Detectives of the Territorial Department of the Economic Security Bureau in Kyiv exposed a large-scale scheme of legalization and illegal export of agricultural products without paying taxes and non-return of foreign currency earnings.

The investigation established the chain of grain supply from the producer to the non-resident buyer. Officials of a number of companies purchased agricultural products for cash. They did not reflect such transactions in their tax reports.

Subsequently the products were stored at an elevator in Odesa region. The elevator pursuant to a foreign economic contract, provided transshipment and storage services to a non-resident company. The above-mentioned legal entities are related to each other by the founder and ultimate beneficial owner.

When exporting grain the freight forwarder, who is also a related party filed cargo and customs declarations and orders for loading ships using the details of a company with "risky" characteristics. This company is not a VAT payer and has one director. He had previously been prosecuted on the grounds of criminal offenses under Part 2 of Art. 309 of the Criminal Code of Ukraine (illegal transportation of narcotic drugs or their analogues) and Part 1 of Art. 205-1 of the Criminal Code of Ukraine (forgery of documents submitted for state registration of a legal entity and individual entrepreneurs).

Such actions of business entities led to tax evasion on a particularly large scale.

Detectives of the ESBU found that the company with signs of "riskiness" exported agricultural products totaling more than UAH 2.3 billion to a non-resident company in just 2 months of this year.

In order to obtain additional evidence the detectives of the ESBU conducted searches at the mentioned elevator in Odesa region.

The searches revealed that the elevator had received agricultural products from a non-existent company for transshipment which were to be exported. There were also no documents confirming the origin of the grain. In addition the detectives found and seized more than 400 consignment notes, according to which the elevator received agricultural products from a non-existent company in the amount of about 9,000 tons.

After the discovery of this documentation the management of the elevator and its officials refused to assist detectives in any way in conducting investigative actions, namely to provide information on the type and quantity of agricultural products that were imported and stored at the elevator, to provide any technical documentation necessary to calculate the amount of product residues which significantly complicated further investigative actions.

Subsequently, the director of the elevator provided detectives with similar consignment notes issued by a registered company with a letter from a non-resident company stating that the previous consignment notes in the amount of more than 400 pieces were allegedly issued by mistake. However, the "new" consignment notes were not properly filled out and showed signs of forgery.

In addition, a point of sale of counterfeit consignment notes was established near the elevator. It turned out to be a grocery store. During the search, the found blank invoice forms of the company that allegedly sent the goods. The aforementioned premises were also used to sell counterfeit consignment notes for the delivery and transportation of agricultural products.

As a result of the search the detectives of the ESBU seized about 9,000 tons of grain. The legalization of the goods with an estimated value of over UAH 65 million is preempted. The issue of its transfer to the ARMA is currently being decided.

The investigation is ongoing. The full range of persons involved in the illegal activity is being identified.

The pre-trial investigation in the criminal proceedings on the grounds of criminal offenses stipulated by Part 2 Art. 205-1, Part 3 Art. 212 of the Criminal Code of Ukraine (fictitious entrepreneurship, tax evasion in especially large amounts) is being conducted by detectives of the Territorial Department of the ESBU in Kyiv together with the Department of national statehood protection of the Security Service of Ukraine under the procedural supervision of the Kyiv City Prosecutor's office.