A German pharm trader has been recently mentioned in the context of corporate embezzlement case in Ukraine. The Ukrainian media have brought to light a criminal case dealing with the corporate embezzlement at Borshchahivskiy Chemical-Pharmaceutical Plant, one of the major pharmaceuticals manufacturers in Ukraine.

The criminal proceedings appear to have been instigated by one of the shareholders of Borshchahivskiy Chemical-Pharmaceuticals Plant. Reportedly, the management of the plant is suspected of siphoning millions of US dollars of corporate funds through purchasing various pharm ingredients at overstated prices, such embezzled funds being further stashed away at offshore bank accounts.

A German firm is alleged to be involved in the scam. A Hamburg based Farmaplant Fabrikation Chemischer Produkte GmbH appears to have been supplying pharm ingredients to Borshchahivskiy Chemical-Pharmaceutical Plant at overstated prices for years. The German firm is alleged to have been paying millions in “kickbacks” to the management of the Ukrainian pharm manufacturer.

The German firm was paying the “kickbacks” to the bank account at the Swiss PKB Privatbank, such bank account beneficially owned by the management of the plant. To be more specific, the said bank account seems to be held by a British shell company Metabay Import/Export Limited. Public register has it that Metabay is owned by the Bezpalko family, the managing shareholders of the Borshchahivskiy Chemical-Pharmaceutical Plant. Ludmyla Bezpalko was running the company as CEO since 1994, she retired in February last year. Her husband Mykola Bezpalko has been chairing the supervisory board for many years. Their daughter Iryna Rzhepetska is said to be in charge of import/export operations. It is Iryna Rzhepetska who is registered to be the owner of the shell company Metabay Import/Export Limited that was receiving millions of “kickbacks” from the German supplier of pharm ingredients.

Metabay’s director Pierre de Merey is a Swiss national linked to a Swiss fiduciary services provider Privaxis Financial Services S.A. Apparently the latter manages the Bezpalkos’ offshore corporate and banking matters.

Borshchahivskiy Chemical-Pharmaceutical Plant has been known for the fight between the management and one of its major shareholders over the opacity of the corporate finances. At the same time, the corporate management has been voicing hostile takeover concerns. The shareholder to have instigated the said criminal case is said to be another Ukrainian pharm producer – Darnitsa which holds 30% stake in Borshchahivskiy Chemical-Pharmaceutical Plant.

The particulars of the criminal case are not publicly accessible. It is clear though that the claims deal with bribery and embezzlement of corporate funds.

Farmaplant Fabrikation Chemischer Produkte GmbH is a small company specializing in selling pharm ingredients to Russia and Ukraine. The Company appears to have Russian roots, with its personnel comprising mainly Russians and Ukrainians. Headquartered in Hamburg, the Company has a branch in Kyiv, Ukraine. The company is headed by a Sergey Schlegel, an immigrant from the former Soviet Union.