Agricultural enterprises of the agrarian Academy are used as" technical gaskets": analysis of financial activity

Recently, the National Agrarian Academy of Sciences of Ukraine has been in the spotlight as a potentially corrupt structure. At the disposal of UNN there are documents indicating the use of agricultural enterprises of the Naas as "technical gaskets", and their land – in hidden lease schemes.

We are talking about the state enterprise "Experimental Farm "Iskra" and the state enterprise "Experimental Farm "Nadezhda" – both belong to the Institute of Agriculture of the north-east of the National Academy of Agrarian Sciences of Ukraine. The main activity of both enterprises is the cultivation of grain crops, both allegedly cultivated thousands of hectares of arable land for years – but where did this lead them?

loss-making and debt

Open information indicates the start of the bankruptcy procedure and the opening of the liquidation procedure for the state enterprise "Iskra". All movable property of the enterprise was seized, according to enforcement proceedings in 2017-2023. by the way, the company owns 17 vehicles, including dump trucks, passenger cars, tanks, trailers and not a single combine harvester. Some of the equipment is from the last century, for example, a dump truck from 1986.  the company is a debtor, according to 15 enforcement proceedings.

The situation is similar with the State Enterprise "Nadezhda". Although this company, according to the latest information available in open sources, did not start bankruptcy proceedings. At the beginning of 2022, the company had more than UAH 1.2 million in tax arrears. All movable property of the enterprise was also seized – 19 vehicles were assigned to the enterprise, including, in particular, a trailer from 1967. Also, according to the enforcement proceedings of 2023-2024, the 2023 sunflower crop, elite wheat seeds of 21.1 tons were seized. the company is also listed as a debtor for 10 enforcement proceedings.

The results of the analysis of public finances of enterprises indicate an insufficient indicator of current liquidity, a high level of accounts receivable, and unprofitability.

●     liquidity and solvency of enterprises

Iskra has an insufficient indicator of current liquidity (the ratio of short-term assets to current liabilities), the current liquidity ratio in 2022-2023 was at the level of 0.76 – 0.68, respectively, at the rate of 2. in Nadezhda, the situation can be described as catastrophic-its current liquidity indicator is at the level of 0.3.

This situation indicates possible problems of enterprises when making settlements on short-term obligations with counterparties.

●      efficiency of using companies ' assets

SE Iskra has an excessively high rate of accounts receivable for goods, works, and services sold – UAH 10.1 million and UAH 20.9 million in 2022 and 2023, respectively. These volumes of accounts receivable are almost equal to the volumes of annual revenue – UAH 13.9 million and UAH 23.3 million in 22-23 years, respectively. This indicates that the company sells almost all of its products in debt and does not receive real live money for it in return. In general, the public finances of both companies indicate extremely inefficient asset management.

●      profitability of enterprises

Judging by the financial statements, Iskra is a deeply unprofitable enterprise. In particular, in 2022, the company had a loss from operating activities in the total amount of UAH 2.6 million, and in 2023 – UAH 1.3 million. that is, the income from sales did not even cover the cost of products sold. The company's net loss for 22-23 years is UAH 5.7 million and UAH 4.6 million, respectively, which is almost equal to the size of the company's authorized capital (UAH 6.4 million). The total amount of accumulated losses of the company for the entire period of operation is UAH 14.7 million, which is significantly more than the authorized capital.

The analysis of public finances of Nadezhda also indicates the unprofitability of the enterprise. In particular, in 22 and 23 years, the company had a loss from operating activities at the level of UAH 5.7 million and UAH 4.6 million, respectively. Revenue, just like in Iskra, did not cover the cost of products sold. The company's net loss for 22-23 years is UAH 10 million and UAH 9.9 million, respectively, which exceeds the authorized capital of the company (UAH 9.8 million). The total amount of accumulated losses of the company for the entire period of operation is UAH 37.9 million, which is several times more than the authorized capital.

