19 April 2018 | Ukrainian Economic Freedoms Foundation / Ukraine
Ukraine’s Budget Committee approved government’s request to grant a Ukrainian billionaire $60 million of taxpayers’ money in agriculture subsidies. But this is not only Ukraine’s taxpayers’ money as the US government issued loan guarantees for Ukraine worth $1 billion and the European Commission recently approved a new state aid program for the Ukrainian state budget worth 1,8 billion euro. And that’s only state aid to Ukrainian state budget, which is the source of these subsidies (not counting at least $3bn in technical assistance programs).
In 2017 Ukrainian government gave $53 million in agriculture subsidies to Youriy Kosyuk – Ukrainian oligarch who is worth $1,4bn according to Forbes. These subsidies were received by just one company owned by Kosyuk called MHP – Ukraine’s largest poultry producer. This constituted 35% of total agricultural subsidies in Ukraine. In 2018 the company wants another $60 million.
Here are some numbers to show why MHP in the last company in the world to need tens of millions of taxpayer’s money:
• MHP’s net profit for 2017 stood at $230 million, without the $53 million in subsidies would have stood at $177 million;
• MHP approved $80 million in dividends both in 2017 and in 2018. $410 million was paid to shareholders in last 5 years alone;
• The majority shareholder of MHP – Youriy Kosyuk – has private yacht worth $180 million, his estate is valued at twice that;
• The average size of agriculture subsidy in EU is 6,000 euro, the largest recorded is 1,5 million euro. Ukraine, the poorest country in Europe, is allowed to pay out up to 50 million euros to one company using EU and US money.
WHY THIS BECAME URGENT NOW: At the end of 2017 the Ukrainian Economic Freedom Foundation managed to convince Parliament to implement a $6 million cap on subsidy program that previously allowed MHP to get huge amounts of cash. In response, the government proposed a completely new program that refunds capital investments for poultry factories. Ukraine’s Agriculture and Tax committees recommended implementing the cap on this program also. But last week the responsible Budget Committee approved subsidies in return for a 50% of seats in a commission that disburses funds. We have absolutely no doubt that this decision was motivated by kickbacks and corruption.
Maryan Zablotskyy, director of the Ukrainian Economic Freedom Foundation, is collecting signatures for a joint coalition letter on this issue to be sent to the US Treasury, White House, Congress and the European Commission.