Prosecutors suspect Ukraine’s second largest state-owned bank Oschadbank of squandering millions of dollars on overpriced goods and services it didn’t need.
The details of an ongoing investigation into several fraud schemes allegedly carried out by Oschadbank’s top managers in the past were disclosed in the decision of Kyiv’s Pechersk District Court on April 5, which was published in the court registry on April 19.
According to the court document, prosecutors investigated an illegal enrichment by the former head of treasury of Oschadbank whose alleged fraud with the bank’s obligations in 2013 cost the bank over Hr 16.7 million ($640,786).
In an official statement on April 20, Oschadbank called the allegations absurd and groundless.
Prosecutors are looking into the embezzlement of funds in Oschadbank’s public procurement.
The court document reads that between 2014 and 2017, Oschadbank purchased computers and software from five private companies at an inflated price. As a result, the bank allegedly overpaid Hr 550 million ($21 million).
This money, the investigators claim, was partially transferred to accounts of offshore companies, converted into cash, and appropriated by employees of Oschadbank.
In May 2017, Oshadbank’s chairman Andriy Pyshnyy announced that the bank joined the electronic public procurement system ProZorro.
Responding to the accusations of the state prosecutors, Oschadbank said on April 20 that overpricing the cost of goods would be impossible since the bank follows “identically transparent algorithms in its procurement procedures.”
Prosecutors also pointed out that between 2014 and 2017 Oschadbank signed contracts with PwC and KPMG audit and accounting companies for some consulting and legal services during public tenders held by the bank.
They claimed that there was no need for external consultants as the bank had its own legal department as well as public procurement department that holds tenders, analyzes bidders and their applications. As a result, Oschadbank allegedly misused over Hr 15 million ($573,800).
Oschadbank responded that hiring international consultants was a common and effective practice to ensure a higher degree of transparency in public procurement.
Big Four audit firm PwC did an audit for Oschadbank in 2015 and 2016.
PwC also audited Ukraine’s PrivatBank. It is now dealing with a 3-billion-dollar lawsuit blamed for failing to uncover $5.5 billion worth of fraud by the bank’s former owners.
Back in 2016, Pyshnyy told the Kyiv Post that his goal was to make the bank profitable again and that it will not be serving vested interests.
