Top management of the Finance and Credit bank, owned by independent member of parliament and businessman Kostyantyn Zhevago, withdrew around Hr 5 billion ($180 million) from the bank before it went bankrupt, the Deposit Guarantee Fund, a government agency responsible for the protection of bank depositors, said in a press release issued on Dec. 12.
The bank’s management looted the funds by granting shady credits to shell companies, the agency said.
Finance and Credit bank was liquidated by the National Bank of Ukraine in 2015, after it suffered a series of financial problems and defaulted on its debts. The bank, created in 1990, was owned by Zhevago, one of the wealthiest people in Ukraine.
Zhevago, who owns Ferrexpo, was unavailable for comment, with both phone numbers provided on his Verkhovna Rada page not responding, similarly to the phone number provided on the website of Finance and Credit bank. A woman who answered the phone in the media relations unit of Ferrexpo, who wouldn’t give her name, told the Kyiv Post that the company has nothing to do with the issue.
According to the top 100 richest Ukrainians list published by Novoe Vremya magazine on Oct. 25, Zhevago, who also owns Ferrexpo, a Swiss-based mining company, is the seventh richest person in Ukraine with a net worth of $1.1 billion.
The Deposit Guarantee Fund conducted an audit that revealed that Finance and Credit bank was giving out shady loans prior to its closure.
“An audit carried out by a representative of the Deposit Guarantee Fund verified that a group, which included the bank’s top officials, gave out shady loans to legal entities worth almost Hr 5 billion,” the fund said in its press release.
According to the fund, insolvent companies received around Hr 3.2 billion ($115 million), between 2010 and 2015, declaring bankruptcy after receiving the loans. Another Hr 1.7 billion ($65 million) was divided between the mangers of four other companies that were supposed to build a new business center in Kyiv, but never did.
The fund also said that another $113 million was paid to international companies, but the transactions were not recorded in the bank’s accounting books.
“In general, according to the facts revealed, the fund filed 73 claims, accusing (Finance and Credit bank) of committing offences costing the state Hr 15.5 billion ($550 million), including 16 claims against the owners and officials of the bank, who caused Hr 12.7 billion ($450 million) in damages,” the fund said.
There are no open cases against the Finance and Credit bank at the moment, although 65 cases are undergoing pre-trial investigations, the fund said.
The Specialized Anti-Corruption Prosecutor’s Office transferred pre-trial documents concerning one particular fraud scheme to the General Prosecutors Office in June.
Prosecutors allege that over Hr 1 billion was illegally withdrawn from the bank and paid to an offshore company called Nasterno Commercial Limited, the beneficiary of which is Oleksandr Demchenko, Zhevago’s assistant.
