Financial Investigation of management’s embezzlement of borrowed funds

As a result of the inspection, we evaluated the amount of losses borne by the holding as a consequence of fraudulent or economically ineffective actions of the management with regard to borrowed funds.

What was achieved:
1) We identified a number of fraudulent operations on withdrawal of funds of the holding for benefit of management and third parties by means of:

  • Withdrawal of real estate, cars and other property for benefit of affiliated individuals and legal entities – more than UAH 140 million;
  • Withdrawal of borrowed funds for benefit of non-residents – more than USD 80 million;
  • Payment of financial aid to management and other affiliated individuals;
  • Transfer of existing corporate rights of the holding to the ownership of a legal entity controlled by the management of the holding;
  • Transfer of corporate rights of subsidiaries for benefit of related persons for the amount of more than UAH 400 million;
  • Selling products to related parties at understated prices, causing losses of more than UAH 1 billion;
  • Formation of “technical liquidity” for receipt of loans in an amount exceeding creditworthiness of holding;
    Formation of excessive amounts of collateral grain (with the participation of an international surveyor), exceeding the actual capacity of the holding’s elevators.

Fictitious consolidated financial statements, which were confirmed by an international auditor, were revealed.

2) We estimated losses borne by the holding from such economically inefficient business operations as:

  • Sale of inventories below cost;
  • Sale of finished products and goods to related parties at understated prices.

This post is also available in: Russian Ukrainian

  • CLIENT A large fat-and-oil holding, one of the industry leaders in Ukraine
  • PROJECT Analytic
  • SERVICE Financial statement audit
  • INDUSTRY Agriculture

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