NABU, SAPO expose criminal organization inside SPFU

On March 22, 2023, NABU and SAPO exposed a criminal organization led by the former head of the State Property Fund of Ukraine. In the course of 2019-2021, its members embezzled UAH 500 million from JSC "Odesa Port Plant" and JSC "United Mining and Chemical Company". The amount of illegal profit received by the group during the entire period of control over Odesa Port Plant exceeds UAH 2 billion.

The suspects are*:

• the head of the State Property Fund of Ukraine (crime boss);
• a close associate to the head of the SPFU (co-organizer);
• an adviser to the head of the SPFU;
• two acting directors of JSC "Odesa Port Plant" (in different periods);
• the acting head of JSC "United Mining and Chemical Company";
• two owners of the LLC that won the auction at Odesa Port Plant;
• two accomplices in the crime.

*positions at the time of the crime

The actions of the suspects fall under Part 1 Art. 255 (as amended by the Law of Ukraine of 04.05.2001 No. 2341-III), Part 2 Art. 255, Part 5 Art. 191 of the Criminal Code of Ukraine.

The acting director of Odesa Port Plant and an adviser to the head of the SPFU were detained under Art. 208 of the CPC of Ukraine. Seven others were notified of suspicion in absentia. One more person was personally served with a notice of suspicion.

NABU and SAPO have established two episodes of the group's criminal activity. The first one involves corruption at the state-owned Odesa Port Plant. At the beginning of 2020, the SPFU head secured the election of loyal members of the plant's supervisory board, who later approved the appointment of a member of the group as the director of the plant. During May 2020-October 2021, the then SPFU head, his associate, two acting directors of the plant, and two owners of the LLC secured the prolongation of additional agreements with the LLC under their control on the processing of gas into urea and ammonia at low cost. Subsequently, the members of the group realized that the constant, groundless extension of the contract between Odesa Port Plant and the controlled LLC might raise questions. Therefore, they conducted a competitive selection of a new raw materials supplier, assuming that the company under their control would win it. When things turned out differently, they illegally canceled the results and signed a contract with a predetermined LLC, which agreed to work with the plant on the old terms, without increasing, and later even reducing payments to the plant for processing raw materials. As a result, Odesa Port Plant incurred expenses not foreseen by the contract worth more than UAH 80 million. The investigation gathered enough evidence that the competition was deliberately disrupted so that the group could further embezzle the money. This is confirmed by the correspondence among the group members.

As a result, from May to December 2020, Odesa Port Plant lost more than UAH 390 million.

The second episode involves the state-owned United Mining and Chemical Company. NABU and SAPO established that in October 2020, the SPFU head, as a crime boss, succeeded in appointing a loyal acting director of the company. The latter, following the instructions from above, during 2020-2021, deliberately concluded four contracts for the sale of titanium-containing raw materials (ilmenite concentrate) at discounted prices with a Czech company controlled by the adviser to the SPFU head. The concentrate was then resold at market prices, including to russian enterprises and those in the temporarily occupied Crimea.

This resulted in losses to the state worth over UAH 118 million.

The group tried to conceal their criminal activity. During 2019-2020, in order to create the image of a person intolerant of corruption, the SPFU head acted as a whistleblower three times, filing relevant reports with NABU and widely informing the public about it. As the detectives and prosecutors later found out, the suspect reported bribe offers in order to eliminate "competitors" at Odesa Port Plant, United Mining and Chemical Company, and other enterprises under the SPFU control - so that only the controlled company could make money. This is evidenced by the documents discovered during the investigation.

Because of the two above episodes, the state lost more than UAH 500 million. NABU and SAPO are identifying other possible participants in the crime and investigating other activities of the group.

Odesa Port Plant is a major chemical enterprise in Ukraine. Its products - ammonia and urea - are in demand in the European Union, North America, Asia, and Africa. Due to significant accounts payable, the company is forced to receive raw materials under the grant scheme.

United Mining and Chemical Company is a state-owned enterprise, one of the world's largest producers of titanium raw materials.

Other investigations of Odesa Port Plant and United Mining and Chemical Company.