Ukraine’s largest bank, PrivatBank, has initiated a legal battle in England’s High Court against its former owners, oligarchs Igor Kolomoisky and Gennadiy Bogolyubov, the Financial Times reports. The trial was postponed last year due to Russia’s invasion of Ukraine. PrivatBank is seeking $1.9 billion in addition to up to $2.5 billion in interest from Kolomoisky and Bogolyubov, who co-owned the bank until it was nationalized in 2016.
Europe’s Largest Banking Collapse
Ukraine’s biggest bank has accused the two Oligarchs Igor Kolomoisky and Gennadiy Bogolyubov of “fraud on an epic scale” covered up by “money laundering on a vast scale” at a High Court trial in London.
The Ukrainian state took over PrivatBank after regulators discovered a $5.5 billion hole in its balance sheet, allegedly caused by fraudulent lending. The subsequent recapitalization of the bank cost the state 6% of Ukraine’s gross domestic product, making it one of the largest banking collapses in Europe relative to national output.
International lenders, including the International Monetary Fund (IMF), have urged Kyiv to recover the funds lost through the bank’s nationalization. Igor Kolomoisky has attempted to reverse the nationalization through Ukrainian courts while also facing investigations in the US for fraud and money laundering. In 2021, the US government imposed sanctions on him for his involvement in significant corruption as a provincial governor in Ukraine.
In 2017, assets worth $2.5 billion owned by Kolomoisky and Bogolyubov were frozen by an English court. The trial is being held in England because some companies involved in the fraudulent loans are registered there, while three others are registered in the British Virgin Islands. PrivatBank alleges that between 2013 and 2014, the loans were funneled to sham companies controlled by Kolomoisky and Bogolyubov as payment for fictitious commodity trades. The bank claims it was part of an elaborate scheme to transfer money out of the bank and launder it overseas, evading Ukrainian capital controls.
Alleged Collusion
Suspicions of collusion between Kolomoisky and Ukrainian President Volodymyr Zelenskyy have deepened. Kolomoisky supported Zelenskyy during his election campaign, and his TV channel played a crucial role in promoting Zelenskyy’s show and propelling him to victory. However, Zelenskyy later distanced himself from Kolomoisky.
While the defendants deny any wrongdoing, an earlier ruling by Justice Timothy Fancourt acknowledged a “good arguable case for fraud on an epic scale.” However, he initially determined that the English courts lacked jurisdiction. This decision was later overturned in the Court of Appeal, allowing the case to proceed. The trial will be a crucial test of Ukraine’s commitment to fighting corruption and recovering stolen assets, and its outcome could have significant implications for future efforts to hold oligarchs accountable.
