Kiev estimates black grain exports' share at over 20% in Jan-Sept

MOSCOW. Nov 17 (Interfax) - A number of Ukrainian enterprises exported grain of unknown origin worth of 133.9 billion hryvni in the first nine months of 2023, which exceeds 20% of the entire exports, Ukrainian media said, citing the Economic Security Bureau's analysis of agricultural exports.

"A common method of 'black export' of grain is the use of risky enterprises. They are created in advance to export unaccounted grain purchased for cash," the bureau said.

According to the bureau, farmers produce grain and sell it for cash to companies, which are usually registered to frontmen and have no regular business operations. Such companies do not provide grain origin certificates or indicate imaginary producers in customs declarations.

Once the grain leaves Ukraine, it is resold several times before legally reaching the end buyer. As a result, foreign exchange earnings are not returned to Ukraine, and the budget does not receive revenue from fictitious exporting companies. As a rule, the final buyer of grain is a non-resident company, which transfers funds for the goods to another non-resident associated with the Ukrainian exporter.

In some cases, foreign currency is transferred to transaction accounts of a non-resident, which buys goods, for instance, in China, and imports them into Ukraine, where it is sold for cash and a tax credit is sold to other enterprises, it said.

The bureau said it gave the State Customs Service about 4,500 cargo inspection instructions, as a result of which the service denied registration to 75 customs declarations for 1.6 million tonnes of goods with a total value exceeding $430 million.

While investigating 22 criminal cases, bureau detectives informed 12 executives of risky grain exporting enterprises about suspicion of crimes defined by Articles 212 and 205-1 of the Criminal Code of Ukraine (tax and duty evasion), 71 searches were carried out, and 12 criminal proceedings were initiated. Courts issued eight indictments.

Based on the analysis, the bureau proposed ways of agricultural export regulations to the government. It proposed, for instance, that the deadlines for settlements (revenue return) be cut to 60-90 days, the procedure for filling custom declarations be improved, the list of grounds for denying customs clearance of grain with dubious origins be broadened, the list of goods to which the export security regime applies be broadened, and public registers of certificates and exporters of agricultural products be formed.