Ferrexpo CEO possibly under scrutiny for embezzlement

6 August 2019

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.

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