State-owned Ukrainian lender PrivatBank is suing auditor PriceWaterhouseCoopers for $3 billion, alleging that the Big Four accounting firm failed to detect massive fraud at the bank when it was owned by billionaire oligarch Igor Kolomoisky.
The bank filed the lawsuit in Cyprus on March 30, a PrivatBank spokesman said.
Calling the lawsuit a “logical and necessary step,” PrivatBank CEO Petr Krumphanzl said that “the absolute inability of PwC to uncover fraudulent operations in the bank over the course of many years led to almost the entire corporate loan portfolio not being serviced and not having any guarantee of collateral.”
A PwC spokeswoman was not immediately available for comment.
PrivatBank was nationalized in December 2016 after a $5.6 billion hole in the bank’s capital brought it to the verge of collapse.
National Bank of Ukraine officials have accused the bank’s former owners – Kolomoisky and Gennadiy Boholyubov – of embezzling billions from the bank through a series of insider lending schemes, in which the bank would loan out millions of dollars to shell firms with faulty collateral.
Last year, NBU Risk Management Chief Igor Budnik told Ukrainian media that PwC had helped the bank cover up fraudulent loans by overvaluing collateral that, in some cases, did not appear to exist.
PwC was disbarred by the NBU from auditing banks in July 2017.
The lawsuit focuses on three separate annual audits, filed for 2013, 2014, and 2015.
Kolomoisky and Boholyubov deny that they embezzled money from the bank, calling it a media campaign perpetrated by the government. PrivatBank sued the two oligarchs as well as companies allegedly affiliated with them in December in London, leading to a freeze on $2.5 billion of the pair’s assets.
