Forum boss says attacks aimed at destabilizing bank.
A large Ukrainian bank owned by Germany’s Commerzbank claims that it has fallen victim to a damaging smear campaign allegedly concocted by Ukrainian businessmen who owe the bank tens of millions of dollars.
Yaroslav Kolesnik, chairman of Commerzbank-owned Bank Forum, said that the media attack on his bank kicked off two weeks ago and is apparently aimed at destabilizing Forum. Allegedly slanted reports suggesting the imminent collapse of Forum, which ranks as Ukraine’s 13th largest bank in terms of net assets, have appeared largely on the Internet, according to Kolesnik.
And the culprits behind the smear could be the banks’ own clients, trying by fraudulent means to avoid repayment of a fortune in loans.
The troubled started two weeks ago. Three former regional Bank Forum managers held a press conference, complaining they had been made scapegoats for disbursing bad loans. The managers included the former head and deputy head of the Dnipropetrovsk branch, as well the former manager of the Khelmnitsky branch.
It continued with publication of negative reports by Internet news outlets such as gazeta.ua, which were linked to advertisements posted in respected independent outlets such as Ukrainska Pravda. The articles alleged that Bank Forum was on the verge of bankruptcy. They also referred to reports that Russian state-owned bank Rosselkhozbank had called off an acquisition bid after due diligence revealed Bank Forum to be in a poor financial position.
Kolesnik dismissed all talk of attempts by the German shareholders, Commerzbank, to sell Bank Forum as “fantasy” and said the bank remains sound.
Headquarters of Commerzbank, which owns Bank Forum in Ukraine, in Germany’s financial center of Frankfurt-am-Main (Courtesy)
Kolesnik said suspects behind the black PR could include a number of million-dollar borrowers. He said that Forum had several large clients using schemes such as fictitious bankruptcy, asset transfer and resale of collateral to avoid paying back loans, against whom the bank was taking legal measures.
One of the most problematic such clients, according to Kolesnik, is Dnipropetrovsk-based Sparta Group, co-founded by Gennady Axelrod and Oleg Levin. According to Kolesnik, Sparta Group owes Bank Forum around $38 million and is using fraudulent means to avoid repaying the debt.
The Europe Shopping Centre in Dnipropetrovsk was used as collateral for a $38 million loan from the bank that has not been repaid. Bank officials say they are victims of a smear campaign, possibly by clients who refuse to repay loans, in a bid to tarnish the bank’s reputation. (Courtesy)
Whether Sparta group, or any other problematic Bank Forum client, is in fact behind the smear campaign remains unclear.
Kolesnik said that Sparta Group used the Europe mall in Dnipropetrovsk as collateral for the $38 million loan. But in an attempt to wriggle out of the debt, the part of the street on which the building is located was renamed, so that the address of the property specified as collateral in the loan contract no longer corresponded to the current address of the building. The building was then resold a number of times.
“According to Ukrainian legislation, the third resale is considered bona fide and is hard to challenge,” said Kolesnik. In April, Levin and Axelrod formally exited the business. Finally, Sparta declared itself bankrupt.
Levin refused to comment on the situation and said he had no knowledge of the smear campaign. Axelrod could not be reached.
Media reports link Sparta Group to Ukraine’s powerful Privat business group, which is led by oligarchs Igor Kolomoisky and Gennadiy Bogolubov, and originated in Dnipropetrovsk. The man who replaced Levin and Axelrod as formal owner of Sparta in April, Vitaly Timshin, is likewise linked to Privat, having been chairman of metallurgy company Privat-Intertrading from 1999 to 2009. Privat-Intertrading is a major shareholder in Privat Bank.
Axelrod and Levin are also linked to prominent Dnipropetrovsk businessman Gennadiy Korban, chairman of Slavutich Capital, who in his turn is a partner of Kolomoisky and Bogolubov in oil refinery Ukrtatnafta. Axelrod, Levin and Korban recently jointly hit the headlines after a bomb exploded Sept. 17 under a sofa on which the three were sitting at the Pepperoni Restaurant in Dnipropetrovsk. The three men escaped with light injuries. Korban said later that he believed the bomb had targeted him.
Kolesnik said, however, that he had doubts that the debt owned by Sparta to Bank Forum could spark such a concerted smear campaign. “We cannot be sure that behind the campaign are our problematic debtors,” he said. “The loan amount does not seem large enough to warrant such efforts. It seems more like a serious attempt to destabilize the bank.”
Among other Forum clients failing to return major loans, Kolesnik named Poly-Pack, a Luhansk-based packaging company, and part of the Apex Group owned by Ihor Chaplygin. Kolesnik said Poly-Pack owed the bank $10 million, and was attempting to defraud Bank Forum via asset transfer and fictitious bankruptcy.
“Bank Forum, today basically Commerzbank, takes a far tougher line on debt repayment than is usual for Ukrainian-owned banks, and shows no readiness to compromise,” Chaplygin said. He said Poly-Pack had passed through insolvency due to non-payments to suppliers, but the situation was now resolved.
Chaplygin said that Bank Forum has filed a lawsuit against Poly-Pack for an amount less than $10 million, but claimed Poly-Pack had in fact no outstanding debts to Bank Forum.
Kolesnik ruled out any involvement in the smear campaign of the bank’s former shareholder, Leonid Yurushev, who sold out his remaining 25 percent stake in the bank in February. “The deal was complicated, but both sides were satisfied, and there are no outstanding claims left. Anyone who knows Leonid Yurushev realizes that he would not harm a bank he spent so much time building up,” Kolesnik said.
Banking analyst Anastasiya Tuyukova of Dragon Capital said that ‘’it looks like some bank may be trying to lower the acquisition price for Bank Forum. It is most likely some foreign, possibly Russian, bank, although some local business groups have in the past employed similar rude measures.”
Kolesnik said the bank’s owner, Germany’s Commerzbank, which holds 89.3 percent, remains fully committed to the bank and would not be deterred by the turbulence. But Kolesnik warned that it would be difficult for Ukrainian banks to resume lending until the courts deal effectively with such cases.
Bank Forum posted a net loss of $186 million for the first half of 2010 due to increased provisioning for loan losses.
Kyiv Post staff writer Graham Stack can be reached at [email protected]
