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    Ukraine Audit Clears Naftogaz-ERU Trades

Summary

However it found the company was sailing close to the wind and has set out steps for improvement in terms of compliance.

by: William Powell

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Ukraine Audit Clears Naftogaz-ERU Trades

Accountancy firm KPMG Advisory has found no evidence of corruption in Naftogaz Ukrainy's gas sales contracts with ERU Trading in Q4 2018, Naftogaz said April 18. It had called for an independent investigation into an alleged conflict of interest in actions of head of the group’s integrated gas business Andrew Favorov, a former executive at ERU and now head of Naftogaz' integrated gas business.

The independent auditor concluded that ERU Trading had not received any preferences in transactions with Naftogaz group companies. The investigation also concluded that Favorov did not set the price or delivery volumes for any company involved in transactions during the period in question. KPMG has identified that Naftogaz’s policies and procedures in relation to conflicts of interest were followed in relation to this issue.

The audit showed, however, that internal control standards and best industry practices to manage conflict of interest, including relevant policies and trading transaction control, still need to be implemented in the trading subsidiary in question. The supervisory board urged Naftogaz management to implement the independent auditor’s recommendations throughout the group as soon as possible and report on progress.

The summary statement on the forensic audit conclusions can be found under this link.