Interestingly, both enterprises are regularly financed by the founder, that is, Naas, and Iskra, which has already been transferred to the state Property Fund, now receives funds from the SPFU.

In addition, public finances indicate excessive depreciation of fixed assets of enterprises, which are not updated. It is also likely that we are talking about revaluation of intangible assets, the book value of which is overestimated.

By the way, both companies have already lost courts with the tax service to recover millions of tax arrears. In addition, Iskra, as of February of this year, was a debtor for the payment of wages in the amount of more than 830 thousand hryvnias. It is unlikely that the situation has changed since then.

Therefore, the question arises about land cultivation – whether we are talking about a hidden lease of land. However, we'll come back to that later.

At the disposal of UNN there are documents certifying that, despite the deplorable situation, the SOEs carried out active actions to buy and sell goods and services, however, these operations also show a lot of interesting things.

Iskra

Iskra's current operating activities in the period 2019-23 demonstrate the presence of counterparties who were both suppliers and buyers of the company's products:

-         LLC"Alliance"

-         JSC"BATKIVSHCHYNA"

-         LLC"Mlin-2018"

-         FG "UKR-AGRO-MIR"

In particular, in 2020-2021, the company acquired services for growing agricultural products from Alliance LLC for a total amount of UAH 25.3 million and in the same years sold products (buckwheat, corn, sunflower, barley) to Alliance LLC for a total amount of UAH 34.9 million.

The situation is similar with BATKIVSHCHYNA JLLC, from which in 2019-2020 the company purchased inventory items totaling UAH 9.7 million and in the same years sold products worth UAH 20.7 million to BATKIVSHCHYNA, mainly corn crops.

LLC " Mlin-2018 "and FG" UKR-agro – Mir "work on a similar principle-they are both the main suppliers and buyers of products of SE "DG" Iskra " ISG PS Naas.

In view of the consistently deep unprofitable activities of SE Iskra, such operations reliably indicate that the enterprise is used as a "technical laying" for the activities of the above-mentioned companies. And such a scheme of work leads to the fact that the state enterprise "Iskra" accumulates losses, thus transferring its potential profit to those enterprises that use it as a "technical gasket" in their activities.

"Hope"

Among the counterparties of Nadezhda, we also meet BATKIVSHCHYNA JLLC.

In particular, in 2019-2020, the company purchased services, fertilizers, seeds, and plant protection products from Batkivshchyna JLLC for a total amount of UAH 24.5 million and in the same years sold products to Batkivshchyna, mainly corn production in progress (i.e. crops) for the amount of UAH 21.9 million.

Nadezhda has a similar situation with  The Farm "Kirichenko m" (now "Agro-Borovaya"), from which in 2022-2023 the company purchased various goods and services for a total amount of UAH 21.9 million and in the same years carried out sales at the farm "Kirichenko M" for the amount of UAH 16.1 million, mainly the sale of sunflower crops of the 2022 harvest.

In general, the picture is similar to what Iskra demonstrates, that is, we can assume that this DP is also used as a "technical gasket".

hidden land lease

It should be noted that the activities of Iskra and Nadezhda attracted the attention of law enforcement officers. Thus, court documents from 2022 indicate that law enforcement officers suspected violations of land legislation when using state enterprise land. This became the subject of criminal proceedings.

"Thus, as part of the implementation of an illegal scheme to obtain shadow profits, the heads of state-owned enterprises and institutes of the National Academy of Sciences of Ukraine and other enterprises controlled by groups of influence, as a result of a malicious agreement among themselves, enter into invalid transactions with private enterprises controlled by them to receive land cultivation services (sowing, harvesting, purchasing fertilizers, seeds and plant protection products, land cultivation, etc.), which are actually a hidden lease of State Land, and carry out crop cultivation through cooperation with private economic entities. At the same time, all settlements with controlled private companies for the services provided are made for cash, and financial transactions are reflected in tax reports from enterprises for which such activities are not typical, thereby artificially forming a tax credit," the court documents say.

