Naftogaz supervisory board has initiated an investigation into gas sales by Naftogaz to ERU Trading in Q4 2018 over an alleged conflict of interest in actions of Andrew Favorov, the recently appointed head of the group’s integrated gas business. The company’s executive director Yuriy Vitrenko earlier had submitted a request for investigation to the company’s compliance service and the Ethics and unbundling committee of the Supervisory board.
In addition to Naftogaz’ standard procedures, the group has engaged an independent forensic auditor. The investigators are reviewing the issue of the alleged conflict of interest and are evaluating specific transactions in question for any deviations from standard market practices.
“Naftogaz has implemented a system of internal controls based on OECD principles of corporate governance and pursues zero tolerance to corruption. The Supervisory board has taken into account the view of the compliance service and will draw final conclusions based on the results of the independent forensic audit. The conclusions will be communicated to the public in a company’s statement,” says Bruno Lescoeur, the chairperson of the Audit and risks committee of the Supervisory board.
Background information: The transactions in question took place in Q4 2018 and involved gas sales to ERU Trading at prices allegedly lower than the market level. Before joining Naftogaz in late November 2018, Andrew Favorov was managing director and partner at ERU Trading, one of Ukraine’s largest private gas traders. The internal investigation held by Naftogaz compliance service concluded that Mr. Favorov had no conflict of interest as he had sold his share in ERU Trading before assuming his office at Naftogaz.
NJSC Naftogaz of Ukraine