The Financial Monitoring Agency of Kazakhstan (AFM) has revealed the mechanism for the illegal sale of Russian grain abroad. During the investigation, it was established that a limited liability partnership (LLP) exported from Kazakhstan 8.3 thousand tons of Russian grain in the amount of $2.2 million. The grain went to Uzbekistan, Afghanistan, and Tajikistan. What is the essence of the fraudulent scheme, who are its main beneficiaries, what are the prospects for the Russian and world grain markets – in the material of Izvestia.
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The illegality of the scheme lies in the fact that the company issued fake supporting documents from local manufacturers and received benefits when paying an export tariff. After that, according to the law, the grain became Kazakh. The total amount of damage caused to the Kazakh economy is estimated at $336,000.
Such cases indicate the need to revise certain legislative acts and the attention of the state, says Ekaterina Kosareva, managing partner of the VMT Consult analytical agency.
“Of course, the fact that the laws of Kazakhstan have been violated, Kazakh producers have suffered and the state has been damaged is bad. In this case, the company was trying to get benefits that it was not legally entitled to. But, on the other hand, it is practically impossible to legally sell Russian grain otherwise. The very principle of reselling Russian grain can be a way out under existing sanctions, by analogy with parallel imports for the Russian Federation. That is, it is possible to develop a similar mechanism for the sale of Russian grain. At least to the market of the CIS countries, – she notes.
Photo: TASS/Dmitry Dadonkin
According to the expert, now it is necessary to look for new ways to sell Russian products. The high yields of previous years had an effect, Kosareva continues. According to experts, a good collection is also expected in 2023, while the reserves of previous years remain. Partially solve the problem could be new processing capabilities.
Food security is a top priority for any state, the interlocutor notes.
“As a result, other countries that officially disown Russia will find it difficult, if at all, to live without our grain. And how much will prices be raised by those who “can” get into the market? As a result, such schemes appear. If some legal corridor is not legalized, then the number of such schemes using fictitious documents will invariably grow. In addition, such mechanisms will help replenish the budgets of the intermediary countries directly, without violating the law,” Ekaterina Kosareva sums up.
In this case, we are talking about the usual fraud, which is an internal affair of Kazakhstan, says Artem Shakhurin, an expert at IVA Partners Investment Company.
Photo: RIA Novosti / Mikhail Mordasov
– If the suspects were simply transporting grain from Russia to Uzbekistan, Tajikistan and Afghanistan in transit through the territory of Kazakhstan, then the transportation would have to be paid at a higher rate. But since, according to the Kazakh investigating authorities, the entrepreneurs forged documentation of the origin of the grain, passing it off as the product of local enterprises, the transportation was carried out at a reduced tariff for export. This story has only an indirect relation to the situation on the Russian grain market. Although it cannot be ruled out that in Russia, due to the record harvest, Kazakhstani entrepreneurs managed to buy grain much cheaper than in their own market, the expert suggests.
In his opinion, the overall situation on the Russian grain market remains difficult.
— In particular, deliveries through European ports remain difficult, and the cost of insuring ships carrying Russian grain has increased. Given the record harvest last year, this forces us to sell grain at a discount to the market. However, the weakening of the ruble somewhat softens this factor, says Shakhurin.
Among other factors, the interlocutor of Izvestia highlights the completion of the grain deal. In addition, there may be less Ukrainian grain on the world market, including due to problems with fuel, electricity and labor in the new agricultural season.
Photo: RIA Novosti / Ilya Naimushin
The described case is a typical fraudulent scheme that a business invents to obtain preferential terms and increase profits, Artem Deev, head of the analytical department at AMarkets, agrees.
– In this case, we are talking about one Kazakh company that bought Russian grain and made a local “registration” of this product: the company received fictitious documents that this grain was grown in Kazakhstan by local farmers (KFH). According to local legislation, the export of such products has transport benefits, thereby reducing the cost of supplying grain to foreign buyers. For the sake of this, this scheme was invented, the specialist clarifies.
According to the interlocutor of the publication, the report refers to only one organization, which means that such a mechanism for selling Russian grain abroad cannot be called massive and ubiquitous.
– This is a special case, from which it is not necessary to draw far-reaching conclusions. Most of the grain from Russia is sold according to quite understandable and transparent schemes that fully comply with the legislation of both Russia and other countries, he believes.
Grain terminal in Novorossiysk
Photo: RIA Novosti / Vitaly Timkiv
More cunning than scammers
Unscrupulous suppliers and contractors will always seek to profit from crises, notes Yulia Makarenko, deputy director of the Banking Development Institute.
“Scammers and those who purposefully seek and exploit loopholes in laws will discover new ways to circumvent local and international laws, as well as sanctions restrictions. Here the situation is a little more complicated than the next crime of the next company “Horns and Hooves”. The inventors of gray schemes will always be one step ahead, she notes.
According to the expert, the best way to counter fraudulent schemes is to legalize a simpler mechanism.
— For example, transactions are possible a la “Russian oil is converted into foreign oil by several transfusions from one tanker to another”, but allowed in the legal field. Or it is possible to agree on the supply of grain only with the obligation to buy oil “in load,” the analyst adds.
Photo: RIA Novosti / Ilya Naimushin
Such exit schemes may once again show the failure of Western sanctions against Russia.
“Both business and the state will benefit from this. At the same time, if local producers continue to be stimulated with benefits, there will be no need to talk about dumping or excessive competition of Russian products with local farms, – Yulia Makarenko concludes.
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