Broken contract: China not joking
At the end of 2012, Ukraine has signed with China General agreement. China has provided Ukraine with three-milliard dollar loan. One and a half billion Ukraine had for fifteen years to put in the China grain, one and a half billion, the so-called commodity portion of the loan, Ukraine could spend on infrastructure projects.
The execution of the contract, that is, the supply of grain in China, the Ukrainian side has laid upon the State food and grain Corporation.
After coming to the post of Minister of agrarian policy of Igor Shweiki in the press was the noise that China requires to return the money in arbitration. The noise, however, lay down, when at the head of the Corporation has been appointed the new Manager Peter Vovchuk.
And recently, the Chinese national Corporation SSES (full name China national Corporation of machine industry and General contracts - as amended), with which Ukraine has signed the aforementioned General agreement on supplies of cereals , accused our state in a catastrophic disruption of supply. In accordance Ukraine threaten imposing financial sanctions.
This is stated in a recent letter to the Chairman of the Corporation sung BAE, addressed to Prime Minister of Ukraine Arseniy Yatsenyuk.
Beijing to Kiev, where the grain of the Lord?
Here is the text of this document, which is available to UKRINFORM.
"Our company helps CONFEDERATION (and the State food-grain Corporation of Ukraine - ed) for 2014, which was a very difficult period for Ukraine and the state food and grain Corporation, writes song Bai, and This led to a prolonged slump in activity, as well as to the emergence of unresolved issues...
During September and October of this year, Microsoft SSIS and EQUIPPING concluded and signed nineteen contracts on grain exports in volume 1 090 000 tonnes, cost 230 million dollars, and the extent of additional supplies are still being discussed, including 150,000 tons of corn, which must be delivered before the end of December 2014 and 1 000 000 tonnes of wheat till the end of January 2015, according to a letter of the head of SSES. About 50% of the specified amount, and this 520 000 tonnes, had to be delivered before the end of October. We are concerned that deliveries do not occur according to the schedule - it was shipped, only 65 000 tons, and as the explanation were given the logistical problem, as well as other local administrative factors. We fear that this will lead to delays of deliveries during the quarter.
If the situation is not corrected, it will lead to breach of contract, as well as to financial losses, " says Mr. song Bai in the final part of the letter, we have made great efforts to obtain quotas for deliveries of grain from Ukraine (particularly maize), and to find markets of grain from Ukraine to consumers in China in tough competition with other major world exporters in North America and the countries of the black sea region. Achieving this goal depends on the implementation of supply as lost once the reputation is very difficult to recover no matter what the external circumstances. Our activities also concerned in several Ministries of China and the export-import Bank of China, which has provided several billion dollars in Ukraine".
The letter concludes with a request song Bai to Arseniy Yatseniuk "personally participate and assist ministries of Ukraine, as well as businesses in working with corporations IMPORTS and SSIS to execute our plans."
We also know that on the 14th of November in Kyiv delegation has visited SSES headed by the Chairman of the Board sun Bum and CEO Yang Jing. Manual SSES met with Prime Minister of Ukraine Arseniy Yatsenyuk and Minister of agrarian policy Igor Sharpening. Official reports of these meetings were very concise. According to our data, on the Ukrainian side of the conversation was very hard and unpleasant.
UKRINFORM turned into Food Corporation (incidentally, the form of ownership is a public joint stock company) with a request to comment on the situation and to obtain information about how to perform the contract. Unfortunately, no information, no public or private to get us failed. On written request from the Corporation haven't responded. At least at the time of this writing. Repeatedly dialed is listed on the corporate website of the phone number, but on the other end sounded that the phone does not work for technical reasons. Contacted the press-Secretary of the Corporation on Facebook, asking her about the comment, or at least about the real operating room admissions, but the answer is also no.
We kept trying to get the answer. In Parliament were able to ask questions to the Minister of agrarian policy of Igor Swiki. (This was the day of termination of the powers of government, and to elect a new government, industry de facto headed by Mr. Schweich.
"How would you comment on the position of the Chinese partners that Ukraine does not fulfill the contract?", "we asked.
"It CLARITA delirium, the contract is executed, there are graphs, we constantly consult with Chinese partners", - said the Minister.
"But we have seen letters from your partners from China who claim the contrary, about the same, as far as we know, were discussed at the session of the government, this was mentioned by the Prime Minister Yatsenyuk", " insisted we.
"This is nonsense, " said the Minister, " there's a graph there are objective factors that affect the situation, but we are in constant dialogue with Chinese partners and solved all our questions."
Why frowning Chinese
We asked the experts.
"The situation is really on the critical line, " commented one of the analysts who advise the government. Indeed, within 15 years of the General agreement Corporation SSES and EQUIPPING concluded nineteen trading contracts for export of Ukrainian maize obsah of 1.09 million tons, valued at $230 million And about half of the specified amount (520 tons) must be shipped before the end of October, and the rest in November of this year. In total, during the six-month period from July 2014 and January 2015, the Ukrainian state had to put the Chinese side over 3.3 million tons, including (in addition to the above-mentioned volume of 1.09 million tonnes, 1 million tonnes of wheat, about 0.8 million tons of barley, and an additional 0.2-0.5 million tons of corn.
