The grain market in Moldova, under the Russian monopoly

Vagoane Trans-oil. Foto:
Author: Ilie Gulca, Mădălin Necșuțu
19/08/2016 37720

The wheat harvest this year was plenteous, with an average quantity of 3.4 tons per hectare. Nevertheless, the small producers will not benefit of this situation, because they are compelled to sell their grains to a derisory price. The only beneficiary is Trans-Oil, a holding consisting in a series of off-shores registered in Switzerland and Cyprus and joint-stock companies form Ukraine, Moldova and Romania. The company is controlled by the Russian citizen Vazha Dzashi, who was born in Georgia (USSR), holds an American passport and hi is member of the Council of Administration of the Moldovan Businessman Association.

Trans-Oil, a Russian company, managed to get full monopoly of grain exports, from storage to railway transportation and export through Giurgiulești International Port. It is worth mentioning that Giurgiulești International Port, including this infrastructure, was built using public money, but the state controls only 10% of the port activity, due to a business made under Vladimir Voronin’s chairmanship.

The farmers threatened with protests for many years, while authorities remained silent, refusing to recognize the monopoly of Trans-Oil.

The small producers accuse that they are cheated while weighing grains and that the quality of their products is tendentiously established by the degree of humidity in the grains. They claim the products are bought at derisory price, while the other traders accuse Trans-Oil for pushing the selling of their grains to the same monopolistic company.

Trans-Oil without make-up

Trans-Oil group of companies consists in a series of off-shores registered in Switzerland and Cyprus which have bought, in the past, joint-stock companies from Ukraine, Moldova and Romania. According to the State Registry of Companies, the society was founded in Moldova in 1997, as a subsidiary of the American company Trans Oil LTD., managed by Maria Corobanenco. According to the same registry, in 2005 there were recorded the chances made in the constitutive documents of the company regarding the change in the shares structure of the associates, as it follows: Dzhashi Vazha, Russia – 100%. On 2006, Dzhashi gave up his right of property in favor of an obscure company, Vision Holding SA, registered in Geneva, in October 18, 2004. The head of company is the Russian citizen Evghenia Ursu, a person in close relationship with Dzhashi, while the president of the Council of Administration is Gregorio Fazzone. The two persons are listed as founders or administrators of many off-shores linked to the activity of Trans-Oil Group of companies.   

The Chechen connection

Vision Holding SA is the founder and owner of a chain of enterprises in Moldova, most of them holding silos: ICS Kelley Grains, SA Elevator Kelley Grains, SA Elevatorul Iargara.

Another relevant  off-shore associated to Trans-Oil is Trezeme Limited, the founder and co-founder of another chain of companies owning silos: ICS AnenGrain SRL, ICS Flograin SRL, SC Agrofloris-Nord SRL, ICS UleiNord SRL, ICS Unco-Cereale SRL and ICS Transbulk Logistic SRL – the last one also owns the terminal for cereals form Giurgiulești, administrated by the Chechen Azmat Misirbiev.

Azmat Misirbiev, native of Grozny, is the founder of Trans-Oil Investments LCC. In order to extend his business in Romania,Dzhashi used another anonymous company, Delta Commodity&Finanical Services SA, administrated (again!) by Gregorio Fazzone and Olivia Ludwika Chenaud.

The first one were the silos

The chronology of buying silos started in 1996, when the American investor James Kelly, form Trans Oil LTD, came for businesses in the Black Sea region. One of his associates was Vazha Dzhashi, at that time vice-president of the company. The first silo bought by Trans Oil was in Caușeni – the largest in Moldova, with a storage capacity of 100,000 tons. The price of acquisition and the conditions for selling were never made public. Instead, the Court of Auditors published, in 2002, a report mentioning that the new buyer agreed to pay for the loss of 5,000 tons of grain – estimated to cost 13,7 million lei and also for loans and debts in amount of approximately 7 million lei.

