Ex-SFS head, agricultural tycoon suspected of massive VAT refund fraud

On Oct. 17, 2022, NABU and SAPO served suspicion notices to the former head of the State Fiscal Service of Ukraine, who received USD 5.5 million and more than EUR 21 million in undue advantage for VAT refunds to agricultural holding companies, and his accomplice (adviser, the owner of the agricultural holding). Their actions fall under Part 4 Art. 368 of the Criminal Code of Ukraine. The owner of the agricultural holding was notified of suspicion of bribery (Part 4 Article 369 of the Criminal Code of Ukraine). Since his whereabouts are unknown, he was notified of suspicion in absentia (under Article 135, Article 278 of the Criminal Procedure Code of Ukraine).

The investigation has established that the SFS head (2015-2016) received the undue advantage in the amount of:

• USD 5.5 million for refunding to agricultural holding companies over UAH 540 million of VAT in August 2015;
• over EUR 21 million for refunding almost UAH 2.7 billion of VAT during February 2015 - August 2016.

The undue advantage, which made about 20 percent of the reimbursed VAT, was transferred by a non-resident company under control of the agricultural holding owner through another foreign company, involved by him, to a foreign company controlled by the SFS head, as well as a company controlled by his father-in-law and adviser.

Part of the undue advantage came from the reimbursed VAT and was converted into foreign currency. NABU and SAPO have evidence that the SFS head prioritized VAT refunding to the agricultural holding companies and ignored the refund requests made by other business entities (including utility companies). This, in turn, led to lawsuits by such companies and penalties amounting to at least UAH 2 million that had to be paid from the state budget.

Gathering the evidence base required significant communication with the competent authorities of other states, which started in 2017 and is still in progress. 

In addition to the exposed episodes, the ex-SFS head is accused of causing more than UAH 2 billion in losses to the state due to the adoption of a number of groundless and illegal decisions on installment payments for the use of subsoil in favor of companies involved in the so-called "gas scheme", which is considered to be organized by a Ukrainian MP. This case is being heard at the HACC. As for the agricultural holding owner, he is suspected by NABU and SAPO of the embezzlement of UAH 1.2 billion of the stabilization loan provided by the National Bank of Ukraine to the "VAB Bank" PJSC.