The Supreme Court of Ukraine has ruled on June 15 in favor of state-owned PrivatBank in a case that threatened to undermine the bank’s nationalization in 2016.
In the lawsuit in question, brothers Ihor and Hryhory Surkis — business partners of PrivatBank’s former owners, oligarchs Ihor Kolomoisky and Gennadiy Boholyubov — and their families attempted to reclaim their former deposits in the bank.
When the Ukrainian authorities took control of PrivatBank, the National Bank of Ukraine recognized the Surkises as insiders in the bank, which was nationalized due to insolvency and widespread fraud. As a result, their deposits were converted into the bank’s capital through a bail-in procedure.
In the Supreme Court case, the Surkises were challenging the legality of that procedure. Had the court agreed with them, the ruling would have created a precedent that could be used in 45 lawsuits by other depositors who were deemed insiders and had their deposits converted into PrivatBank’s capital.
Lawyers and representatives of state-owned PrivatBank and the National Bank of Ukraine take a celebratory photo after the Supreme Court of Ukraine ruled in their favor in a precedent-setting case on June 15, 2020. (Kostyantyn Chernichkin)
Read more: What is happening with PrivatBank court cases and why is this such a big deal
Previously, on April 15, the Kyiv Court of Appeals ruled that PrivatBank must pay $259 million to six British companies owned by the Surkis family.
That ruling was a significant blow to PrivatBank monetarily, but the June 15 case — which only covered $40 million — was much more important due to the precedent the ruling would set.
History of fraud
In 2016, the Ukrainian state assumed control of PrivatBank, the country’s largest bank, after uncovering a $5.5-billion hole in its ledgers.
After the takeover, Valeria Gontareva, then the National Bank governor, announced that PrivatBank’s entire corporate loan portfolio had gone to companies closely tied to its previous owners.
Kolomoisky and Boholyubov have denied wrongdoing.
The current management of PrivatBank is suing the two oligarchs in the United Kingdom, the United States, Israel and Cyprus. They are counter suing in Ukraine.
Kolomoisky is currently under investigation by a U.S. federal grand jury on suspicion laundering hundreds of millions of dollars in American real estate, Buzzfeed News reported in May.
