The Battle of Belgravia
Oligarchs who bought big in London have assets frozen as Ukraine chases them through UK courts
TWO billionaire oligarchs are battling their former bank in a High Court fight that could determine the fate of some of London’s most desirable residences.
Gennadiy Bogolyubov and Ihor Kolomoisky, who rose to riches in the 1990s following the demise of the Soviet Union, are now being pursued by a new generation of political leaders in Ukraine.
The pair owned Privatbank, the largest bank in Ukraine, until it was nationalised in 2016.
The bank’s new bosses launched proceedings in London before Christmas to recover from the pair nearly £2billion which it said had been misappropriated through a ‘series of dishonest transactions’.
Bogolyubov, who used to live in a Belgravia mansion, has ploughed cash into the London property market. Kolomoisky chairs a leading Ukrainian football club, Dnipro, and was governor of his native Dnipropetrovsk province.
The pair retain a range of business interests including mining and the media.
Their fight is being played out in the London courts amid what has been called a process of ‘deoligarchization’ by the Ukrainian government – ridding the country of the influence of super-rich individuals trying to shape national affairs in their own interests.
Privatbank won a High Court order in late December freezing the two men’s worldwide assets.
The bank said: ‘The freezing order was granted on the basis of detailed evidence that Messrs Kolomoisky and Bogolyubov extracted almost 2billion US dollars (£1.5billion) from the bank through a particular series of dishonest transactions, which had the effect of transferring the funds to companies that they secretly owned or controlled.
‘Through these initial legal proceedings, with interest Privatbank is seeking to recover over $2.5billion (£1.8 billion).’
It is thought London properties could be included in any attempted recoveries – even though Bogolyubov’s portfolio has dwindled in recent years. He bought One Trafalgar Square, an office block opposite Nelson’s Column, for £173 million in 2010.
But revelations in the leak of offshore documents known as the Paradise Papers show he passed that and 27 Knightsbridge, near Harrods, to another Ukrainian oligarch as settlement of a legal dispute. His firms also bought a mansion in Eaton Place and a luxury house in Belgrave Mews for a total of £20 million. All the properties are owned through offshore firms.
Filings for Bogolyubov’s UK-based charitable foundation show he recently changed his official residence from London to Switzerland.
This year may see the release of a study by corporate investigators Kroll into the Ukrainian banking system and where all the cash went.
Privatbank was taken into state hands when the central bank, National Bank of Ukraine, launched a clean-up of the nation’s financial system. Kateryna Rozhkova, deputy governor of National Bank of Ukraine, told The Mail on Sunday: ‘During this cleanup period we as regulator have developed this new investigations focus. Privatbank is the biggest case but there were of course others.’ She said as much as 90 per cent of Privatbank’s corporate lending had been to ‘related parties’ – to the people either managing the bank or connected to them. She added that these loans had no security or collateral lodged against them in case they were not repaid. She added that the interest and capital were only paid by taking out new loans from the bank. Bogolyubov was sued for £20 million in 2013 by his former rabbi, Yonah Pruss, who had helped him find London properties to buy. The case was settled for an unknown sum.