The Ukrainian government is strongly committed to justice for state-owned PrivatBank, the state, and the Ukrainian taxpayer, a source in the Cabinet of Ministers has told the Kyiv Post.

The comment came in an answer to questions about that government’s response to $5.5 billion in alleged fraud carried out by the bank’s former shareholders, including then-owners Ihor Kolomoisky and Hennadiy Boholyubov.

The source, who did not want to be identified publicly because of ongoing legal proceedings aimed at recovering the money from PrivatBank’s former owners, said that the government has a three-point commitment to the bank which represents the state’s obligation to PrivatBank and the Ukrainian people:

  1. Oppose the return of PrivatBank to its former shareholders.
  2. Oppose the payment of any refund or compensation to its former shareholders.
  3. Go after the alleged stolen amount of $5.5 billion.

The response may signal the government’s intention to more firmly rally behind the embattled state-owned lender.

The bank says it is the target of a campaign of harassment and intimidation being waged by its former owners. Kolomoisky has sought the return of PrivatBank through the Ukrainian courts and bragged to the media that it will soon be returned to him.

But that is looking far less likely.

On Nov. 27, the Central Bank published documents that revealed ownership of PrivatBank had been transferred from the Finance Ministry to the Cabinet of Ministers. That move puts the state-owned bank more directly under government protection. Kolomoisky has been suing the National Bank of Ukraine and Finance Ministry to have the bank returned.

PrivatBank was nationalized in 2016 after forensic auditors discovered a $5.5-billion gap in its balance sheet. The state recapitalized the bank with taxpayer money. The National Bank of Ukraine said PrivatBank functioned as a Ponzi-like pyramid scheme of related-party lending. The bank’s entire corporate loan portfolio was insider lending and non-performing, according to the central bank.

Sources close to PrivatBank told the Kyiv Post that the Ukrainian Cabinet of Ministers, led by Prime Minister Oleksiy Honcharuk, has said the government is committed to not returning the bank to former shareholders, not compensating or refunding them, and finally, to go after the assets that were allegedly stolen.

On Nov. 28, the Cabinet source confirmed that the government was committed to these three priorities and was working on implementing them.

The source affirmed for the first time that the state would not only prevent PrivatBank’s return or any refunds to former shareholders, but would “go after” the funds that were allegedly embezzled by Kolomoisky and Boholyubov.

The government is also prepared to use different means to do this, the source said, and the Cabinet is paying close attention to any court decisions in Ukraine that could negatively impact PrivatBank.

“All three points – yes,” the official said. “We follow closely developments in the courts, and we are ready for all the scenarios. Our government and the president will be on the side of Ukrainian taxpayers,” they added.

“If needed we will use all the leverage to protect the interests of the state and Ukrainians,” the government source added. “We understand that this case is crucial in terms of Ukraine’s macro-economic stability, is a marker of trust of our international partners for Ukraine… it is crucial for the overall image of our country.”

In the U.S. and the U.K., PrivatBank is suing its former owners, the oligarchs Ihor Kolomoisky and Hennadiy Boholyubov, for embezzlement.

Courts in the U.K. have not passed judgment, but have already ruled that the oligarchs must stand trial in London and recognized that “fraud on an epic scale” took place.

PrivatBank is suing for at least $3 billion in London, with costs and interest accruing.

Kolomoisky has strongly denied all wrongdoing.

The oligarch has historic business ties to Ukrainian President Volodymyr Zelensky and backed him for the presidency, which he won in April 2019. Zelensky has faced pressure to distance himself and his government from the controversial businessman.

Zelensky has repeatedly said PrivatBank would not be returned to Kolomoisky. But critics say pressure is mounting on the bank while the government response has been inadequate.

Zelensky’s spokesperson did not respond to requests for comment. A PrivatBank spokesperson declined to comment on the government’s three-point commitment.

In Ukraine, justice for banks and taxpayers that lost out during years of widespread bank fraud and insider lending has been hard to come by. Between 2014 and 2017, the NBU shuttered at least 89 banks which it said were insolvent empty shells or implicated in alleged financial crime.

Successive prosecutors general, law enforcement and the courts have been blamed for the failure to hold anyone accountable for an estimated $15 billion in fraudulent losses across the banking sector.

With the government clarifying its position on PrivatBank and moving the bank’s ownership to the Cabinet of Ministers, Kolomoisky will come into direct confrontation with the new government if he continues his fight to have the bank returned.

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