Grain stealing quotas. The Russian scheme to export Ukraine’s crops and the hidden ties to Putin’s Palace

The occupation of the Ukrainian breadbasket

On the last day of September 2022, in the St George’s Hall of the Grand Kremlin Palace, Vladimir Putin signed decrees annexing the occupied regions of southern and eastern Ukraine. The agreements on joining Russia were signed by the heads of the Russian administrations of the Donetsk, Luhansk, Zaporizhzhia and Kherson Regions.

The Kherson Region was represented at this ceremony by VladimirVolodymyr Saldo, a former Ukrainian politician and former mayor of Kherson. Saldo is currently cooperating with the Russian authorities and is under sanctions by Ukraine, the EU and the USA. Saldo has been in charge of the Russian-controlled part of the Kherson Region since April 2022. Saldo’s career began with his appointment as Chairman of the Russian Civil-Military Administration by the Russian occupation forces. He was subsequently appointed acting head of the administration by Vladimir Putin. In September 2023, he became the so-called Governor of the Kherson Region.

Before the Russian invasion, the Kherson Region was renowned for its advanced agricultural practices. In 2021, a year before the Russian army launched a full-scale invasion of Ukraine, local farmers achieved a remarkable feat by harvesting the largest early crop in 30 years – 3.1 million tonnes of grain. With part of the Kherson Region under occupation, the Russian authorities were able to dispose of the region’s agricultural produce by issuing permits for export and sale.

In June 2022, the General Prosecutor’s Office of Ukraine announced that the Prosecutor’s Office of the Autonomous Republic had opened an investigation “into the facts of violation by Russian ships of the procedure for entering and leaving the temporarily occupied territory of Crimea for the purpose of transporting Ukrainian grain looted by the invaders”. This process was controlled by Vladimir Saldo, according to the National Resistance Center of Ukraine.

Export quotas

“We have received an official letter from the Russian authorities stating that they have nationalised the grain elevator. We have a copy of this letter which states that all ownership of the elevator now belongs to the Russian Federation”, says Marharyta Cherepakha, co-owner of the Ukrainian OOO Novoalekseyevsky Elevator. Her company operated in the Henichesk District of the Kherson Region. [*]

Marharyta states that following the occupation, the elevator was taken over by the Russian administration, after which it was made available for use by the B-Agro company. A letter sent by B-Agro to Saldo, which has been made available to journalists, confirms that this company began managing the assets of Novoalekseevsky Elevator after the occupation.

The B-Agro company is referenced in two documents from the array obtained by journalists. This data file primarily addresses the export of agricultural products from the Kherson Region within established quotas.

This scheme was introduced three months after the annexation of four regions of Ukraine was announced. On 30 December 2022, the Government of the Russian Federation issued Resolution No. 2535, which establishes quotas (limits) for exporting agricultural products from the occupied territories with a discounted export duty. It also provides a mechanism for the export of these products.

Under the resolution, Russian companies seeking to export wheat, meslin, barley, maize, sunflower oil and sunflower meal with a zero or reduced export duty rate and sell the crops to third countries are required to contact the head of the region as per the established rules. In the case of the Kherson Region, the Commission for the Consideration of Applications for the Distribution of Tariff Quotas for Certain Types of Agricultural Products was established to distribute quotas. The commission was tasked with considering applications and voting on them. The decision must be signed by the head of the Russian administration, Vladimir Saldo.

“For EU countries, the acquisition of goods from the occupied territories of Ukraine violates the sanctions regime, which renders any trade activity related to the occupied territories impossible", states Bohdan Bernatskyi, consultant at Project Expedite Justice. "For those states that have not yet imposed sanctions on Russia, the situation is more complex and depends on the stance of each individual country".

The journalists discovered that approximately a dozen Russian companies had approached the commission and Saldo with a request to export agricultural products from Ukrainian territories at a discounted price. Numbers show that the value of agricultural products exported under such a scheme from the occupied Kherson Region in 2023 was around €6.2 million. These are shipments that have been confirmed by journalists thanks to data from the Import Genius global import and export database and information obtained from Russian customs leaks.

From occupied territories to Azerbaijan and Syria

In a statement released on its website, Russia’s OOO Sim-Trans Group announced that, “based on the results of 2021-2022, the company has become one of the three largest wheat exporters to the Republic of Azerbaijan”. In 2023, the company achieved its highest annual profit in 13 years, with a total of 22 million Russian rubles (approximately €239,000).

Documents obtained by journalists show that the Sim-Trans Group has been recommended by the Commission to be granted a quota for the export of 2,200 tonnes of wheat and meslin from the region. The buyer is the Azerbaijani company Diba. [*]

The application submitted to the Commission by the director of Sim-Trans Group includes a Eurasian Economic Union declaration. The document states that the grain to be exported was grown in the Kherson Region in 2023. The Russian export and import database confirms that in the same year, 2,200 tonnes of grain were supplied to Azerbaijani Diba at a cost of approximately 35 million Russian rubles (equivalent to €380,000).

On 4 May 2023, another Russian company, OOO TD Fregat, received an export quota of 3,000 tonnes of Kherson maize. The 3,000 tonnes were included in a shipment totalling 8,000 tonnes. The Russians gave Libya as the destination and the Kavkaz as the shipping port in the papers. [*] [*]

However, according to the SeaKrime Centre analysts, the Souria ship’s point of shipment, which appears in the documents obtained, could have been Syria.

The journalists contacted Russia’s TD Fregat and Azerbaijan’s Diba for comment, but had not heard back by the time of publication. Mikhail Builov, the director of the Sim-Trans Group, did not return phone calls.

Bound for Turkey and EU

The Russian company OOO Agro-Fregat has been referenced in Ukrainian mass media and a statement by a representative of the Ukrainian Foreign Ministry as a participant in a scheme to export grain from the occupied territories of Ukraine. In the summer of 2022, railcars bearing the designation “Agro-Fregat” were registered in the territory of Crimea, which had been annexed by Russia, at the port of Feodosia. At the time, Oleksiy Makeyev, the Ukrainian Foreign Ministry’s special representative for sanctions policy, referred to Agro-Fregat as a “seller” of stolen Ukrainian grain.

A journalist review of commission records revealed that in the summer of 2023, Agro-Fregat requested permission to transport wheat and meslin from the territory of the Kherson Region on two occasions. The first request, for 20,000 tonnes, was made on 28 June, and the second, for 5,000 tonnes, was made on 20 July. [*] [*]

The documents state that the products originate from the territory of the Kherson Region. And the commission has been in favour of this transport. According to the contract, the buyer is the Turkish company Velar Tarım Sanayi Ticaret Ltd. Şti. [*]

Using details from the “Final report on the quarantine phytosanitary condition of quarantineable products”, which includes the name of the ship, journalists were able to trace the route of the wheat from the occupied Ukrainian territory to Turkey. Agro-Fregat chartered the Alfa M ship, which, according to MarineTraffic, had been in the Sevastopol Bay since 30 July. On 7 August, Alfa M left Sevastopol with 9,553.7 tonnes of cargo on board and headed for the port of Kavkaz in the Kerch Strait. [*]

According to documents obtained by journalists from the SeaKrime Analytical Centre, the St. Olga ship entered the port of Kavkaz on 9 August, where the goods were transshipped from Alfa M. St. Olga brought wheat to the Turkish port of Mersin.

Source: Ukrainian hacker community KibOrg

Source: Ukrainian hacker community KibOrg