OREANDA-NEWS. March 01, 2011. State Audit Service conducted the audit of financial and economic activities of State Group for alcohol and alcoholic beverage (Group "Ukrspirt") for the period of 2008-2009 and 9 months of 2010. Revisions covered 67 public companies that are members of the Group.

Total financial violations found made worth nearly 1.2 billion UAH. These losses of financial and material resources, made due to law violations, amount to more than 36 million UAH. (Other violations did not result in losses).

Most financial violations (worth 902 million UAJ, or 76%) were made during public procurement of goods, works or services. So, the alcohol plants of Lviv region bought cereals and enzymes for production of alcohol without the appropriate tender procedures or in violation of tender laws. The amount of violations was more than 223 million UAH. Distilleries of Ivano-Frankivsk region made such purchases totaling over 260 million UAH, Kiev - 136 million UAH, Volyn - 67 million UAH, Chernigov - 62 million UAH. Overall distilleries purchase of assets in violation of tender legislation found in almost all the regions of Ukraine.

As a result, purchase of raw materials at inflated prices led to losses of distilleries for a total of 13.9 million UAH. Similar cases were found in enterprises of Vinnitsa, Volyn, Zhitomir, Ivano-Frankivsk, Kyiv, Lviv, Poltava, Rivne, and Zhytomyr regions.

Contrary to the Commercial Code of Ukraine and the Charter of the "Ukrspirt"  Group, the companies allocated for maintenance the net income instead of the profit. Overall, this amounted to over 10 million UAH. Such violations were found at the state enterprises of Vinnitsa, Volyn, Zhitomir, Kiev, Lviv, Poltava, Rivne, Sumy, Ternopil, Kharkiv, Cherkasy, and Chernihiv regions.

Revisions have found the hidden property privatization of state enterprises "Ukrspirt" Group, by bringing them to the artificial bankruptcy, getting credit from commercial banks to transfer the state property as collateral, and collection of existing arrears of wages of its employees through the court decision by selling state property to businesses structures.

The scheme to bring the "Ukrspirt" Group companies to bankruptcy is based on artificial dept creation by receiving returnable financial assistance from commercial structures, the conclusion of agreements that are clearly aimed to bring companies to debt.

At the end of control activities, payment of wages to employees by the companies’ dept was more than 10 million UAH.

The control measures have identified one of the schemes, which may indicate money-laundering in large amounts. SE "Lutsk Alcohol Works" (Volyn region) violation the legislation in 2008-2009 without the permission of the governing body has concluded contracts on purchase of oil products in volumes that are 110 times higher than its annual requirement. Despite the prepayment totalling over 130 million UAH, the materials have not been undertaking. During the audit, it was found that these companies are not located at the place of their registration.

In addition, the audits of distilleries revealed a number of facts that may indicate production of uncounted alcohol: overdue charges for energy and raw materials.

Failure of following by officials of the distilleries of the applicable laws regarding wages, led to its undue payments totalling about 0.9 million UAH, and the staff shortfall of almost 1 million UAH.

Almost the half of the companies of the "Ukrspirt" Group is unprofitable today. One reason is the loss selling of alcohol at prices below its production cost, resulting in shortfall of income businesses totalling over 17 million UAH.

Due to revision 71 official fined to administrative responsibility, 65 revisions materials are handed to the police, following the revision results 9 criminal cases were initiated and 7 revision materials are included in earlier initiated criminal cases.

Reference. The scope of management of "Ukrspirt" Group includes 92 companies, 10 of which are under liquidation according to the Cabinet of Ministers of Ukraine resolution dated 10.09.2008 № 820, and 6 companies out of business. Among the companies that perform economic activities, 44 businesses are profitable, others are unprofitable.