Independent audit confirms competitive terms of Naftogaz contracts with ERU Trading

Naftogaz posted the relevant report on its website on Wednesday.

“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,” reads the report.

At the same time, the audit showed 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 instructed Naftogaz management to implement the independent auditor’s recommendations throughout the group as soon as possible and report on progress.

The investigation was initiated by Naftogaz management and supported by the supervisory board in February 2019 following an application by another Naftogaz executive to the company’s compliance service.

As reported, in late March, media published an official note of Naftogaz Executive Director Yuriy Vitrenko to the head of Naftogaz compliance service. Vitrenko put under question the profitability of a number of agreements with ERU Trading, which were concluded in late 2018. Prior to his post at Naftogaz, Andriy Favorov was director of ERU Trading.

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