficial for the participants of the scheme?

It is also worth paying attention to the impact of Chinese agro-giants on the export market. In 2023 alone, Cofco Agri Resources Ukraine did not pay more than UAH 50 billion, while the company exports 3 per cent of Ukrainian grain.

In addition, Cofco continues to operate in the temporarily occupied territories, for example, the Satellite plant “miraculously” survived in Mariupol and continues to operate at full capacity and pay taxes to the Russian Federation.

Farmers falsify documents to pretend that the grain they sell is of a legitimate variety that pays taxes, or underreport income when selling abroad before depositing the proceeds in a foreign bank. Sometimes they also sell grain at a low price to a foreign organisation that is in collusion with them or covertly under their control, often based in Turkey or Romania. 

The proceeds from these sales are returned to Ukraine, but the cash from the subsequent sale at a higher price to another firm is not.

In addition, controlled companies are used as conversion centres, set up to retain profits and closed before the currency is due.

Grain goes through several rounds of resale before it legally reaches the final buyer.

The Investigative Department of the Territorial Office of the State Bureau of Investigation located in Kyiv has entered information into the Unified Register of Pre-trial Investigations under No. 62024100110000057, Part 1 of Article 212 of the Criminal Code of Ukraine, and the Territorial Office of the Bureau of Economic Security in Kyiv has initiated a pre-trial investigation under No. 72024101400000019, Part 1 of Article 212 of the Criminal Code of Ukraine – but it seems that these are only formal actions of law enforcement. After all, Chinese Cofco continues to earn billions without paying a penny to the Ukrainian budget.

Special attention should be paid to the NOVAAGRO group of companies. Through the component Limited Liability Company “Trading House “Novaagro”, fictitious contracts are concluded and agricultural products are sold for cash to controlled companies. In this way, the products are resold several times and end up with a non-resident, which leads to tax evasion and significant losses to the state.

The owner of Novaagro, Polumysnyi, together with an oligarch with alleged Russian citizenship, took control of a number of state-owned enterprises, including: Svitanok State Enterprise, Chuvyrino IT NAAS State Enterprise, and Novopokrovsky Chemical Plant State Enterprise. Within these enterprises, debts are artificially created and liquidation procedures are initiated.

For example, law enforcement agencies have also launched investigations into the matter: The Chuhuiv District Police Department of the Main Directorate of the National Police in Kharkiv Region registered information in the Unified Register of Pre-trial Investigations №12023221240001253 on the grounds of a crime under Part 4 of Article 111-1 of the Criminal Code of Ukraine, and by the decision of the Shevchenkivskyi Court of Kyiv №761/1711/24 of 24.01.2024, the investigating judge ordered the investigation to be carried out by authorised persons of the Investigation Department of the Main Directorate of the National Police in Kyiv.

So who is behind the black export schemes?

Did you witness a crime?

Let us know about it. We will help protect the violated rights!

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