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2 February, 2011  ▪  Yurii Nikolov

Agriculture minister with advantage

The government gives multibillion agricultural contracts to companies associated with the Yenakievo-Donesk group controlled by Minister of Agriculture Mykola Prysiazhniuk


A loud scandal has erupted over the distribution of grain export quotas, prompting The Ukrainian Week to launch an investigation into the activities of companies that have gotten access to billions of hryvnias in the form of government contracts. Minister of Agriculture Mykola Prysiazhniuk provided an additional impetus. He replied to all questions from journalists about the business arrangements recently made by his ministry with childish excuses: “I haven’t heard of that. I don’t know. I don’t have a clue.”

Meanwhile, the grain market has been howling for months because of the new “rules” imposed by the new team. Ambassador of Great Britain to Ukraine Leigh Turner switched from the diplomatic to normal language saying: “In 2010, grain quotas were quite unexpectedly introduced. This means that grain traders lost an opportunity to freely buy and sell grain … This situation in which some companies get an opportunity to earn money using grain quotas, while others don’t, facilitates corruption.”

This statement is likely to be the voice of one calling in the desert, because the entire national agriculture sector administration — from the head of the Agrarian Fund to the agriculture minister — recently gave journalists the cold shoulder when they kept asking: “Who is now the owner of the Khlib investbud company which only recently was government property and has received multibillion contracts to purchase grain for the Agrarian Fund and the biggest grain export quota?”

The Ukrainian Week has joined the journalist investigation. We have asked about the new owners and the price the government charged for its stake in this company. Press secretary of the Agriculture Minister replied politely and in a timely manner that the ministry did not and does not have anything to do with this, so no comments would be offered.

Finally, journalists managed to put the minister on the spot at a public event, and he forced himself to admit that “yeah,” the Khlib investbud company is no longer fully owned by the state. Mr. Prysiazhniuk went on to say that the government now has a 61-percent stake in the company and that he has not inquired about who owns the rest. He implied that this company is a temporary solution, because state-owned Zerno Ukrainy will anyway be the designated grain exporter. However, he failed to specify how long this temporary solution will be in place.

That’s an astounding lack of awareness on the part of a minister. Journalists have the mission to inform people not only about the government’s decisions but also about its activities, so let us fill the gaps in Mr. Prysiazhniuk’s knowledge of the situation by telling the story as it is.

Before the Donetsk clique came to power, the state-owned Khlib Ukrainy company was nothing out of the ordinary. But then last year it suddenly began to promote on the market its subsidiary, Khlib investbud (KhIB), instead of busying itself with its own promotion. Grain traders smelled a rat: whenever the government sets up a company to make transactions through it in this fashion, it is always fishy. Their intuition proved right.

In September 2010, it was reported that KhIB had become the grain supplier of the national Agrarian Fund through a noncompetitive procedure in which the purchase is made from the only existing participant. The company was to deliver five million tons of grain worth seven billion hryvnias.

In 2011, KhIB beat several large worldwide brands in winning the right to export over two million tons of grain from Ukraine. The company’s director, Robert Brovdi, who was the head of the Transcarpathian branch of Arsenii Yatseniuk’s Front of Changes in the spring of 2010, said: “Our purchasing capacity is over two million tons, which is equivalent to 3.7 billion hryvnias.”

How could a newly created company without any experience or finances reach this huge turnover was a mystery, but not for too long. Several months later, large players on the grain market received a proposal to buy a portion of the companies grant export quotas. It’s hard to calculate precisely how much KhIB will earn on such transactions, but it is absolutely clear that it is making money out of nothing.

It would be strange if such extra profit went to a state owned enterprise. Rest assured — no surprises this time.

All of a sudden, it turned out that KhIB ceased to be solely government property. Khlib Ukrainy gave a stake in this company to a private business. (It may have sold it rather then given it away; the reader should know that the agriculture minister refused to answer this question when asked by The Ukrainian Week.) Our sources say that the state has 15,000 hryvnias and a private business 15,800 hryvnias in KhIB’s authorized capital. Therefore, Mr. Prysiazhniuk’s claim that the government has a 61-percent stake in this company can be trusted about as much as the opinions of Mykhailo Chechetov and Hanna Herman.

So who was so lucky to receive multibillion government contracts to supply and export grain? The answer is: Kalasar Ltd. The CEO and one of the founders of this company is Oleksandr Kozyriev, a person who is well-known to the players on the market.

He was CEO in companies which obtained a contract from the Agrarian Fund last fall to supply sugar to the tune of 717 million hryvnias at 10 percent above the market price.

He’s not just a businessmen in the street who was run over by a truck loaded with money. Mr. Prysiazhniuk should know the man from his business past. We have written extensively about Mr. Kozyriev when we studied Mr. Prysiazhniuk’s links with Yura Yenakievsky. However, we feel that it need to be repeated here:

Albenta and Oil-river are companies linked together by Oleksandr Kozyriev who was the CEO of Albenta and UIK last year… UIK brings us closer to Mr. Prysiazhniuk. Several years ago, this company founded Forest-city Ltd. Last year, its place as the founder was taken by Andrii Adamovsky (head of the supervisory board in Farlep-invest, a key Rinat Akhmetov asset in the communications sector), Olha Dzharty, and Tetiana Prysiazhniuk, both daughters of Vasyl Dzharty. Mr. Dzharty, an ex-environment minister who now heads the Crimean Supreme Council, was involved in the “real estate affair” in which the Mezhyhiria residence became Victor Yanukovych’s property). One more participant is Minister of Agriculture Mykola Prysiazhniuk.”

So nothing extraordinary has happened. The right guys bought a stake in KhIB; foreign grain traders will incur some losses; Ukrainian peasants will be paid a bit less money — so what? Every little bit helps. Not everyone can have a better life as yet, so at least one person can enjoy it.

P.S. The next article will focus on the setting up of wholesale agricultural markets across Ukraine. The undertaking requires over one billion hryvnias in investments from the state budget. We will get acquainted with the lucky ones who will be putting this money to use.

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