The same court documents indicate that the investigators established " the facts of abuse of official position by officials of the state enterprise "Experimental Farm "Iskra" and the state enterprise "Experimental Farm Agrofirma "Nadezhda" of the Institute of Agriculture of the north-east of the National Academy of Sciences by unauthorized use of state-owned agricultural land with an area of more than 3.5 thousand square meters for their own enrichment and in the interests of the state enterprise "Batkivshchyna". ha outside of settlements on the territory of the Perekrestovsky village council of the Romensky district for the cultivation of agricultural crops, illegal cultivation of land and crops of such crops, their further sale of JSC "Batkivshchyna" at low prices.

In addition, at the same time, a pre-trial "investigation "was carried out on the fact that officials of the state enterprise "DG" Iskra", in prior agreement with officials of LLC" Alliance "for the purpose of illegal enrichment from the beginning of April 2020, without permission, without documents certifying the right of ownership or the right to use land plots of state ownership, acting in the interests of the specified company, the forces and means of LLC" Alliance " cultivate land with an area of 1.4 thousand hectares. ".

Law enforcement officers pointed out that the harvest from enterprises is bought at an undervalued price. 

"In addition, for the formation of unofficial profits by officials of state-owned enterprises and institutes of the National Academy of Sciences of Ukraine, when providing information to local statistical bodies, a documentary underestimation of yield is systematically carried out several times in comparison with local agro-industrial enterprises. In turn, the difference from the actual grown volumes is sold for cash or imported for storage in grain elevators under the documents of other enterprises, and documentary materials about the origin of these products are forged," we see in the same court documents.

Consequently, private enterprises actively skimmed the cream, and SOEs received debts and losses in return. And all this in addition to violations of land legislation – concealment of the actual lease of land for agricultural activities.

By the way, the Romensky District of the Sumy region, where the mentioned SOEs are located, Vkursi Agro experts, who conducted a study in 2021 on the use of State Agricultural Land, put among the leaders in the scale of illegal use of these lands and shadow leases, causing millions of losses to the state. 

In such conditions, another issue arises – the preservation of land quality. After all, foreign private enterprises that operate on not quite legal grounds are unlikely to worry about preserving soil fertility in the future. And this question also arose in the context of Iskra and Nadezhda. In particular, it was about reducing the humus content in the soil, and therefore reducing the fertility of land that is "cultivated" by SOE. However, the issue was formally removed, in particular, due to comments on the procedure for conducting a soil examination. But from the financial documents of the enterprises, we learn that they have been buying hundreds of tons of liquid ammonia for years (and from the same private owners who cultivated the land). Valuable ammonia was applied as a fertilizer, and although we cannot say that this type of fertilizer is definitely bad, it unquestioningly requires taking measures to preserve land fertility. But whether these events were held is an open question.

strange purchases

Only during 2019, the State Enterprise "Nadezhda" purchased more than 1.7 tons of butter for a total amount of more than 231 thousand hryvnias without VAT. Such a "love" for oil was also observed during 20-23 years – in general, over 12.5 tons of this product were purchased over these years for a total amount of more than UAH 1.5 million.

The question arises – Did they give out wages to employees with butter? And also apple jam, pretzels and "cakes", which are also listed among the purchases of "Nadezhda".

instead of conclusions

You can talk as much as you want about the difficult fate of state-owned enterprises, and even more so agricultural ones, in our state. However, the question should be asked, Would this fate be so difficult if those at their head did not participate in gray schemes for leasing land for "cash", but instead performed the functions assigned to them and adhered to the law?

Add

Ex - minister of Agricultural Policy Mykola Solsky told how the National Academy of Agrarian Sciences of Ukraine illegally leased state land, receiving cash for this. At the same time, in many cases, the Naas and its state-owned enterprises could not even confirm their right to use these land plots.