“to sum up, the buyer, excepting his assumed liabilities, was also bound to pay additional charges of 22 million lei”, is specified in the report of the Court of Auditors. The company did not fulfill its obligations. The same institution underlined in a report form July 2nd, 2010 that the post-privation liabilities were also not accomplished by Elevatorul Iargara SA, bought by Kelly Grains Corporation SRL (from Trans-Oil group) for 4,2 million lei, who committed itself to invest 18, 1 million lei.

In the conclusion of the report, the Court of Auditors noted: “The objectives and investment directions stipulated in the investing plan and in the sales contract of the public patrimony were not duly or totally accomplished, the terms being prolonged by additional agreements that changed, in some cases, even the general lines of the investment”.

Trans-oil group owns 16 (of the 44) silos in Moldova, with an approximate capacity of 500.000 tons, a silo in Reni, Ukraine, and some recently bought facilities in Romania, previously held by Racova group of companies and the Romanian businessman Adrian Porumboiu.

A plan with real estate similarities

Once bought, most of the silos administrated by Trans Oil went through a continuous process of pledging. Hundreds of millions of dollars were circulated as loans from various banks. For instance, after a series of successive pledgings of the storage facilities in Ceadîr – Lunga, Trans Oil has achieved, since 2007, loans estimated at about 60 million dollars, 26 million euro and 40 million Moldovan lei. After pledging the silage in Iargara, Trans Oil attained, between 2007 and 2012, loans worthing 50.5 million dollars. A part of this amount of money – about 20 million dollars – was contracted and returned in the same day (December 3, 2012) to the investment found Deutsche Investition (DEG).

The loans occurred exactly at the same time when Chisinau Stock Exchange recorded the sale of the shares of the Iargara silage to Ceba Grup SRL, one of the companies belonging to Trans Oil. Regarding the silage from Caușeni, Trans Oil achieved, in 2014, a 25 million dollars loan form EBRD. More interesting is the fact that Trans Oil obtained another loan, of about 155 million dollars, form a group of international creditors, with a guarantee offered by the off-shore company Aragvi Holding International, an entangled society belonging to Trans Oil group and rated, on the interest, as “very small” (more details, here).

These are just some examples of using silos in intricate financial schemes and to a higher value compared to the price of acquisition, in some cases after a process of privatization. More precisely, buying the facilities for an insignificant amount of money and using them as warranties to their current value, in exchange for loans of hundreds of millions.

Trans Oil business practices

The problem is even more pressing as the producers in Moldova would like to export grains to the European market, where the prices are far more advantageous. Given the fact that it is almost impossible to avoid Trans Oil in Giurgiulești International Port, the access to Romania is only possible on land, by trucks, which implies extremely high expenses for the small quantities of products and lengthy procedures.

According to Vasile Gajiu, a grain producer and exporter, the European market, far more secure, is unattainable for most of the grain exporters in Moldova. “The political power favors Trans Oil for years. First, this support concretized in granting wagons for grain transportation. In order to avoid the future hindrances, we bought trucks to bring the grains to Reni and Galați, because Giurgiulești is under the control of Trans Oil”. We are obliged to go to Reni and Galați by car, which is highly expensive. The best way to export cereals is by sea and the state should ensure equal conditions for all the exporters. The wheat prices would be higher, if there was no monopoly but this company (Trans Oil) struggles to controls the market in Moldova, in order to keep the prices low”, Gajiu said.

The competitors of Trans Oil avoid talking to journalists and, in certain situations, they even hesitate to speak about the company. One of the few businessman who had the courage to talk about the business practices of Trans Oil is the producer and exporter Alexandru Vitan, the director of Vitanimpex-Agro. He was involved in a series of lawsuits with ICS FFA Trans Oil LTD, due to the fact that he was unable to pay his loans to the company. For the moment, Alexandru Vitan is established in Galați, being unable to continue his business in Moldova. There, he only remained with debts, “because of Trans Oil”, he said.

