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E-mail correspondence proves that American investment fund has effectively robbed its Latvian partners in Ukraine

Pietiek.com, 12.08.2020.Print version
It has been confirmed that the Ukrainian authorities have gained access to the e-mail correspondence between Valdis Muižnieks, former Director General of the Ukrainian company owned by SIA LU Invest, which belongs to a member of the Paškausks family – the owners of the renown Latvian agricultural group Agrolats Holding – and the CFO of a company involved in the chain of offshores created by US investment fund NCH Capital. The correspondence clearly demonstrates that for years the profit jointly earned in Ukraine has been channelled over to offshore companies in Cyprus, bypassing the Latvian partners who were only left with the losses.

This e-mail correspondence from October 2018 that has now also become available to Pietiek.com and fragments of which are published below shows Olga Makara, CFO of Agroprosperis Group, clearly indicating to the Latvian representative the financial schemes, which resulted in the joint company owned by NCH Capital and LU Invest in Ukraine incurring losses from purchasing raw materials and equipment for inflated prices and selling grain at discounted prices while profits are bypassed around the Latvian company and channelled to offshore companies in Ukraine controlled by NCH Capital.

 

In one e-mail Olga Makara explains that rather than looking at the profit indicators of the joint venture alone, the overall profit of the group which is generated elsewhere – at the profit centres within offshores in Cyprus – should be looked at. In the correspondence, Olga Makara failed to realize that the Latvian representatives have nothing to do with these profit centres, the money channelled there remaining exclusively with NCH Capital.

 

As previously reported, information disclosed by the Ukrainian authorities, which (just like the authorities in Latvia and the USA) are reviewing the facts, indicates that about 14 years ago, in late 2006, an agricultural company was founded in the country by offshore company Trittico Holding Limited owned by NCH Capital and Latvian joint stock company Dobeles dzirnavnieks.

 

However, less than a year later, Dobeles dzirnavnieks was replaced by another Latvian company – LU Invest owned by Vitauts Paškausks, and a month later, when the Latvian representative Valdis Muižnieks was appointed as the Director General of Golden Sunrise (Agro), he received 4% of the company’s shares.

 

Even with this 4%, the Latvian side was in the minority: the Cypriot offshore company Unagro Finance Limited, which had replaced Trittico Holding Limited, owned 50,01% of the shares, while LU Invest and Valdis Muižnieks together owned 49,99%. Yet the rights and obligations of the parties were rather strictly regulated, including the rights of the minority shareholders, such as that they were the ones to nominate the Director General of the company.

 

According to the Ukrainian authorities, already in 2010 the actions of NCH Capital in “optimising” various costs had started to cause some concern to the Latvian partners. The suspicious activity had mostly been related to two basic operations of the company – purchasing of raw material and sale of produced grain.

 

With time, these processes were increasingly taken over by the representatives of NCH Capital, thus effectively bypassing the official Director General of Golden Sunrise (Agro). Raw material was often purchased for inflated prices, while grain was sold for suspiciously low prices.


However, the information collected by Ukrainian authorities shows – this does not necessarily mean that the representatives of NCH Capital deliberately chose to incur losses. Quite the opposite, the NCH Capital representatives who controlled the supply of raw material and grain customers – offshore companies, had chosen to gain profit through those, rather than share it with their Latvian partners and Golden Sunrise (Agro).

 

According to unofficial sources, Ukrainian authorities have gained access to correspondence between Valdis Muižnieks and the CFO of an offshore company involved in the NCH Capital offshore chain, who clearly admits to the existence of this financial scheme and the fact that profit is being gained by the offshores in Cyprus, bypassing the Latvian partners, who are left with only losses.

 

The situation had become completely obvious in 2017-2018 when the possible goal of the NCH Capital representatives had been revealed – to not only gain extra profit through the offshores, but also to force the Latvian partners out of Golden Sunrise (Agro), purchasing their capital shares at the lowest possible price by taking advantage of the shareholders’ agreement and the pre-emptive rights contained therein.

 

This assumption was confirmed in late 2018, when objections voiced by LU Invest and Valdis Muižnieks as to never having received any dividends throughout the duration of the company’s existence, were met with an NCH Capital offer to buy the Latvian partners’ shares for 5 million dollars. Other offers followed, topping out at 8.5 million dollars. Meanwhile, the average annual profit of Golden Sunrise (Agro), which through the financial scheme had been moved to the offshores, had been approximately 9 million dollars, while the company’s actual value was over 70 million dollars.

