Prosecutor General Yuriy Lutsenko is trying to thwart efforts by state-owned PrivatBank to recover $2.5 billion allegedly stolen by the bank’s former owners, billionaire oligarchs Ihor Kolomoisky and Gennadiy Bogolyubov, Finance Minister Oleksandr Danylyuk alleges.
Danylyuk is calling for Lutsenko’s resignation, accusing the country’s chief prosecutor of blocking the foreign investigative and law firms that on Dec. 19 secured a $2.5 billion global freeze from a London judge on Kolomoisky and Bogolyubov’s assets.
Danylyuk issued a Dec. 21 statement saying that the freeze, ordered by the High Court of London, came without Lutsenko’s help and, in fact, occurred despite all the direct attempts by the prosecutor general to prevent this process.
“I demand the resignation of Prosecutor General Yuriy Lutsenko.”
Prosecutors launched a criminal investigation into the government’s hiring of forensic analysis firms Kroll and AlixPartners. In a Dec. 5 court order, a Kyiv judge granted prosecutors a subpoena for documents related to the hiring.
The Ukrainian government hired Kroll and AlixPartners to investigate allegations of $5.6 billion lost to insider lending at the Dnipro-based lender. Ukrainian taxpayers have spent more than $5 billion to stabilize the bank since nationalization.
But that case may be under threat both by Lutsenko’s announcement of the launch of a criminal investigation and by a bevy of civil lawsuits filed by Kolomoisky.
Kolomoisky issued a statement on Dec. 21, calling the asset freeze “temporary.” PrivatBank spokesman Oleg Serga had no response by the time this edition of the Kyiv Post went to press on Dec. 21.
General Prosecutor’s Office spokesman Andriy Lysenko called Danylyuk’s statement “a banal desire to avoid criminal liability for tax avoidance.”
As local media reported on July 31, the Prosecutor General’s Office named Danylyuk a suspect in violating tax laws in 1998-2016 and initiating respective investigations back in early July. Danylyuk denied all the accusations.
However, Concorde Capital reported that the criminal tax evasion case against Danylyuk was closed on Sept. 1 with no charges. Said Danyluk at the time: “We answered all the questions. The case has been closed. We need to look to the future. The fact that such investigations are opening tells us that we are doing the right things.”
Concord Capital analyst Zenon Zawada wrote on Dec. 22: “There’s no doubt that Danyliuk has a long-standing feud with Lutsenko stemming from this year’s tax evasion case, which was closed in September. The case could have been retaliation for Danyliuk closing corruption loopholes enjoyed by top officials, as well as Danyliuk helping protest leader Mikheil Saakashvili set up a think tank in Kyiv. Nonetheless, we believe Danyliuk’s claims deserve to be investigated, though the independent National Anti-Corruption Bureau would be able to do a better job than state prosecutors, as suggested by Lutsenko. There is a great deal of suspicious activity surrounding the Privatbank bankruptcy that requires a thorough, independent investigation.”
Diversions
Lutsenko spokeswoman Larisa Sargan referred the Kyiv Post to a Facebook post from Lutsenko, in which he angrily denied that a criminal investigation even existed.
“As of today, there were no criminal proceedings in the prosecutor’s office in relation to the Kroll audit company or any other foreign auditing companies that the National Bank of Ukraine involved in the financial review of PrivatBank’s activities,” he wrote.
But the investigation itself is not directly into Kroll.
Rather, prosecutors cite criminal investigation number 42017000000001823 for the basis of their subpoena request — a case that has been open since at least June and was first used to seize information regarding dozens of companies, allegedly related to Kolomoisky and Bogolyubov, that concluded Hr 128 billion ($4.5 billion) in loan agreements with the lender.
Within the framework of that investigation into alleged insider lending by Kolomoisky and Bogolyubov, prosecutors asked the judge for access to documents relating to the hiring of Kroll and AlixPartners.
Most notably, the judge granted prosecutors access to what appears to be the entirety of Kroll’s work product.
That includes documents “based on the results of the forensic analysis: analysis of the loan portfolio of related parties, ownership structure of ‘PrivatBank,’ analysis of money laundering schemes through the Bank’s Cyprus branch, analysis of the largest depositors of the Bank’s Cypriot branch, withdrawal of funds from the Cyprus Branch of the Bank, analysis of the structure of the assets of the beneficiary owners of theBank in Ukraine and abroad.”
That’s essentially the entire scope of Kroll’s work on PrivatBank.
According to Andriy Lysenko, a Lutsenko spokesman, prosecutors closed an investigation into National Bank of Ukraine officials after “interrogating NBU officials and analyzing the current legislation.”
Lysenko would not say if the investigation into PrivatBank management was continuing.
Amsterdam meeting
The criminal probe aligns with civil lawsuits filed by Kolomoisky, and with a meeting between Lutsenko and the Dnipro-born oligarch. A Nov. 25 Instagram post from a Ukrainian student showed Kolomoisky and Lutsenko “meeting for coffee” in an Amsterdam cafe.
The very same day, Kolomoisky announced that he had filed a civil lawsuit against PrivatBank and the NBU for giving Kroll and AlixPartners his personal data.
Ten days later, a judge in Kyiv approved prosecutors’ subpoena request in the criminal investigation.
“I flew to Amsterdam for medical treatment,” Lutsenko said. “I was walking around the center of the city and accidentally bumped into Kolomoisky.”
Danylyuk cited the meeting while calling on Lutsenko to resign. “A ‘random’ meeting in Amsterdam of Yuriy Lutsenko with Igor Kolomoisky on the eve of the London court case raises even more questions,” he wrote.
He is not the only one to raise questions about the meeting. Swedish economist Anders Aslund of the Atlantic Council questioned why Lutsenko is still in office. “This is outrageous that the Ukrainian prosecutor general holds a secret, private meeting abroad with the man suspect of holding the greatest debt to the Ukrainian state. How can he stay on his post?” Aslund tweeted.
A Solomensky district court judge in Kyiv ruled in favor of Kolomoisky on Dec. 14.
olomoisky has other London legal issues.
His former business partner Vadim Shulman filed a lawsuit against him over alleged fraud regarding the sale of an American steel factory. That case has gotten bogged down in arguments over jurisdiction, with Kolomoisky’s attorneys trying to have the case moved to Switzerland.
In a separate development, PrivatBank is selling its Latvia division. The bank is looking for a buyer.
Kyiv Post staff writer Veronika Melkozerova contributed to this report.
