HISTORY

1999 : foundation of OOO «International Cargo Control»

2000 : foundation of ZAO«Baltic Control Vostok»

2007 : foundation of «International CargoControl-Ukraine»

2007 : foundation of ZAO «BCVG»(holding company)

2009 : ZAO «BCVG» has joined the Association of Russian Banks

CUSTOMERS

RaiffeisenbankUniCredit Bank MDM BankPeople’s Bank of KazakhstanAlfa BankSociété GénéraleBNP ParibasRussian Bank for Development Evrofinance Mosnarbank INVESTBANK

and other Russian and foreign banks as well as banking investment companies.

MAIN SERVICES

Supervision of goods and various property provided or proposed for pledge.

Monitoring of development projects (construction audit).

Evaluation of property.

Prior to loan issue

After a loan is issued

constant(daily or overnight )

regular, at fixed intervals

SUPERVISION OF PLEDGES:

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presence, value and quantity of goods kept in storage facilities of Borrower and belonging to Borrower; whether a Borrower observes or violates terms of pledge agreement as to maintenance of minimum balance and range of goods;

any problems with documents relating to goods and the goods themselves;

In most cases photographic survey of properties is undertaking and pictures made be used in reports.

DETAILS THAT ARE ALWAYS AVAILABLEFOR A CUSTOMER :

Evaluation of investments in construction:

amount of investments;

correspondence of works performed with project documentation.

Regular monitoring of property/site expenditure of:

purposeful expenditure of funds; ;

check the compliance of actual performance of work with schedules of construction and of issue of loans;

completed construction operations are as per project documentation (quality monitoring);

all initial planning, project and estimate documentation is in place, complete and correct.

MONITORING OF DEVELOPMENT PROJECTS

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status of construction documentation;

current situation at site;

whether funds are spent as per intended purposes and consistently with progress of construction;

whether works and materials conform to design documentation;

Reports are always accompanied with photographic materials.

DETAILS THAT ARE ALWAYS AVAILABLEFOR A CUSTOMER:

ORGANIZATIONAL STRUCTURE

Group’s Resources:

Head Office in Moscow.

Offices in Saint-Petersburg, Human Resources Center in Voronezh.

Groups of people working in large cities, industrial centers and ports.

Over 70 employees including experts of various goods, evaluators and civil engineers.

STATISTICS Just some figures (construction monitoring excluded)

In 2008, total 8,720 inspections of pledged property were held, or at average 35 inspections per day.

Geography: all of Russia.

Aggregate value of property under supervision: over USD 3 billion.

Breaches (apparent failures to meet requirements on minimal value of pledged property) have been identified in 2% of inspections.

Total number of other violations: 4.5% of all inspections.

Percentage of detected violations compared to the year 2007 has grown twice.

PRINCIPLES

Independency and objectivity.

Avoidance of conflict of interests and pressure.

Repeated inspections.

Openness in customer relations.

Confidentiality.

Rotation.

Expediency and purposefulness.

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MEASURES TO AVOID CONFLICTS OF INTERESTS

The Bank, in accordance with resolution of its credit committee or through other procedures, appoints a particular inspection company to conduct inspections and examinations, and never delegates this choice to a Borrower.

Ideally, the Bank enters a bilateral agreement with an inspection company and pays for its services at the Bank’s own cost.

PLEDGE ASSOCIATED RISKS

The pledged property is in place butit does not satisfy a Creditor for whatever reasons including any of the following:

The pledge is multiple.

The pledge is overestimated.

The pledge is non-calculable or non-evaluable.

Storage conditions of pledged propertybear high risk of loss(of quality, or pledged property in total).

The Pledge cannot, or will take excessivecosts to be, put into circulation (monetized).

The subject of pledge is “paper subject”only due to:

“vain” warehouse receipt, with no physicalgoods beyond;

complexity of goods quantity and typeidentification (soft commodities).

Willful fraud:

Mysterious disappearance:a pledge has been there in place with properquantity and value, but then suddenly andmysteriously disappeared (from warehousewith its seal unbroken, or in transit).

Falsification of inspection company’s reports.

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PLEDGE ASSOCIATED RISKS

The pledged property is in place butit does not satisfy a Creditor for whatever reasons including any of the following:

The pledge is multiple.

The pledge is overestimated.

The pledge is non-calculable or non-evaluable.

Storage conditions of pledged propertybear high risk of loss(of quality, or pledged property in total).

The Pledge cannot, or will take excessivecosts to be, put into circulation (monetized).

The subject of pledge is “paper subject”only due to:

“vain” warehouse receipt, with no physicalgoods beyond;

complexity of goods quantity and typeidentification (soft commodities).

Willful fraud:

Mysterious disappearance:a pledge has been there in place with properquantity and value, but then suddenly andmysteriously disappeared (from warehousewith its seal unbroken, or in transit).

Falsification of inspection company’s reports.

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ARRANGEMENTS TO PREVENT VIOLATIONS OF PLEDGE AGREEMENTS:

to be carried out as per loan terms andPledge Agreement to check:

availability and quality of the commodity;

all necessary documentationrelating to commodity and titles;

conformity of commodity actually availableto the List of pledge provided to the Bank;

conformity of commodityto the fixed minimal value of pledge;

satisfaction of storage conditions.A Customer will be notifiedupon each inspection.

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to be conducted prior to grant of loanand aimed to check:

availability and quality of the commodity;

all necessary documentation; conformity of property actually availableto the List provided to the Bank;

proper storage conditions.

Preliminary inspections. Recurrent and continuing supervision of pledged property.

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RESULTS OF WORK:

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Detailed report of inspection specifyingquantity and value of property,and describing commodityflow for the reported period.

Identification of problems:

overestimation of pledge;pledge non-calculable or non-assessable, or associatedwith high risk of loss;shortage, deficiency of pledge;non-conformity to storage conditions.

Improvement of Storage andAccounting Procedures.

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RISKS OF DEVELOPMENT PROJECTS:

Financial:

Technological:

are inspected indirectly during checking of projectdocumentation and initial planning permits (“IPP”)for completeness.

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improper quality of constructionoperations;

use of materials not correspondingto the project requirements;

change of project during construction;

noncompliance with schedule ofconstruction; constructionwithout project documentation,clear costs and schedule (“at sight”).

overestimation or underestimation of construction costs (and resulting increase of costs during construction);

unpurposed or unreasonable use of funds;

construction without design and estimate documentation, clear costs and schedule (“at sight”).

Other risks(legal, technical, ecological etc.)

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ARRANGEMENTS

Regular visit to the building site and visual inspection of construction,identification of problems, collection of documents.

Review of initial planning permits.

Review of design and estimate documentation.

Review of contracts, subcontracts and addendums to them.

Review of work performance statements.

Review of hidden works statements.

Review of materials quality certificates.

Accounting and analysis of pay-roll records dueunder contracts and subcontracts;

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RESULTS OF WORKS

Determination of the amount of performed work.

Calculation of funds actually spent.

Determination correspondence of funds actually spent to worksactually performed.

Determination of compliance of performed work with design/projectsolutions and standards (quality inspection).

Identification of unpurposed or unreasonable use of funds.

Determination of compliance of construction workwith the approved schedule.

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CONCLUSIONS

The Bank’s use of professional inspection company:

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Serves for the Bank and its employees as a proper interface for communication and understanding of processes in highly specialized areas.

Provides orderly and transparent keeping of collaterals or construction records.

Reduces a risk of being involved in fraud.

Disciplines a Borrower.

Assists the Bank in learning more of its Customers and their businesses.

Povides the Bank’s interested departments with the qualitative information on the state of affairs.

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