- By Lynda Kiernan-Stone, Global AgInvesting Media
Financial Inspectors Uncover $55.2M in Infringements at Ukraine’s State Food Grain Corp.
In the course of the off-schedule audit of the public joint-stock company, State Food Grain Corporation, the State Financial Inspection of Ukraine uncovered losses totaling $55.2 million due to “infringements of financial discipline”.
The government of Ukraine decided to create the State Food and Grain Corporation in 2010. The corporation consists of a chain of branches, grain storage facilities, flour mills, fodder factories, and a cereal factory. The corporation has the capacity to store 3.75 million tons of grain, which includes the handling capacities of the Odesa and Mykilaiv ports that together have throughput of approximately 2.5 million tons of grain per year.
In 2013, under the terms of a contract, the corporation paid US$16.9 million to China’s Sonders Trading K/S Co. Ltd., however, the documents proving the purchase of goods without importation to Ukraine are ‘absent’, according to authorities. In addition, the corporation did not receive US$3.7 million for the good reportedly purchased through the afore-mentioned contract. The corporation then carried out the set-off without confirming the debt under the contracts worth US$27.6 million.
In addition, it was discovered that in 2014, the corporation “bought” and “sold” 22,000 tons of third-class barley through fake transactions of re-registering warehouse receipts, leaving the corporation with a debt of US$2.4 million to TIS-Grain LLC.
The State Food and Grain Corporation of Ukraine receive its first tranche of US$1.5 billion from the Export-Import Bank of China to be used to conduct spot and forward purchases of 4 million tons of grain to be shipped to China. A contract was signed with the China National Machinery Industry Complete Engineering Corporation (CMCEC) for a period of 15 years. Under the contract, Ukraine’s State Food Grain Corp. plans to ship 3.5 million tons by late 2015.