A new court ruling in PrivatBank’s lawsuit against its former owners provides the first inside look at the court case, which has already seen Ukrainian oligarchs Ihor Kolomoisky and Gennadiy Boholyubov lose access to $2.5 billion in assets after a global asset freeze.
Judge Joanna Smith of the High Court of Justice in London ordered three companies linked to Ihor Kolomoisky and Gennady Bogolyubov’s Privat group to give up detailed information surrounding a series of loan agreements with the oligarchs’ former bank.
The contracts are alleged to be at the center of a massive embezzlement scheme that drove the bank to the brink of collapse in December 2016, when the Ukrainian government nationalized it to fill a $5.6 billion hole at the lender.
The order, issued on March 12, marks the first public filing in PrivatBank’s lawsuit against its former owners. The case has proceeded in hearings sealed from the public since Dec. 19, when the bank first sued Kolomoisky and Bogolyubov.
The two oligarchs have filed appeals against the freezing order, challenging both the court’s jurisdiction over the case and the asset freeze itself. Kolomoisky and Bogolyubov denied that they stripped PrivatBank of Ukrainians’ deposits, and say that the allegations are part of a government-backed media campaign against them.
Closed door discussions
PrivatBank’s lawsuit against Kolomoisky and Bogolyubov marks the Ukrainian government’s only thrust for accountability over the lender’s near-collapse. Refilling the bank’s coffers has cost the Ukrainian government $5.6 billion to date, in the form of t-bills issued to recapitalize the bank.
But the London proceedings have been entirely closed. Combined with an uncharacteristic lack of leaks to the Ukrainian press over the matter, very little has been known until now about the status of the case.
In addition to Kolomoisky and Bogolyubov, PrivatBank sued six companies, alleging that they entered into fraudulent loan agreements with the bank as a means of siphoning cash out of the lender. They are Treamtrend Limited, Trade Point Agro Limited, Collyer Limited, Rossyn Investing Corp, Milbert Ventures Inc, and ZAO Ukrtransitservice Ltd.
The last three firms – Rossyn, Milbert, and Ukrtransitservice – have failed to fulfill a subpoena from the court regarding $1.9 billion in PrivatBank funds going to 46 Ukrainian borrowers in “sham loan agreements,” Smith wrote.
The English court redacted the cash value of each loan, but did disclose that the identities of many recipients of the allegedly stolen cash “have been identified,” and that “investigations are continuing.”
Unhappy lawyers
But conflict arose after attorneys for the six firms sent letters on Jan 18 and 31 laying out which kinds of documents the companies were willing to provide.
PrivatBank’s lawyers “were unhappy” with what the firms said they had to offer, and challenged the companies to give more, detailed information about the loan agreements allegedly used to rob the bank of at least $1.9 billion.
Smith ruled in part for PrivatBank and in part for the companies, supposedly tied to Kolomoisky and Bogolyuov. The firms will not have to submit copies of the agreements themselves to the court, the order reads, but will have submit data including repayment schedules, information on collateral for the loans, and information on goods and services purportedly supplied in exchange for the loans.
The PrivatBank case is one of three court cases against Kolomoisky and Bogolyubov in London. One other concerns a 2000s deal with Tatneft, which led to a separate asset freeze against the oligarchs.
Yet another comes from the pair’s former business partner Vadim Shulman, who accuses them of defrauding him of up to $500 million.
