Lon­don court shines light on $2.5 bil­lion Pri­vatBank law­suit

Kyiv Post - - Business - BY JOSH KOVENSKY [email protected]

A new court rul­ing in Pri­vatBank’s law­suit against its for­mer own­ers pro­vides the first in­side look at the court case, which has al­ready seen Ukrainian oli­garchs Ihor Kolo­moisky and Gen­nadiy Bo­holyubov lose ac­cess to $2.5 bil­lion in as­sets af­ter a global as­set freeze.

Judge Joanna Smith of the High Court of Jus­tice in Lon­don or­dered three com­pa­nies linked to Ihor Kolo­moisky and Gen­nady Bo­golyubov’s Pri­vat group to give up de­tailed in­for­ma­tion sur­round­ing a se­ries of loan agree­ments with the oli­garchs’ for­mer bank.

The con­tracts are al­leged to be at the cen­ter of a mas­sive em­bez­zle­ment scheme that drove the bank to the brink of col­lapse in De­cem­ber 2016, when the Ukrainian govern­ment na­tion­al­ized it to fill a $5.6 bil­lion hole at the lender.

The or­der, is­sued on March 12, marks the first pub­lic fil­ing in Pri­vatBank’s law­suit against its for­mer own­ers. The case has pro­ceeded in hear­ings sealed from the pub­lic since Dec. 19, when the bank first sued Kolo­moisky and Bo­golyubov.

The two oli­garchs have filed ap­peals against the freez­ing or­der, chal­leng­ing both the court’s ju­ris­dic­tion over the case and the as­set freeze it­self. Kolo­moisky and Bo­golyubov de­nied that they stripped Pri­vatBank of Ukraini­ans’ de­posits, and say that the al­le­ga­tions are part of a govern­ment-backed me­dia cam­paign against them.

Closed-door talks

Pri­vatBank’s law­suit against Kolo­moisky and Bo­golyubov marks the Ukrainian govern­ment’s only thrust for ac­count­abil­ity over the lender’s near-col­lapse. Re­fill­ing the bank’s cof­fers has cost the Ukrainian govern­ment $5.6 bil­lion to date, in the form of t-bills is­sued to re­cap­i­tal­ize the bank.

But the Lon­don pro­ceed­ings have been en­tirely closed. Com­bined with an un­char­ac­ter­is­tic lack of leaks to the Ukrainian press over the mat­ter, very lit­tle has been known un­til now about the sta­tus of the case.

In ad­di­tion to Kolo­moisky and Bo­golyubov, Pri­vatBank sued six com­pa­nies, al­leg­ing that they en­tered into fraud­u­lent loan agree­ments with the bank as a means of si­phon­ing cash out of the lender. They are Treamtrend Lim­ited, Trade Point Agro Lim­ited, Col­lyer Lim­ited, Rossyn In­vest­ing Corp, Mil­bert Ven­tures Inc, and ZAO Ukr­tran­sit­ser­vice Ltd.

The last three firms — Rossyn, Mil­bert, and Ukr­tran­sit­ser­vice — have failed to ful­fill a sub­poena from the court re­gard­ing $1.9 bil­lion in Pri­vatBank funds go­ing to 46 Ukrainian bor­row­ers in “sham loan agree­ments,” Smith wrote.

The English court redacted the cash value of each loan, but did dis­close that the iden­ti­ties of many re­cip­i­ents of the al­legedly stolen cash “have been iden­ti­fied,” and that “in­ves­ti­ga­tions are con­tin­u­ing.”

Un­happy lawyers

But con­flict arose af­ter at­tor­neys for the six firms sent let­ters on Jan 18 and 31 lay­ing out which kinds of doc­u­ments the com­pa­nies were will­ing to pro­vide.

Pri­vatBank’s lawyers “were un­happy” with what the firms said they had to of­fer, and chal­lenged the com­pa­nies to give more, de­tailed in­for­ma­tion about the loan agree­ments al­legedly used to rob the bank of at least $1.9 bil­lion.

Smith ruled in part for Pri­vatBank and in part for the com­pa­nies, sup­pos­edly tied to Kolo­moisky and Bo­golyuov. The firms will not have to sub­mit copies of the agree­ments them­selves to the court, the or­der reads, but will have sub­mit data in­clud­ing re­pay­ment sched­ules, in­for­ma­tion on col­lat­eral for the loans, and in­for­ma­tion on goods and ser­vices pur­port­edly sup­plied in ex­change for the loans.

The Pri­vatBank case is one of three court cases against Kolo­moisky and Bo­golyubov in Lon­don. One other con­cerns a 2000s deal with Tat­neft, which led to a sep­a­rate as­set freeze against the oli­garchs.

Yet an­other comes from the pair’s for­mer busi­ness part­ner Vadim Shul­man, who ac­cuses them of de­fraud­ing him of up to $500 mil­lion.

Pri­vatBank col­laped be­cause of bank fraud and in­sider lend­ing, cost­ing Ukrainian tax­pay­ers $6 bil­lion. The govern­ment took over the bank in 2016 and is try­ing to re­cover the money. (Kostyan­tyn Ch­er­nichkin)

Newspapers in English

Newspapers from Ukraine

© PressReader. All rights reserved.