However, as we can see, according to the Chinese side (and there is no reason for her not to trust), in early November, our Corporation has managed to do just 1 of 19 contracts, putting only those 65 thousand tons instead of more than half a million tons of corn! And future prospects hardly encouraging. As we learned from sources in the ports of Ukraine, during November IMPORTS in the best case, will send another 4 vessels with a total volume of 200 thousand tons Therefore, the default in most export contracts with China and underdelivery Ukrainian side 3/4 specified quantities of maize seems more than probable.
To the question, is there a chance until the end of the current year to correct the situation, our expert replied: "it Seems they nabiratsa to zero".
The critical attitude of our interlocutor on the Corporation's share and other interviewed experts and participants of the grain market. In their opinion, the reasons of failures of the Corporation are not only poor organization of international business management, logistics and transshipment. At the same time, they believe that the pursuit of quantitative shaft, not quality, the use of questionable services firms-intermediaries, buying grain at high prices in structures close to the Ministry. As a result, experts say, the Corporation has driven itself into a trap on the spot market. Forward contracts have been signed and funded twice less than expected. And most of them fails. As a result, even spent millions of money, IMPORTS are faced with acute shortage of grain export quality, carrying the loss Corporation on the first three quarters of this year, according to some, exceeded 820 million UAH. Arise high-profile corruption scandals, which featured the Corporation and its management, and what to do with all of this further, it seems that no one is.
And now the Chinese have sounded the alarm, making now (and not in a month or two) the problem at the highest level. According to our sources in the Cabinet and the Ministry of agrarian policy, the delegation of the Chinese SSEC said very categorically: if before the New year, the situation in IMPORTS will not change dramatically, the 15-year agricultural project and a loan of $1.5 billion, it will be possible to put the fat cross. The consequences of this development for our state, can be the most sad and difficult to predict.
Agrarian market analyst Marian Zablotskiy differently sees the situation that has developed in IMPORTS and suspected of dishonesty and previous management of the Corporation:
- First money on supplies of grain were allocated at the end of 2012. $ 1.5 billion. was credited to the set state food and grain Corporation in the state Ukreximbank. The money was obtained under the state guarantee, hastily adopted on 27 December 2012. It is clear that all 1.5 billion. IMPORTS were not immediately needed, but the money on account of Ukreximbank in terms of the budget deficit were very attractive to the Ministry of Finance. Moreover, for the use of money the government need only make one call and give the command of the Bank, which is located in their submission, send money to the budget. Both in private conversations, bankers say, the lion's share of Chinese money before the revolution was used UNECA for budget financing. The easiest way is buying government bonds denominated in dollars, which not so long ago were put into circulation on the domestic market. Formally, the state food and grain Corporation has money in the Bank, but the Bank's liquid foreign exchange assets, most likely, under this account anymore.
The new government understands that in order to calculate the Chinese should return the money from the budget. But it is not really wants. First, the Ministry of Finance has real financial difficulties. Secondly, the loan at very attractive conditions - low interest rate and long repayment period. But the loan is still not published for the budget and for the purchase of grain. Therefore, the government tries to balance between the target and misuse of money.
In this case, Arseniy Yatsenyuk, like all professional participants of the grain market, a very negative attitude towards IMPORTS. On the second agricultural forum Yatsenyuk openly called CONFEDERATION "evil spirits". The reason for this corruption scandals and loss that accompany the activities of the company. Since our inception, official losses IMPORTS exceeded UAH 1 billion. If not for the Chinese loan, EQUIPPING them probably already been eliminated.
As it was done, or rather, what was not done
The author of these lines in the UKRINFORM had to lead in the management of public Affairs food and grain Corporation and work on the position of press Secretary.
Working in a Corporation, I was constantly called to the Directors of elevators (the Corporation is 53 elevators throughout Ukraine, including two Crimean), studied the operational information to the Ministry of agrarian policy, communicated with Directors of various departments of the Corporation on cooperation with China (exports of grain was not the only focus of the Corporation).
I can say with absolute liability, the Corporation's period of leadership by Robert Brovdi (and the leadership of the Ministry of agrarian policy and food Mykola Prysiazhniuk) executed a contract with China.
This is confirmed not only the official reports of the Corporation of the period, but all my personal experience of communication with superiors conventional elevators, port elevators, all operational data of that period.
Two million tons exported Corporation before the end of 2013, there were significant achievement. Even some triumph, which in its own way of celebrating all the departments of the state food and grain Corporation. And then, in spite of the terrible social upheaval of the late 2013 - early 2014, the real economy and the agricultural sector lived their lives. Ukrainian court, chartered Corporation, stood under load and 30 and 31 December 2013, and January 1 and 2, and 6 and 8 January 2014. Corporation during the period were sent ten or twelve vessels per month in different directions. In other words, despite the revolution, Ukraine has remained a reliable partner.
