Businessman Oleg Bakhmatyuk has stated that within the next month or two the agricultural company Avangard will be forced to close down 6 out of its 27 egg farms in different parts of Ukraine over the refusal by the Specialised Anti-Corruption Prosecutor’s Office (SAPO) and the National Anticorruption Bureau of Ukraine (NABU) to close the case involving a stabilisation loan extended to VAB Bank, which the businessman used to own, those farms generating 20% of the company’s total output.
This is according to the news agency Interfax-Ukraine.
“This is no blackmail; this is a forced decision. To save 10 thousand jobs, we’ll have to lay off 2.5 thousand. If the situation doesn’t change within two months, I’ll be forced to close down half of all the farms”, said Bakhmatyuk.
“We’ll get everyone, being laid off, the phone numbers of NABU Director Sytnyk and Head of SAPO Kholodnitskiy and tell them they are the people who got them fired’, added the businessman.
He reminded that on 25 June the Office of the Prosecutor General complied with the judgement of the Pechersk District Court of Kiev City dated 5 June 2020 that had reversed the decision of the now former first deputy Prosecutor General, Vitaliy Kasko, dated 18 September 2019, to reopen a criminal case involving a stabilisation loan of UAH 1.2 billion extended by the National Bank of Ukraine to VAB Bank in the autumn of 2014. NABU and SAPO are continuing the investigation, nevertheless.
Bakhmatyuk emphasises that demand has been depressed as a consequence of logistical disruptions, the coronavirus crisis, and lack of financing brought on by the conflict with NABU and SAPO that became the last straw behind the decision to close down the farms.
“We are racing against time, financially, economically and in terms of human resources. [The decision to close down the farms] is based on all those factors – any war has a beginning and an end”, explained the businessman.
According to him, debt financing would help and so would an equity injection, also potentially by the government, as suggested by the International Monetary Fund (IMF), but none of those options are now acceptable due to the conflict.
“The only way to tide over the demand fluctuations is to raise debt or equity. Both options have been taken away from me. As a businessman, I’m forced to make decisions, to cut costs “, stressed Bakhmatyuk.
He indicated he would not even try and propose to the government to come in as an equity investor in Avangard or Ukrlandfarming as its parent because “no one is going to do it”.
The owner clarified that he was going to suspend those farms, he ruled out their sale though. “No one would buy those farms, only those who engage in real business, and it’s a hard business to be in”, explained Bakhmatyuk.
The businessman added that he had approached the President, the Government, the National Bank, the Deposit Guarantee Fund (DGF) numerous times with a proposal to settle amicably the conflict that started after the banks VAB Bank and Financial Initiative he used to own were withdrawn from the market, all to no avail.
He added that he had only been able to get the debts before Oschadbank restructured, the Ukreximbank situation, however, remains unsettled.
“We are always ready to engage in a constructive dialogue. If this goes on, we are going to see Sytnyk, Kholodnitsky and the activists lay eggs come autumn”, indicated Bakhmatyuk.
As reported earlier, in late November 2019 the Ministry of Interior put Bakhmatyuk and his sister, the CEO of Avangard, Nataliya Vasylyuk, on the wanted list in a case involving a stabilisation loan extended by the NBU to VAB Bank. NABU detectives had earlier issued a notice of suspicion in the same case to the former first deputy governor of the NBU Oleksandr Pysaruk, a member of the NBU Council Mykola Kalenskiy, the [former] head of bank supervision Alla Shulga and 4 other individuals related to the bank or Ukrlandfarming companies. Those individuals have been released on bail.
The NBU claims that the debt owed by the insolvent banks VAB Bank and Financial Initiative (both formerly owned by Bakhmatyuk) to the Deposit Guarantee Fund totals UAH 11 billion, a further UAH 10.6 is allegedly owed to the NBU. The debt to the NBU is secured by the businessman’s personal guarantee of UAH 8.6 billion and suretyships issued by his companies.
Bakhmatyuk has previously stated to Interfax Ukraine that he denies all accusations and offers to settle the UAH 8 billion to the DGF gradually: UAH 500 million upfront and then UAH 1 billion per year. He believes the case has been fabricated to disrupt settlements with creditors. The businessman has urged President Volodymyr Zelenskiy to intervene.
In a letter dated 15 November , a group of international creditors of the Ukrlandfarming group offered the Government of Ukraine to discuss the potential downside for the aggregate debt obligations of the agricultural companies from recent developments in the legal dispute involving Bakhmatyuk and Ukrlandfarming. The letter specified that the total stock of principal debt obligations owed by ULF totalled nearly USD 1.65 billion, of which some USD 1.25 billion was owed to international creditors and some UAH 400 million to Ukrainian banks (including stated-owned Ukreximbank and Oschadbank).
Ukrlandfarming is one of Eurasia’s largest agricultural companies. It grows grain, breeds cattle, distributes agricultural machinery, fertilisers and seeds. Avangard, which is part of ULF, is Ukraine’s largest producer of eggs and egg products.