English High Court issues order to freeze assets of former PrivatBank owners

The High Court of England has issued an order for a global freeze of assets held by former PrivatBank owners and managers Ihor Kolomoyskyi and Gennadiy Bogolyubov. The assets are valued at more than $2.5 billion, according to a press release from Privatbank obtained by RBC.

The bank confirmed that it had started a trial in the High Court of London. According to the report, on December 19, 2017, the High Court of England issued an order for a global freeze on the assets of Kolomoyskyi and Bogolyubov, as well as six companies that they allegedly belong to or which are under their control.

"The freezing order was granted on the basis of detailed evidence put to the court that Kolomoyskyi and Bogolyubov extracted almost $2 billion from the bank through a particular series of dishonest transactions, which had the effect of transferring the funds to companies that they secretly owned or controlled. With this trial, PrivatBank will recover more than $2.5 billion, taking interest into account," the press release said.

"PrivatBank is confident that the English court will determine its claims fairly and objectively and that it will succeed in recovering funds that have been misappropriated from it," the bank said.

Zerkalo Nedeli (Mirror Weekly) previously reported that PrivatBank had filed a lawsuit with the London High Court against its former owners, in order to recover funds withdrawn from the bank and oblige its former owners to repay unfulfilled refinancing obligations.

PrivatBank was nationalized on December 21, 2016. It was sold to the state for a symbolic amount of one hryvnia. The Ukrainian government explained at the time that the decision to nationalize the bank was made on the "recommendation of the National Security and Defense Council" in order to "stabilize the financial system." Prior to nationalization, the main owner of PrivatBank was Ihor Kolomoyskyi (whose net worth is $1.3 billion, second on the Ukrainian Forbes list); Kolomoyskyi owned a share worth 41.6%. The second-largest shareholder was businessman Gennadiy Bogolyubov, who owned 33.2%. After the bank’s nationalization, the shares went into the possession of the Ukrainian Ministry of Finance.

In July, Deputy Governor of National Bank of Ukraine (NBU) Kataryna Rozhkova stated that before nationalization, the bank had been a pyramid investment scheme. An audit of PrivatBank conducted by EY (Ernst & Young) showed that the amount of impaired loans was 206.5 billion hryvnia (about $7.5 billion), of which only a small portion were loans granted to individuals and small and medium sized enterprises (14.9 billion hryvnia). "According to the NBU, this indicates that a risky credit policy was conducted by former management. For comparison, the amount of people's funds in the bank at the time of State’s entry into the investment was 151.2 billion hryvnia; that is, the bank had no resources prior to nationalization with which to return deposits," Rozhkova said then.

  Privatbank, Kolomoyskyi, Gennadiy Bogolyubov, Ukraine