In 2021, the prosecutor's office of the Akmola Region uncovered a large-scale scheme involving the misappropriation of subsidised diesel fuel intended to support agricultural producers. Thousands of tonnes of state fuel ended up in the warehouses of 'operators' appointed by local authorities without a tender, while real farmers bought diesel at market prices. Four years later, the control mechanisms for distributing state support have essentially not changed, meaning: the scheme could still be operating. The documents from that investigation, which have come into the possession of FBRK, reveal for the first time the details of a system that turned the programme of support for agricultural producers into an instrument for enriching the chosen few.
One of the main principles of interaction between business entities and the state should be legality, equality of entities and transparency in the activities of state bodies. However, reality, as is often the case, turns out to be radically different. When distributing subsidised fuel, the local executive bodies of the region systematically violated the principles of fairness and equal access to state support.
The main problem lay in the lack of transparency of the procedures for selecting operators — the intermediaries between fuel suppliers and agricultural producers, through whom the subsidised fuel is issued. Instead of open tenders, the list of 'lucky ones' was approved by the Deputy Akim of the Region based on lists submitted by district authorities. No documents justifying the selection were kept. There were no selection criteria. Competitive bidding was excluded from the outset.
It is no surprise, then, that the operators became structures close to the authorities, while real entrepreneurs received refusals or were simply unaware of the opportunity to participate in the programme. When businesspeople tried to understand the situation, they were sent around in circles from the district akimats to the regional department of agriculture and back again.
The story of PetroRetail LLP in the Zharkain District is particularly telling. The company submitted an application to participate in the programme in February 2020, but received a dismissive reply from the district akimat stating that the matter was not within their competence and advised them to contact the regional administration. The regional administration replied that the operators were determined by the districts. A classic bureaucratic merry-go-round.
A similar situation occurred with Kaz-Sher and Company LLP in the Sandyktau District: their application was simply ignored. And in the Atbasar District, entrepreneurs directly told the prosecutor's office that the operator selection procedure was non-transparent and their interests were not taken into account.
Equally absurd was the system for compiling lists of fuel recipients. In twelve districts of the region, officials did not bother collecting applications from farmers at all. Instead, they compiled lists based on statistical data on sown areas, effectively designating as recipients those who were not even aware of their participation in the programme.
Stepnogorsk became a textbook example of this approach. Officials compiled a list of 15 farms supposedly needing 130 tonnes of diesel fuel. The operator duly purchased the entire volume at the subsidised price. However, only two farms approached them and took delivery of just 13 tonnes. The remaining 117 tonnes stayed with the operator, who effectively gained the opportunity to resell the state fuel at a huge mark-up.
The head of Akbai Mermukhan LLP, which at that time cultivated the largest area in the region — 1,350 hectares — admitted to investigators that he bought diesel at market prices and was completely unaware of the existence of the subsidised programme. None of the officials bothered to inform him, even though such large producers were supposed to be the main beneficiaries of state support.
But that's not all. The prosecutor's office discovered the inclusion in recipient lists of organisations that do not engage in agricultural production at all. For example, agricultural technical colleges received diesel fuel supposedly for work on training fields. At the same time, the produce from these plots went exclusively for the internal needs of the educational institutions, not to the market.
As a result, of the 813 agricultural producers included in the regional lists, a significant number never collected their fuel during the sowing campaign. The operators were left with 3,487 tonnes of unsold diesel, which they had received at the subsidised price supposedly for the farmers' needs. These tonnes of fuel could then be easily sold at market prices, generating a superprofit at the expense of the state budget, which would have amounted to over 185 million tenge.
So how could it happen that such a large-scale programme for distributing subsidised diesel fuel resulted in a series of violations, dissatisfaction among agricultural producers and the inefficient use of resources? Perhaps one of the reasons lies in the fact that, having developed the overall concept of supporting agricultural producers, the Ministry of Agriculture subsequently effectively distanced itself from monitoring its implementation.
Be that as it may, the scheme was ideal. The central authorities get political dividends from launching the support programme, local officials trade access to subsidised fuel, and the operators get rich from unused volumes. The only losers are the real agricultural producers, whom this programme was supposed to support.
Honest farmers not on the selected list are forced to bear additional fuel costs, which reduces their competitiveness. At the same time, unequal conditions are created for business: some receive state support, others do not, and the selection criteria are unknown to anyone. The trust of the agricultural community in state programmes has been undermined. Why submit applications and waste time on bureaucratic procedures if decisions are made behind closed doors? Why believe promises of support if only structures close to the authorities receive real help?
Four years have passed since this investigation, but as we can see, no systemic changes have occurred. The mechanisms for distributing state support remain just as opaque. The selection criteria for recipients are still unclear. Control over the use of budget funds remains formal. This means that schemes for enrichment through agricultural support programmes could still be operating today.
The situation in the Akmola Region is just the tip of the iceberg of a systemic problem of inter-departmental coordination that manifests itself across the country. The FBRK editorial board has been hammering on about this problem from one article to the next, from one series to the next. This is evident in the sabotage of state control during inspections (if any are carried out) of unauthorised landfills, and in the so-called protection of water resources using the example of the Bukharka channel, and in how civil servants simply shirk their duties, as was recently vividly demonstrated in the Department for Land Resource Management (DULRM) of the same Akmola Region.
The absence of uniform work standards, clear procedures and independent monitoring turns any state programme into a lottery. Whether those for whom it is intended benefit, or the money ends up in the pockets of middlemen, depends entirely on the integrity of local officials. And, as practice shows, that is not something to rely on.
The FBRK editorial board has sent official inquiries to the relevant agencies to find out what the situation looks like today.
To be continued...