The National Anti-Corruption Bureau of Ukraine (NA

19.04.17 (UKRAINE) - Fedcominvest, a world-leading export business and the principal sponsor of AS Monaco FC, are appalled by the ongoing harassment of their staff by the controversial and discredited National Anti-Corruption Bureau of Ukraine (NABU).

On 5 April 2017, senior Fedcominvest executives were in Kyiv attending the 14 ^th International Black Sea Grain Conference to discuss future investments in the Ukrainian grain sector with industry colleagues from around the world. At around 2pm during a public presentation at the InterContinental Kyiv, two NABU detectives escorted Italian national Mr Marco Garzone (Vice President of Fedcominvest) out of the conference hall and questioned him for 12 hours at the bureau's headquarters in central Kyiv.

For several months now, NABU has pursued an unjustified and politically motivated investigation into Fedcominvest and its Chairman, Mr Alekszej Fedoricsev. NABU's baseless allegations centre on commercial disputes between the State Food and Grain Corporation of Ukraine (SF&G) and a number of private firms. Fedcominvest is not a party to any dispute with SF&G.

The Ukrainian government has struggled since 2012 to meet the terms of a US$ 3 billion 'loan-for-grains' contract with China. SF&G state grain terminals can only cope with 12% of national annual export volumes, which has long forced the Ukrainian government to sign transhipment contracts with private sector terminals operators like Mr Fedoricsev. Mr Fedoricsev is the owner of TIS grain terminals in the Odessa region which have a capacity of 27 million tonnes per year.

The objective of NABU's investigations and their heavy-handed approach to questioning Mr Garzone appears to be to seize the privately owned TIS terminals to meet the high demand for grain exports. SF&G's Deputy Chairman, Andriy Repko recently admitted that Ukraine needs to build a new state grain terminal suitable for large vessels.

Fedcominvest is concerned that the overzealous actions of NABU will undermine foreign direct investment in Ukraine and could hamper efforts by President Poroshenko and his international partners to make the Odessa region a global leader in commodities shipping.  

Mr Fedoricsev says, "Having invested hundreds of millions of hryvnias in high-tech grain terminals in Ukraine and provided employment to thousands of hard-working Odessans, I am disgusted that my staff at Fedcominvest were harassed by NABU investigators. The Black Sea Grain Conference is an opportunity for Ukraine to showcase itself to the world, but sadly NABU has embarrassed their country and may jeopardise future international infrastructure investment."

**ENDS**

Background information:

1. National Anti-Corruption Bureau of Ukraine (NABU)

The National Anti-Corruption Bureau of Ukraine (NABU) is a Ukrainian law enforcement agency founded in October 2014 which investigates corruption in Ukraine and prepares cases for prosecution. NABU has investigatory powers although it cannot indict suspects directly and must pass any evidence of corruption over to the Prosecutor General of Ukraine.

NABU was created at the request of the International Monetary Fund and the European Commission in return for the relaxation of visa restrictions between Ukraine and the European Union. NABU's funding by the Ukrainian Government is mandated under US and European Union aid programs. NABU recently received funding from the UK Department for International Development (DFID) as part of the Good Governance Fund for Eastern Europe and the Western Balkans.

The NABU's detectives only started work in October 2015 and the bureau has already been the subject of allegations of corruption and ineffectiveness. In February 2017, the Head of the EU Delegation to Ukraine Hugues Mingarelli expressed concern about proposed amendments to the laws governing NABU and noted the EU Delegation was 'alarmed' at the state of anti-corruption efforts in Ukraine.

The Ukrainian Prosecutor General's office has strongly criticised NABU's impartiality and there is currently a parliamentary dispute about who should be appointed to the independent commission to audit NABU.

2. Fedcominvest Europe SARL

Fedcominvest Europe SARL, is a world-leading export business, specialising in the trading of grain, sulphur and fertilizers.

Founded in 2009 in the Principality of Monaco, the company has expertise in the storage, shipping and distribution of a variety of commodities. Fedcominvest has a significant presence in Western Europe and is a market-leader in the supply of grain from the deep-water ports of Odessa region to countries in the MENA region.

