NJSC Naftogaz of Ukraine is investigating the sale of gas by Naftogaz to ERU Trading LLC, due to which Yuriy Vitrenko had suspicions about the conflict of interests of the new NJSC top manager Andriy Favorov.
“On the recommendation of the Supervisory Board of NJSC Naftogaz of Ukraine, it investigates the sale of gas to ERU Trading in the fourth quarter of 2018 due to a possible conflict of interest in the actions of Andriy Favorov, who was recently appointed the Head of the integrated gas business of Naftogaz Group”, it is said in a statement on the NJSC’s website.
Earlier, the Executive Director of Naftogaz, Yuri Vitrenko, filed a request for an investigation to the company's compliance service and the committee of the Supervisory Board on ethics and unbundling.
In addition to the standard internal audit procedures, Naftogaz has engaged an independent investigating auditor, the company says. Now experts analyze the existence of a conflict of interest and evaluate individual transactions, which caused a suspicion of deviation from standard market practices.
Naftogaz has introduced an internal control system that complies with the principles of corporate governance and zero tolerance for corruption. The Supervisory Board took into account the opinion of the compliance service and will make final conclusions on the results of an independent audit investigation. The company will inform the public about the findings of the Supervisory Board”, said the Head of the audit and Risk Committee of the Supervisory Board Bruno Lescua.
Earlier ERU Trading noted that “the deals mentioned in the published materials with Mr. Vitrenko’s signature were concluded according to the public procurement procedures held in September 2018, , until the moment when Mr. Favorov accepted the offer to join the group”.
The transactions, which caused questions, were conducted in the 4th quarter of 2018 and dealt with the sale of gas to ERU Trading at prices allegedly lower than market prices. Before joining Naftogaz at the end of November 2018, Andriy Favorov was Managing Director and Partner in ERU Trading. “An internal investigation conducted by the Naftogaz compliance service established that Favorov did not have a conflict of interest, as he had sold his stake in ERU Trading before taking a position in Naftogaz”, the NJSC reported.
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