 

The materials collected by Ukrainian authorities show that when these offers were rejected, NCH Capital representatives effectively implemented a takeover of the company. Despite the company by-laws stipulating that a shareholders’ meeting shall have consensus only if the owners of at least 60% of shares are present, in March of last year the representatives of NCH Capital managed to register a new Director General for Golden Sunrise (Agro) in the Ukrainian Enterprise Register thus removing Valdis Muižnieks from office, even though this decision was taken without the presence of the Latvian partners, thus with only 50,01% shares being represented.


According to the Ukrainian authorities, this illegal takeover was facilitated by finding an especially favourable place of registration, and as a result the Latvian entrepreneurs have lost both actual and official control over an agricultural company worth several tens of millions.

 

Fragment from correspondence between Valdis Muižnieks and Olga Makara about “profit centres” and cash flows

 

From: Olga Makara

Sent: Thursday, 11 October, 2018 4:53 PM

To: Muižnieks Valdis

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka; Viacheslav Sagan; Igor Osmachko; Michael Bertram

Subject: RE: Nika-Tera

Dear Valdis,

I propose to address the issue of financing and cash flows of your Holding, Golden Sunrise, at the level of the new EU member states, without involving Agroprosperis.

By blocking the shipments, you are not improving the cash flow of your Holding.

Best regards,

Olga Makara

CFO/Business Development

Agroprosperis Group


From: Muižnieks Valdis

Sent: Thursday, 11 October, 2018 4:38 PM

To: Olga Makara

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka; Viacheslav Sagan; Igor Osmachko

Subject: RE: Nika-Tera

Dear Olga,

the question we are discussing now is more about the cash flow of Golden Sunrise Holding.

We have already forgotten that Agroprosperis is not the only Investor in this Holding.

Best regards,

Valdis Muižnieks

CEO

LLC GOLDEN SUNRISE (AGRO)


From: Olga Makara

Sent: Thursday, 11 October, 2018 4:26 PM

To: Muižnieks Valdis

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka; Viacheslav Sagan; Igor Osmachko

Subject: RE: Nika-Tera

Dear Valdis,

the issue, which we were discussing, is the transfer price for you; the Trading House in Cyprus receives the real price from the buyer, and it is this price, which is taken into consideration, when the Farm Report result and the bonus for the APZ team are calculated.

Whether we offer you $ 150/t or $ 162/t, it does not matter for the Group as a whole; it does not in any way characterise the Agroprosperis sales department. All international groups have their transfer price.

To evaluate the work of the sales department, one should just look at EBITDA of the group before 2014. The figures speak for themselves.

Best regards,

Olga Makara

CFO/Business Development

Agroprosperis Group


From: Muižnieks Valdis

Sent: Thursday, 11 October, 2018 4:17 PM

To: Viacheslav Sagan; Olga Makara; Igor Osmachko

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka

Subject: RE: Nika-Tera

Dear Colleagues,

we have a sales department that has to offer the best prices throughout the marketing year, don’t we? Or should we endlessly bargain every time as if we were at an open-air market??? Maybe we should refuse such services that are to the disadvantage of the business?

Best regards,

Valdis Muižnieks

CEO

LLC GOLDEN SUNRISE (AGRO)


From: Viacheslav Sagan

Sent: Thursday, 11 October, 2018 4:12 PM

To: Muižnieks Valdis; Olga Makara; Igor Osmachko

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka

Subject: RE: Nika-Tera

And $ 162/t, FOB, Nika-Tera?


From: Muižnieks Valdis

Sent: Thursday, 11 October, 2018 4:10 PM

To: Olga Makara; Igor Osmachko; Viacheslav Sagan

Cc: Korolko Galina; Matviienko Maxim; Novoseltsev Viktor; Maria Osyka

Subject: RE: Nika-Tera

Dear Colleagues,

Golden Sunrise does not agree to sell corn at $ 155/t, FOB.

Best regards,

Valdis Muižnieks

CEO

LLC GOLDEN SUNRISE (AGRO)


From: Olga Makara

Sent: Thursday, 11 October, 2018 4:08 PM

To: Igor Osmachko; Viacheslav Sagan; Muižnieks Valdis

Cc: Korolko Galina; Matviienko Maxim

Subject: RE: Nika-Tera

Igor,

you are right; in relation to this terminal, we can add $ 7/t to the price, i.e. $ 162/t.


