U.K. Court Freezes Assets of Ex-Owners of Ukraine's Top BankBy
Privatbank alleges former chiefs used shell firms in fraud
Order to force disclosure of $2 billion held by ex-bosses
Ukraine’s Privatbank, which was nationalized last year, said a U.K. court froze $2.5 billion of its ex-owners’ assets as the government seeks to recoup its bailout of the nation’s No. 1 lender.
Justice Christopher Nugee in the U.K. High Court granted a worldwide freezing order against billionaires Igor Kolomoisky and Gennady Bogolyubov, including six companies they’re believed to own or control as of Dec. 19, Privatbank said late Wednesday by email. The bank said the two men used a “series of dishonest transactions” to transfer almost $2 billion to themselves. The order also covers interest on the allegedly misappropriated assets.
“The worldwide freezing order against Privatbank’s former owners is an important first step for the bank in its efforts to recover money that was misappropriated,” said Richard Lewis, a lawyer with Hogan Lovells in London representing Privatbank. “Mr. Justice Nugee held that the bank has a good arguable case that they defrauded the bank through a series of dishonest transactions and there is a real risk that they will seek to dissipate their assets if not restrained from doing so by court order.”
Ukraine took over Privatbank a year ago, the culmination of a financial-industry cleanup that closed more than 60 lenders in 1 1/2 years. Kolomoisky and Bogolyubov, who both deny wrongdoing, had failed to recapitalize the lender after stress tests. The central bank complained at the time that Privatbank had lent too much to shareholders and people or companies connected to its management, estimating a capital hole of $5.6 billion.
The government has spent almost 140 billion hryvnia ($5 billion) on recapitalizing Privatbank, according to the Finance Minister Oleksandr Danylyuk. That cash belongs to “all taxpayers and must be recouped to the state budget,” he said in a statement.
In a further move to raise funds, the bank said Thursday that it’s seeking to sell its 46.5% stake in Latvia-based lender AS Privatbank and has hired an adviser to explore a transaction.
Danylyuk on Thursday accused the Prosecutor General’s Office of hindering the investigation into Privatbank’s former owners and management, demanding that Prosecutor General Yuriy Lutsenko steps down. Larysa Sargan, Lutsenko’s spokeswoman, declined to comment immediately.
Kolomoisky told the 1+1 TV channel, which he controls, that the court’s decision “is a temporary freeze for the period of dispute.” Calls and text messages to Kolomoisky’s mobile phone went unanswered, as did emailed questions sent to Bogolyubov via his spokeswoman.
Under the order, Kolomoisky and Bogolyubov must begin disclosing details of their holdings to Privatbank by January. The two men can appeal the order.
— With assistance by Volodymyr Verbyany, Edward Robinson, and Aliaksandr Kudrytski