The High Court in London confirmed the embezzlement of $2 billion by former owners of PrivatBank
Former owners of Ukraine’s PrivatBank, Ihor Kolomoisky and Gennadiy Bogolyubov, have stolen nearly $2 billion from the bank before it was nationalized in 2016, a U.K. court ruled on Wednesday.
The judge said the two used a “highly complex loan recycling scheme” to move the money through offshore companies for their own benefit.
The High Court in London found that both men were responsible for what the judge described as a “fraud of Byzantine complexity.” The ruling fully supports the claims brought by PrivatBank. With interest and legal costs, the amount owed is expected to exceed $2 billion.
Justice Richard Trower dismissed the pair’s defense, calling their case “built on dishonest foundations.” He said Kolomoisky acted as if he was “above the law,” and that Bogolyubov tried to cover his tracks with misleading documents.
Neither of them testified during the trial. According to the judge, they avoided the witness stand because they knew they couldn’t explain their actions. The court also found that Kolomoisky ordered the destruction of digital records, while Bogolyubov got rid of documents that could have been used as evidence.
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Meanwhile, Ukrainian anti-corruption officials are pursuing related criminal charges. Earlier in July, the National Anti-Corruption Bureau (NABU) said it had finished an investigation into one of the bank’s former owners — widely believed to be Kolomoisky — and five others. They are accused of embezzling over $228 million through fake bond buybacks and laundering the money through offshore companies. Investigators say the plan was launched in 2015, while the main suspect was governor of the Dnipropetrovsk region.
PrivatBank obtained a worldwide asset freeze against both Kolomoisky and Bogolyubov in 2017. The bank says it will now begin efforts to recover the stolen funds. “This is a monumental victory for the Bank and our shareholder – the Government of Ukraine,” said Chairman Nils Melngailis. “It shows the fraud was real, and that we were right to keep fighting.”
Richard Lewis, a partner at Hogan Lovells, the law firm representing PrivatBank, said the case was “one of the most complex” seen by U.K. courts. He said the defendants “deliberately destroyed and suppressed documents and sought unsuccessfully to shift the blame onto others,” according to a press release by PrivatBank.
PrivatBank is Ukraine’s largest lender, serving more than 18 million customers. It was nationalized in 2016 after auditors found massive losses tied to insider lending and fraud.
Kirill Romanovskiy