From: Igor Osmachko

Sent: Thursday, 11 October, 2018 3:58 PM

To: Viacheslav Sagan; Muižnieks Valdis

Cc: Korolko Galina; Matviienko Maxim; Olga Makara

Subject: RE: Nika-Tera

Viacheslav, in relation to Nika-Tera, we pay the entire cost of transshipment in hryvnias (UAH). The non-resident does not pay extra.


From: Viacheslav Sagan

Sent: Thursday, 11 October, 2018 3:57 PM

To: Muižnieks Valdis; Igor Osmachko

Cc: Korolko Galina; Matviienko Maxim; Olga Makara

Subject: RE: Nika-Tera

It should also be taken into account that, actually, we do not quite have FOB.

The APZ pays for the transshipment service only partially (that is, in the amount of $ 5), the non-resident pays an extra $ 6-7 for fobbing, fumigation, survey, etc. for a non-resident (who is related to the terminal; these are the terminal operating conditions).

Therefore, we have a small difference between the CPT and FOB prices.


From: Muižnieks Valdis

Sent: Thursday, 11 October, 2018 3:18 PM

To: Igor Osmachko

Cc: Korolko Galina; Matviienko Maxim; Viacheslav Sagan; Olga Makara

Subject: RE: Nika-Tera

Igor,

but our price is $ 155/t, Free On Board (FOB).

Best regards,

Valdis Muižnieks

CEO

LLC GOLDEN SUNRISE (AGRO)


From: Igor Osmachko

Sent: Thursday, 11 October, 2018 3:12 PM

To: Muižnieks Valdis

Cc: Korolko Galina; Matviienko Maxim; Viacheslav Sagan; Olga Makara

Subject: RE: Nika-Tera

Valdis,

at the port of Nika-Tera, the price is $ 154/t (transshipment is $ 2 cheaper there), $ 156/t is the price of the deep-water ports of large Odessa. In any case, I do not set transfer prices. I put my financier colleagues in copy as we need to know if they are satisfied with a different transfer price.

Best regards,

Igor Osmachko


From: Muižnieks Valdis

Sent: Thursday, 11 October, 2018 3:08 PM

To: Igor Osmachko

Cc: Korolko Galina; Matviienko Maxim

Subject: FW: Nika-Tera

Dear Igor,

today, at the port, the price after the recession is $ 156/t, Carriage Paid To (CPT).

What are our actions?

Best regards,

Valdis Muižnieks

CEO

LLC GOLDEN SUNRISE (AGRO)


From: Matviienko Maxim

Sent: Thursday, 11 October, 2018 2:08 PM

To: Valdis Muižnieks

Subject: Fwd: Nika-Tera

The price of corn is $ 155/t. Our actions?


From: Oleksandr Sladkov

Date: Thu, 11 Oct, 2018 at 12:57 PM +0300

Subject: Nika-Tera

To: Myronenko Yuliya , Onatska Melaniya , Matviienko Maxim

Good afternoon, dear colleagues. To execute the contract for the supply of corn, I ask you to prepare the package of documents according to the list.

Please send the scanned copies to my email tomorrow before 11:00. Please send the originals and the certified copies to the address: Nika Trans Logistics, 23 Aivazovsky St., Office 214, Mykolaiv, for Irina Lomakina, tel.: +38 050 493 88 83.

Documents required for customs clearance:

Accreditation at the customs. Registration Card/Extract from the register. Copy certified by the seal

Foreign trade contract. Copy certified by the seal (attached)

Supplements and specifications to it. Copy certified by the seal (attached)

Proforma invoice (in relation to the quantity under the contract or the freight volume planned for shipment). Original (attached)

Invoice (in relation to the freight volume actually shipped). After loading the cargo onto the vessel

Power of Attorney of the Chamber of Commerce and Industry for freight forwarders (pro forma in the attached file). Original

Registration in the Phytosanitary Service. Copy certified by the seal

Certificate of the exporter of grain. Original (attached)

Add. to the contract on the collection and transportation of municipal solid waste (MSW). 2 originals

Best regards,

LLC “AGROPROSPERIS”

Aleksandr Sladko






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