Ihor Kolomoisky, the oligarch and former owner of PrivatBank, will face trial at the High Court in London next year after the UK Supreme Court rejected his request to appeal an earlier verdict. Kolomoisky, and a number of co-defendants that include his business partner Hennadiy Boholyubov, had sought to appeal at the Supreme Court over an appellate judgment on October 15, 2019, that ruled Ukraine’s state-owned PrivatBank could proceed with a civil claim for damages in English courts worth at least $3 billion.
With the Supreme Court ruling against him, Kolomoisky is out of options in the UK and his lawyers will be preparing for a High Court trial, which is expected to take place in 2021, multiple experts and PrivatBank executives have told the Kyiv Post. Kolomoisky and Boholyubov, as well as three co-accused UK companies (Teamtrend Ltd., Trade Point Agro Ltd. and Collyer Ltd.) will most likely be summoned at the trial and would be legally required to appear before the court to answer the $3 billion claim. Lawyers from both sides will now confer with each other and the court to set a date for trial.
PrivatBank and the Ukrainian government allege that Kolomoisky and the co-accused used a number of British shell companies as part of a years-long scheme of insider lending and fraud that siphoned money out of Ukraine, leaving the bank with a $5.5 billion hole in its balance sheets. The total balance of damages, interest and fees that PrivatBank is now pursuing in four jurisdictions – the UK, the US, Israel and Cyprus – has now risen to $10 billion. Kolomoisky and Boholyubov have denied all wrongdoing and said the bank nationalization and damages claim are politically motivated. Kolomoisky, who is also under criminal investigation by the FBI, told the Kyiv Post in an earlier comment that he did not know if he would attend a future trial in London. Law enforcement agencies in the UK will not confirm or deny if Kolomoisky is the subject of a criminal investigation there.
According to the text of the April 6 Supreme Court judgment, as seen by the Kyiv Post, a panel of three judges rejected a request by Kolomoisky to appeal and ruled that “the applications do not raise an arguable point of law which ought to be considered at this time.” Two Supreme Court justices, Lord Briggs and Lord Sales, and the President of the Supreme Court, Lord Reed, passed the judgement. They also ruled that the defendants must pay PrivatBank its legal costs relating to the unsuccessful application to appeal.
Until now, UK courts have mainly deliberated on whether Kolomoisky should be sued in British jurisdiction. However, this also required in-depth examination of the PrivatBank complaint and the accompanying evidence provided by the bank, the Ukrainian Ministry of Finance, and the National Bank of Ukraine. Without passing judgement on the alleged fraudulent scheme, the UK courts have noted that there is a “good arguable case of fraud on an epic scale” and decided that the claim should be heard in London.
As a taste of what’s to come in the 2021 trial, here is an extract from the Oct. 15 ruling against Kolomoisky by the Court of Appeal of England and Wales: “The judge observed in his judgment at [25] that there was no difficulty with the Bank proving a good arguable case of a fraudulent scheme. The evidence was “strongly indicative of an elaborate fraud perpetrated by someone, allied to an attempt to conceal from any auditor or regulator the existence of bad debts on the Bank’s books, and money laundering on a vast scale”. The Borrowers had no commercial track record or any substantial assets. The documentary evidence clearly demonstrated that the supply agreements were shams, and “were used as a deceptive basis on which to justify very large sums of money flowing out of the Bank”. The artificial complexity of the re-cycling of funds was “itself indicative of a fraudulent scheme”. At [104], the judge noted that Mr. Kolomoisky and Mr. Bogolyubov had admitted “a good arguable case of fraud on an epic scale”.
In other news, the Ukrainian government says it expects immediate explanations from Iran after an Iranian MP said that “military forces carried out their duties well” when they shot down a Ukrainian passenger airliner in January, Ukrainian Deputy Prime Minister for European and Euro-Atlantic Integration Vadym Prystaiko said. “We expect an immediate explanation from Iran on this deplorable statement. It shows full disrespect for human lives. Dozens of families from Iran, Ukraine, Canada, Sweden, UK & Afghanistan lost their loved ones in the attack against defenseless civilian aircraft,” Prystaiko said on Twitter on Tuesday.
Ukraine won’t allow Iran to evade responsibility for the downed plane, the foreign minister also said. Kyiv will not allow Tehran to evade responsibility for downing of the Ukraine International Airlines (UIA) flight in January and is awaiting official explanations, Foreign Minister Dmytro Kuleba said, as reported by Interfax-Ukraine. “The embassy has sent a note requesting official explanations of the Iranian stance. […] We need to rely on official information. We will draw relevant conclusions after we receive official information from Iran. However, we will never allow Iran to evade responsibility for the tragedy and will be working with it in order to acquire the black boxes. […] We will not be acting alone, instead, we will pool efforts with our partners, first and foremost Canada.”
One third of small businesses in Ukraine will need to reduce their number of employees, a poll by the European Business Association has found. One third of small businesses (31%) plan to cut staff, another 21% are undecided, and 48% of respondents do not plan layoffs, according to an express survey reported by Interfax and conducted by the EBA among 155 representatives of small and micro businesses, part of the Unlimit Ukraine project. According to the survey, which was conducted on March 24-30, some 78% of respondents report a loss of up to 75% of revenue, 18% consider closing their business, 4% recorded an increase in profit.
In their findings, the EBA and Unlimit Ukraine stated: “The quarantine period is really very difficult, especially for such companies that cannot transfer their business online. No one has a scenario yet. It is unlikely that anyone was ready for this type of crisis.”
The National Bank of Ukraine bought $430 million over the past five working days, NBU Deputy Governor Dmytro Sologub has said. The hryvnia exchange rate had strengthened from just over UAH 28 against the dollar last week, to UAH 27.09/$1 by the afternoon of April 7. “Only in the last five working days, the National Bank bought $430 million for reserves,” Sologub said in an interview with Ukrayinska Pravda. “There are fluctuations, we are smoothing them in both directions,” he said, adding that NBU fiscal policy had not changed.
Ukraine’s international reserves decreased in March by 7.8%, or by $2.1 billion, to $24.92 billion, the National Bank of Ukraine (NBU) said on its website on Tuesday. “The decrease in international reserves during March was primarily due to the significant volumes of foreign exchange interventions of the National Bank aimed at smoothing out excessive exchange rate fluctuations due to high demand for currency from businesses and the population,” the NBU stated.
