Two lawyers acting for two separate institutions that represent the state in a legal battle with Ihor Kolomoisky over the nationalized PrivatBank told the Kyiv Post that the presiding judge is biased in favor of the billionaire oligarch.
Kolomoisky is the bank’s former owner who has sued the state to get PrivatBank returned to him, even though taxpayers had to pay $5.5 billion to make the financial institution solvent again. The bank, the nation’s largest, went broke because of alleged massive insider lending and bank fraud under the ownership of Kolomoisky and his partner Gennady Boholyubov.
In December 2016, the state took the bank away from Kolomoisky, but he has never accepted the decision.
In Kyiv’s Economic Court, Kolomoisky along with Triantal Investments Ltd, a Cypriot company that he owns, has demanded that the court overturn the share sale agreement on nationalization and return to him 41.3 percent of the PrivatBank shares that he owned and another 16.5 percent in shares that belonged to Triantal.
Judge Liudmila Shkurdova is hearing the case, during proceedings that she has kept secret, and is openly supportive of Kolomoisky, the two lawyers told the Kyiv Post. Hearings in the case have been postponed until Oct. 17.
Both lawyers referred to a number of Shkurdova’s actions which they say expose her bias and which have turned the case into a farce.
The Kyiv Post tried to get a response to these allegations directly to Shkurdova, but was blocked by the court’s press office, which asked the newspaper to file a Freedom of Information Request instead.
The sources asked the Kyiv Post for anonymity because Shkurdova has closed the proceedings to the public and prohibited participants from discussing publicly the testimony before she rules.
The tensions around the case hearing escalated yesterday on Oct. 10 when the Ministry of Finance allegedly mistakenly published a press release saying that they lost the case against PrivatBank and are about to appeal, Liga.Net reported. The court has not made any decision yet. The next hearing, on Oct. 17, is likely to be final.
Behind closed doors
PrivatBank’s court case is of high importance for Ukraine because its result could determine whether Kyiv receives any more loans from the International Monetary Fund. The IMF is adamant that PrivatBank should not be returned to Kolomoisky, nor should he be compensated for its loss. To the contrary, many in Ukraine believe Kolomoisky should be prosecuted for bank fraud and be forced to reimburse taxpayers.
It’s also raising suspicions that a case with such high public interest is being heard behind closed doors. Shkurdova justified banning the public from the proceedings, citing that a key contract in dispute is subject to banking secrecy laws. Since then, journalists and the public have not been allowed in the courtroom.
At a previous court hearing on Oct. 8, the lawyers acting in the state’s interests on behalf of PrivatBank filed a petition asking Shkurdova to open the proceedings to the public because the “secret document” has already been reviewed. She rejected the petition.
“Everyone will immediately see who is wrong and who is right, who has evidence and who has none. The presence of the journalists and the public will provide an independent assessment of two things – the behavior of the judge and the reasoning for our petitions and claims,” one of the lawyers told the Kyiv Post.
The lawyers complained that Shkurdova’s bias in favor of Kolomoisky is extensive.
“She throws away every petition the defense files,” one lawyer said.
Both lawyers representing the state said that the vast majority of the questions they had raised were rejected while Kolomoisky’s lawyers enjoyed no time limits in presenting their position. “She (Shkurdova) interrupts us,” one of the lawyers stressed.
The lawsuit has degenerated into a farce, they said.
The Kyiv Post was told that one of the lawyers acting for the state once said to the judge: “Your honor, could you explain to us our rights, please? Everyone here is a professional lawyer but, in this case, we do not understand who has what rights.”
Legally, this case may be heard by three judges as it is complex and of high importance. The lawyers filed petitions to ask Shkurdova to increase the panel up to three members, but she rejected the request. Then they appealed, seeking Shkurdova removal, which she also rejected.
“This was telling. The petition on the judge’s withdrawal was filed by everyone from the defense side: The Ministry of Finance, The National Bank and Fund Deposit Guarantee. That was the only petition that all three State entities signed,” said one lawyer.
Both lawyers indicated that Shkurdova might have breached the law reviewing the case.
“It may make sense to apply to the High Court of Justice regarding her.”
The judge
In July, Shkurdova had an interview at the High Commission of Judges in Ukraine, which assesses the judges and decides whether to dismiss them or keep them working. The commission has not made a decision on Shkurdova yet.
Shkurdova survived a 2014 lustration case and continued working as a judge, where she oversaw a number of high-profile cases, the Kyiv Post reported.
According to an openly available e-declaration of assets from Shkurdova, she drives a Mitsubishi ASX that she bought in 2013 for Hr 206,114. Shkurdova also lives in a 71 square meter apartment in Kyiv that the Holosiiv district administration provided her with in 2011, when she was appointed as a judge at the Kyiv Economic Court.
At the time, she reportedly needed a place to live in Kyiv but her declaration shows that in 2011 she also bought a 63-square-meter house in Poltava Oblast, and a 42-square-meter land plot. She had already had another apartment since 2018 in Poltava, a city of 290,000 people located 350 kilometers east of the capital. The Poltava house is not in her declaration in 2016.
According to Ukrainian law, judges are required to leave state-given accommodation if they purchase real estate in the city where they work. Such state-owned apartments are only provided judges “in need of better living conditions.” There is no indication that Shkurdova violated the law.
According to declarations that Shkurdova filed in March 2019, she has a bank account with PrivatBank, the largest bank in the nation.
PrivatBank’s case decides Ukraine’s fate
Kolomoisky has filed hundreds of lawsuits against PrivatBank, the NBU and their supporters in Ukraine, all part of a legal campaign to reclaim either the bank or its assets.
How Ukraine’s President Volodymyr Zelensky resolves the PrivatBank issue is seen as a litmus test of his commitment to rule of law.
At his first-ever press conference on Oct. 10 Zelensky gave mixed signals about his strategy with Kolomoisky, with whom he did business for many years and with whom he met with top aides in the President’s Office. Kolomoisky’s 1+1 channel broadcast Zelensky’s comedy shows for years and gave him favorable coverage in unseating ex-President Petro Poroshenko in the April election.
First, he said that he thinks it is reasonable to negotiate with Kolomoisky, then stepped back saying: “We must do everything we can so that the previous owners do not get a single kopek.”
He also said that he has no power over the courts and is not going to intervene, although he admitted that the courts in Ukraine aren’t trusted much yet.
