Ferrexpo CEO possibly under scrutiny for embezzlement

Kostyantyn Zhevago, the CEO and majority owner of
Ukraine’s largest iron ore pellet exporter Ferrexpo (FXPO LN), is possibly being
reviewed by the State Bureau of Investigations (SBI) in relation to the
embezzlement of about USD 113 mln from the Finance & Credit (F&C) Bank,
according to media reports that cited an Aug. 5 Facebook post by Olha
Varchenko, the SBI’s deputy director.

Varchenko wrote that a member of parliament (MP) is
being checked for their possible relation to a scheme that allowed an offshore
company to take loans from certain foreign banks in 2007-2014 using F&C
Bank’s USD 113 mln in correspondent accounts as collateral. That collateral was
seized by the foreign banks in the autumn of 2015, immediately after F&C Bank was declared insolvent,
because the offshore company defaulted, according to Varchenko. The MP being
investigated is Zhevago, the former controlling owner of F&C Bank,
according to the rbc.ua news site, which cited unspecified media sources.

Recall, Zhevago lost the parliamentary
elections in July and will lose his political immunity
once the new parliamentary convocation begins, which is likely in September.

Dmytro Khoroshun: If Zhevago is accused and found guilty of being involved in this embezzlement
scheme, it will create a substantial uncertainty around Ferrexpo’s governance
and ownership prospects. Conversely, if no accusations are raised, we see
Ferrexpo ready to overcome the Blooming Land affair and to focus on its strong business.