In 2016 Fedcominvest shipped over 5 million tonnes of grain to countries around the world including, Bangladesh, Malaysia, Saudi Arabia and Vietnam.

3. Alekszej Fedoricsev

Alekszej Fedoricsev is a successful Russian-born businessman. He is the founder of Fedcominvest, a global export business, specialising in the trading of sulphur and fertilizers. Fedcominvest are one of the principal sponsors of AS Monaco FC.

After starting his career as a professional footballer for Moscow club FC Dynamo, Mr Fedoricsev began trading in car parts during the fall of the Soviet Union. He quickly became a specialist in the business of logistics, concentrating on transporting and trading in grain and chemicals including ammonia, phosphates and sulphur. His company, Fedcominvest, is now a global leader in the field.

A values-driven and self-made businessman, Mr Fedoricsev's business ethos is centred on re-investing profits back into his businesses. This has proven to be a hugely successful model, with his business interests now spanning across commodities, sport, media, shipping and property. 

A passionate sportsperson, Mr Fedoricsev is a leading figure in European football. As well as Fedcominvest sponsoring AS Monaco FC, Mr Fedoricsev previously owned a significant stake in FC Dynamo (Moscow). As part of his commitment to make football accessible to all, he bought the rights to show football in Russia and allowed fans to watch the matches for no charge.

4. 2012 Loan-For-Grains Contract between the Governments of China and Ukraine

In 2012, the Ukrainian Government entered into a Loan-For-Grains Contract with the China National Complete Engineering Corporation ("CCEC") under which the Chinese Government agreed to provide Ukraine with access to $3 billion in credit lines in exchange for supplies of corn. It was reported that the Export-Import Bank of China ("Eximbank") agreed to lend this money at six-month LIBOR+4.5% over 15 years with a five-year grace period.

The first $1.5-billion tranche of a loan was sent by China's Eximbank to the State Food and Grain Corporation of Ukraine in 2013.

At the time this agreement was reached the Ukrainian Farm Minister Mykola Prysyazhnyuk was quoted as stating that Ukraine expected to supply between 2.0 million to 2.5 million tonnes of maize to China every year to pay off the $3 billion loan.

See:   https://www.ft.com/content/79bc2174-0276-11e2...144feabdc0            http://china.aiddata.org/projects/42559

5. The commercial dispute involving SF&G and transhipment contracts

In 2012, SF&G entered into a US$ 3 billion 'loan-for-grains' contract, which the Ukrainian Government agreed with the Chinese government, knowing that the maximum transhipment capacity of their own terminals was just around 2 million tonnes per year.

From more or less the commencement of the loan term, China demanded more grain from Ukraine that could be transhipped through State terminals. In 2013, this demand reached such a level that the SF&G was unable to perform its obligations under the loan. SF&G therefore sought use of Ukraine's privately owned TIS terminals to tranship their grain.

In order to secure the transhipment services at privately owned terminals in Odesa region SF&G had to do two things they were unaccustomed to doing:

1. Pay for the privately owned terminals to tranship their grain; and
2. Pay a portion of the transhipment costs to foreign companies in the manner of accepted industry practice.

Due to Ukrainian currency restrictions on foreign companies, SF&G were unable to pay for transhipment directly to the foreign company (which was Mr Fedoricsev's logistics company Grain-Trans, which provides informational and commercial support of the transhipment process) and agreed with TIS terminals' owner, Mr Fedoricsev, that they would pay the part of transhipment costs to the foreign company once the restrictions are lifted.

To facilitate the deal, SF&G secured their obligation to pay for transhipment with the grain to a third company (Lirtavis), which would prepay the transhipment costs to Grain-Trans. It is important to note that Mr Fedoricsev has no commercial or other interest in Lirtavis. He is, however, the owner of the terminals which SF&G desperately required to meet demand for grain exports.

To this day, SF&G has not paid the balance of transhipment costs to Grain-Trans, so Lirtavis has lawfully withheld part-payment of the grain to cover this expense.