The debts of major Ukrainian businessmen are far more than Kyiv plans to borrow from the IMF
The debts of major businessmen are a million times more than Ukraine plans to borrow from the International Monetary Fund until 2018, as stated in the article “Business Behind the Curtain” by Andrey Kaut in a business.ua periodical.
The edition assessed the amount of debt of major businessmen to domestic and foreign-owned banks and other creditors and compared the debt with the cost of their assets, specified in public research on financial situations of the richest Ukrainians. “The richest people of the country are actually poor. Judging by their business situation, they will never be able to repay their debts,” the article says.
According to author’s estimates, the largest debtor is Ihor Kolomoyskyi. The amount of his debt is $16 billion against $1.1 billion worth of assets. “The hole in the capital of PrivatBank, the financial heart of the Privat Business Empire lost UAH 120 billion. Kolomoyskyi owned 49.98% of shares in the bank. Thus, his debt is UAH 60 billion.
“The hole emerged as a result of providing loans to companies related to owners of the bank. Many of these companies turned out to be created in an offshore territory. Ukraine was forced to nationalize and take control of PrivatBank in order to save it. Otherwise, the bank would have been liquidated and the amount of deposits payable by relevant authorities would make UAH 90 billion. This is the same amount of money that relevant entities had to repay to depositors of all insolvent banks, which were withdrawn from the market for two years. Kolomoyskyi’s other businesses also have debts. Ukraine International Airlines owes UAH 1 billion and Ukrnafta owes approximately UAH 12 billion,” the author wrote.
The co-owner of Industrial Union of Donbas, Serhiy Taruta, and the owner of Ferrexpro, Kostyantyn Zhevago, are on the edition’s list of major debtors. Both owe $3 billion and $2.9 billion, respectively.
“The debt of Finance and Credit bank to the population makes UAH 17 billion, from which 10.5 billion were compensated from the Individuals Deposits Guarantee Fund at the expense of the state budget. Businessmen will have to answer a lawsuit in court for unpaid refunding of the bank in the amount of UAH 1.4 billion. The refunding of the bank was granted on the pledge of his personal financial guarantee. The total amount of refunding debt to the National Bank of Ukraine is UAH 7.1 billion. Kremenchuk Automobile Plant (AvtoKrAZ) also has a troubling UAH 1.3 billion debt to Oschadbank, the State Savings Bank of Ukraine. Legal proceedings are ongoing on this case. In May 2016, the State Savings Bank of Ukraine filed an application to the Commercial Court of Poltava region with a request to declare AvtoKrAZ insolvent. The total amount of losses is UAH 17.5 billion,” the article says.
Ukrainian businessmen, Andriy and his brother Serhiy Klyuyev amassed a debt worth $1.48 billion, Rinat Akhmetov accumulated debts of $5.2 billion and Leonid Klimov owes $346 million. All of them joined the list of Top 20 major debtors.
“The Financial Group Seaside (Prymorya), which controls Privoz market and all construction sites around it, three hotels at the Black Sea, the Central Universal Store, the Chornomorets Football Club and Shevchenko Park in Odessa makes up the total business empire of Leonid Klimov. In 2011 to 2014, companies related to Klimov took loans in Imexbank for the amount of UAH 10.2 billion, many which were granted on the pledge of Chornomorets stadium. In 2011, Chornomorets Football Club took a $40 million loan in Sberbank of Russia on the pledge of its base and a part of Novy Privoz. In 2009 to 2014, Imexbank, controlled by Klimov received two stabilization loans for the amount of UAH 3.4 billion from the National Bank of Ukraine. Imexbank repaid only UAH 400 million of this amount. In 2013, this bank received another UAH 300 million loan. The Chornomorets Football Club did not pay back the loan received from the Sberbank of Russia. Sberbank of Russia sued and won their case in court with a UAH 1 billion claim. In 2015, Imexbank was found insolvent. The overall damage caused by the activity of the financial group makes UAH 8.1 billion,” the author wrote.
In addition, the Guta family (MRIYA Agro Holding, with a debt of $1.297 billion), Viktor Nusenkis (Donetsksteel Group, with a debt of $1.1 billion), Victor Polishchuk (Eldorado trade chain for sale of electronic household appliances, Gulliver City Mall and Bank Mikhailovsky, with a debt of $769 million), Stanislav Berezkin (Creative Group, with a debt of $704 million), Yuri Ivanyushchenko (Azovmash, with a debt of $546 million), Vladimir Kostelman (Fozzy Group, the largest food retail group Silpo, Fora, with a debt of $404 million) and other businessmen believed to be the richest people in Ukraine were also added to the list of 20 largest debtors of the country.
The loan funds, which businessmen actively raised abroad and in Ukraine, including raising money through their own banks, were the main engine for the growth of their business empires.
“Other people’s money can’t help if there is no long-term strategy and appropriate business model,” the author summarized. The total amount of debts that 20 major debtors of Ukraine should repay to creditors, State and population is more than $40 billion. On the other hand, the amount of IMF tranches that the Ukrainian Government expects to receive until 2018, makes $9.9 billion.