“They were always blocking my exports by some sort of personal relations they had at the central customs office in Chisinau. When my tucks got to the custom office in Cahul and made their papers, they were blocked. Trans Oil blocked me. Even though I had debts to Trans Oil, I see no reason for the state to block my activity. Another time, they kept my trucks loaded with grains for 20 days at the border crossing. It was all done with the aid of the customs office, the court and the bailiff. It was all legal, as they said. I had ships loaded in Giurgiulești. When they heard I loaded wheat, they stopped me. I gave them back a part of their money, about 10000 dollars, and I asked them to let me sell the grains, in order to return the other money. I had also told them my merchandise  was stored in Iargara silo and that I was offering it as a guarantee, so they could take it whenever they wanted. And so they did, I don’t know anymore about the grains”, the businessman declared.

Iargara Business

„Do you know how they bought the silage from Iargara?!They gathered all the workers and all of them signed, I have witness, they signed that Trans-Oil has grains in the silage, but they didn’t have, in order  to make it pledge and to take money from banks to buy that objective.   So they bought, so they became owners by fraud!”, he added

(Photo: Table from the Report of Court of Accounts regarding the audit denationalization of state patrimony and insurance of post privatization activity)

We should mention that, according to data from the land registry, in the same period the silage from Iargara, Leova, contracted from Universalbank, a financial institution where Vazha Dzhashi was shareholder, a credit in the amount of 444.500 dollars, which he returned in 2009. We remind that the silage from Iargara was bought in 2007 by Trans-Oil with about 4 million lei.

Meanwhile, the manager of Iargara silage, Vera Belicci, told us that at the moment when she became manager, the company had many debts. After appointing her as director, she told us that she managed to bring the company afloat, equilibrating it financially. Furthermore, the director received an award for good management practices applied by her. After privatization, she continued to administrate this company. Regarding Vitan’s accusations, Belicci said: "Workers have never signed such acts, neitherTrans-Oil forced us to do it. It was a privatization competition and I don’t know how it was conducted, because I have not participated. "  

„The situation of farmers in Moldova is very difficult”

Farmers are dissatisfied how Trans-Oil sets purchase prices for grains. "They gave me some money in advance for wheat that we had on the field at a price that suited them. That attracted me under their control ... Thus, the people are obliged to sell them the grains at the price set by them because farmers have a tough situation, they always have problems. Sometimes Trans-Oil increases the price, but they don’t buy the grains... And if it buys, it pays within two - three months. Other exporters are obliged to go to Reni. But there the port services are more expensive than in Galati. To load a ton in Galați costs 4 euros and in Reni - 12 ", said Vitan.

"Very often the farmers sell to Trans-Oil quality grain, but the representatives of this company say the opposite, 'Your grains are of poor quality.’ After this experience, I decided that for my company, Trans-Oil does not longer exist! I strive to assure my suppliers with quality seeds brought from France, I assure them with quality herbicide; I sell them diesel with a discount of 2-2.50 lei per liter, I bring mineral fertilizers from Uzbekistan; the Moldavian wheat has a very good quality; we import seeds from USA and Turkey. Therefore, when we negotiate the purchase price of cereals with our suppliers, we take into account the above details, while Trans-Oil comes only and sets the price in the region. Trans-Oil made his reputation that it has. Trans-Oil buys wheat and does not pay his suppliers or make payments in three or four months; it deceives suppliers regarding the quality of grains, "declared one exporter from UTA Gagauz-Yeri.

Competitors accuse Trans-Oil that it does not have any technology for determining the quality of the grains delivered by the farmers. "The labs are old and work under GOST system, not like in Romania under ISO (quality management system). Trans-Oil does not do anything to upgrade the technology. In addition, many silages are old, which affects grain quality ", declared a source from the domain of grain trade close to Trans-Oil.