I once asked the Director of the Elevator, as he managed four times to raise the rate of grain storage. (Elevators, SC are quite old and to bring them to the client, you need a special approach and contacts, and I wondered how they managed four times to raise revenue). He said, "Before everything a season of waiting to fill the grain tank, and then was shipped grain for export. But it turned out you can work differently: the Corporation started immediately chartered a small vessel and send it to the partners. Such reversibility gives good performance".
"Why did you finally begin the repair of elevators, China gives credit?" - I asked the head of the Department of construction (the second part of its three billion human loan, one and a half billion dollars, as has been said, was given to the reconstruction of our capacity).
"We went to China and well studied. In my opinion, is to buy only the Swiss equipment, concerns which are located in China, and they want us to take a purely Chinese equipment. Traded was explained to me by the Director of the Department of building, to Disclose the loan is not an end in itself. I for European equipment.
It is not strange, but problems in the Corporation began with the change of the "criminal regime" and the advent of a new, revolutionary, management.
At the staff meeting the new Minister Ihor Shvaika publicly promised the audience criminal cases. When he bravely went on, shaking hands with all the staff, the Director of the best Elevator Corporation grimly joked: "It's like in the movie: "Hello. I am the king".
From March until China stopped sending the ship. In the first half of April of the Corporation left the previous management, in one day with the head of the state food and grain Corporation Robert Brovdi freed 230 people. It was the Anglo-French and foreign staff, specialists who were trained for more than one year. They knew about all grain. And about quality, and about its price in each region of Ukraine and on each global exchange, and the routes of vessels and freight costs for these vessels.
To digress, I would say that it is the observation of PJSC "state food and grain Corporation" has convinced me that the state must exist. Despite the fact that private companies are now attacking the Cabinet initiatives to sell the Corporation, not sure that this is the only correct way.
Perhaps the state should be. But, it seems, to guide them should, showing the result of a business team. Then miscalculate all the risks, all the plans are logical. The success of each enterprise is simply a consequence of correct decisions of the Central office. (Even taking into account that Ukrainian darcorporation far to the West "relatives" and generous head pulls back not only close relatives, they are still effective).
Returning to the "revolutionary" management of the Corporation. Until the end of April in China has gone one ship. According to my calculations, which I discussed with the guy from the analytical Department (it very soon fired): not to leave the delivery schedule, we had to send five or six heavy ships a month.
We did not perform the contract, it was clear, as white day. On it there were no serious reasons. Just in the Corporation have people who, as they say, absolutely do not possess the topic.
In late April, the journalists agricultural agencies invited to the meeting, the Deputy Minister of agriculture under the quota Maidan Andrey Dikun. When he asked what we can to please the press and support the new government, I said, "Nothing. The contract is not executed more than 200 professionals have gone from the structure. Tribal longer with us did not meet.
In SC I witnessed two of the chief departments of forward purchases, the departments were renamed. I know that the documents about the new leadership of CONFEDERATION did in lustracni the Committee and the Commissioner for the fight against corruption. I admit, I tried to convey to the leader of Svobody" Oleg Tyagnibok (as you know, the Minister of agrarian policy Ihor Shvaika, is a native of "Freedom" - as amended) that the failure of the contract can be his personal responsibility. But no one is scared.
I must say that the departure of ships to China resumed. But loading one or two ships per month did not solve the issue of supply. Our export obligations 2013-2014 marketing years amounted to four million tons, and one velikovataya the vessel can accommodate 60 to 65 thousand tons.
In may in Kiev attended by representatives of the Chinese Corporation to meet with the new government, I was present at the meeting, Yang Jing Minister Igor Sharpening. I didn't feel anything but shame, when representatives of SSES gave amber a picture worth four thousand UAH. It is encouraging smiled, but her face was saying: treat for my money, it is better that you have fulfilled your obligations.
With high probability we can say that when Yanukovych's share of the profits of the Corporation was or his family or the Minister Prysiazhniuk. Even more - don't believe that then you could work differently. But the simple truth was that although a significant share of the profits could somehow go to private pockets, but we remained serious and capable partner for its suppliers. And if we want to remain a partner (and not running in this case on a serious court action), I would not have risked and gave it execute a professional team or already has experience of such a serious program or, at least, carried out such programs, which could revive a contract with China.
Do something, or instead of an epilogue
I was seen within six months after the arrival of the new team was collapsing slim the supply chain. As a hidden plans to expand capacity of its own port elevators and attempted to buy millions of dollars of unnecessary stevedoring campaign. For those who do not understand, explain. Export is, in addition, handling of grain at the port. It is expensive and difficult. The last command uses state power port elevators, and when they don't have enough for the whole grain, which is sent just rented a private berths terminal. Here it was essentially about buying an old dock with cranes, which shipped only metal. Media wrote that in fact this purchase, the head of the Corporation, Peter Vovchuk was detained SBU. As far as we know, in a few days he was released. But all the issues are cleared, not completely clear.
We already experimentalist with the General Agreement. Yes, I want new and fresh frames. But first grow such Manager who would immediately involved in the process and did. While no such Manager, to hire proven professionals. Create Supervisory Board, the body control with this command, you specify the conditions where they take the profit.
But start already, finally, to load grain in China.
Song Bai was not joking.
Lana Samokhvalov. Kiev