Extension in Ukraine and the problems on EU market – Romania

(Adrian Porumboiu. Photo:

In 2015, Trans-Oil came in Romania, buying Racova group from businessman Adrian Porumboiu, with all silages, oil mills and land lease rights. The official price of the transaction was not disclosed, but media from Romania estimated it at around 150-180 million US dollars. No sooner enter the EU market, Trans-Oil does not pay their payments to landowners. "I am unpleasantly surprised to learn that many landowners, in the new conditions, have not received the rights that were due by contract, and because of inertia, this thing is reproached me too. This is sufficient to come to say that I do no longer take care of this business and to remind them that for 18 years I have had an excellent collaboration with everyone ", said recently Romanian businessman Adrian Porumboiu, quoted by economic. net.

Competition Council stands idly

In 2013, the Republican Union of Agricultural Producers (UniAgroProtect) requested from the Competition Council to verify if Trans-Oil holds a dominant market position. UniAgroProtect represents the interests of 15 regional associations from agricultural domain throughout Moldova and 2,000 sales agents. "In our opinion, the company Trans-Oil abuses of dominant position on oilseeds market, offering a price below the market, which exists in the region. So, it buys a kilo of sunflower at the price 4.20 to 4.30 lei, depending on the region and at the same time, on the local markets in Ukraine and Romania this figure is estimated at 4.50 to 4.60 " it is said in a complaint to the Competition Council on 27 September 2013. In response, this authority asked to UniAgroProtect do the field work that even this state institution had to carry.

UniAgroProtect President, Alexander Slusari, told us that the Competition Council knows about the monopoly of grain exports, but it does nothing, "Trans-Oil controls 60% of the grain market. Its purpose is to buy cheaper and to sell more expensive. In September, the price of wheat will be 2 lei and 60 bani. At one million tons, we lose 500 million lei, if we calculate only 50 bani losses per kg"said Slusari.

The farmers want to sell at best prices from EU

At a meeting held on 25th July 2016 between the representatives of associations of cereals producers, exporting companies, experts from the Competition Council and specialists from the Ministry of Agriculture and Food Industry was raised the questions regarding the low price of grains in Moldova. They concluded that the most convenient is shipping. The representatives of associations of cereals producers presented information on the price of wheat in of Romania and Ukraine ports, compared to the price in Giurgiulesti port, the only port in Moldova accessible for ships

Romania offers prices with 20% higher, why the Moldovan producers do not take advantage?

Except, that there the force position is held by the trader Trans-Oil, which owns also the silage, which gives it a huge advantage in negotiating prices with small farmers who come and want to export grains by sea. Grains exporters have explained that the price of big ports such as Romania or Ukraine, are higher with about 20% because their capacity is higher, which has an impact on logistics.

Grains prices on the local market in Romania, according to the latest official data from the Ministry of Agriculture of Romania on 27 July 2016 per ton of wheat varied from 124 (Banat region) to 140 euros (Oltenia). In contrast, in Moldova, Trans-Oil, far the most powerful trader on the market, buy wheat by 97 euro ton at the silages that it owns in northern Moldova and 120 euros at the terminal Trans-Oil from Giurgiulesti port. Basically, those 20% price difference enter in the pocket of trader monopolist  on the storage market which transport further the grains to more generous  marketplaces, including in European Union. 


Vazha Dzashi recognized that Trans-Oil holds a dominant position on Moldova grain market, but this, in his opinion, is the result of investments that Trans-Oil made in the agricultural sector: "Firstly , monopolism is a term very broadly. It would be more correct a dominant position of Trans-Oil, as the company has invested over 200 million dollars in this business in Moldova. Trans-Oil is currently the only company that has made such investments in the country. That is why Trans-Oil has a high percentage of exports. We are also producers, we work 35,000 hectares. Secondly, we do not dictate prices. Prices are dictated by the market. If we pay less than others, producers should sell to others. We have an adequate attitude of economy market, so market conditions are equal for all, except that we have built and bought a lot. If our competitors would invest as much as we, they would have the same privileges. The market is free, if we establish prices, these are not mandatory; the farmers can sell their grains where they want. "

The investigation was carried out under the "Shining a Light on Corruption in Moldova" conducted by the Center for Investigative Journalism and Freedom House, with the support of the Foreign Ministry of Norway.

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