Kolomoisky and Boholyubov lose $2 billion lawsuit in London: PrivatBank announces details
30 July 14:09
PrivatBank has won a historic victory in a long-running lawsuit in London against its former owners, Ihor Kolomoisky and Gennadiy Boholyubov. The High Court of London found that they had misappropriated almost USD 2 billion from the bank before it was nationalized in 2016. This was reported by
As reported by
This decision was an indisputable confirmation of the fraud, which the court called “a Byzantine complex scheme of re-lending”. The bank, which was undercapitalized by $5.5 billion and recapitalized by the state, is now entitled to compensation.
“This is a significant victory for the Bank and its shareholder, the Government of Ukraine, as well as for millions of Ukrainians who rely on PrivatBank every day,” said Nils Melngailis, Chairman of the Supervisory Board of PrivatBank.
Court confirms large-scale fraud scheme
According to the court’s decision, Kolomoisky and Bogolyubov implemented a “very complex re-lending scheme” that allowed them to illegally withdraw almost $2 billion from PrivatBank. The court noted that this scheme acted solely in the interests of the defendants.
“In a judgment handed down today, the High Court of Justice in London found that these two individuals misappropriated almost USD 2 billion of the Bank’s funds through a ‘very significant scheme’. “The High Court in London today found that these two individuals misappropriated almost USD 2 billion of the Bank’s funds through a ‘highly sophisticated over-lending scheme which acted in the interests of the Individual Defendants [i.e. Mr. Kolomoisky and Mr. Bogolyubov]. The judgment against them could hardly be more damning, as it lays out the scheme of what has previously been described as a “fraud of Byzantine complexity,” the statement said.
Rejecting Mr. Kolomoisky’s and Mr. Bogolyubov’s contention that there was “not a single piece of evidence” linking the former owners of the Bank to the transactions, Judge Trauer found that their objections were “entirely based on dishonesty.”
“The judge also found that Mr. Kolomoisky ‘appears to have considered himself above the law’ and that it was ‘dishonest of Mr. Bogolyubov’ to use misleading documents to distance himself from the fraud,” the bank said.
PrivatBank: the claim was 100% confirmed
The decision of the High Court of London is a complete legal victory for PrivatBank. The court satisfied the bank’s claims in full. The full amount of the former owners’ liability to the Bank is yet to be determined, but given that the court has satisfied the Bank’s claims in full, they are likely to be obliged to pay more than USD 1.7 billion, even before interest of more than USD 1.5 billion. This amount is likely to be in excess of USD 1.7 billion, even without taking into account interest for more than a decade.
The full amount to be paid to the Bank, including interest and legal fees, will be determined at the next hearing later this year and is likely to be well in excess of USD 2 billion in total. THE AMOUNT OF THE BANK’S DAMAGES WILL BE DETERMINED AT THE NEXT HEARING LATER THIS YEAR AND IS LIKELY TO EXCEED USD 2 BILLION.
Refusal to testify and destruction of evidence
Neither Kolomoisky nor Boholyubov testified at the 2023 court hearing in London. The court concluded that they had deliberately avoided answering uncomfortable questions that would have shed light on their role in the embezzlement scheme.
“Neither Mr. Kolomoisky nor Mr. Bogolyubov testified at the substantive hearing in London in 2023, and Mr. Kolomoisky spent part of that period under temporary detention in Ukraine. The judge found that their refusal to testify was due to the fact that “they were both aware that by testifying in person they would expose themselves to questions about their role in the misappropriation of funds to which they would not have a convincing answer, and therefore they decided not to do so,” the bank said.
The court also found that Kolomoisky deliberately destroyed data that could be relevant to the case, and Boholyubov practiced the destruction of documentation related to the trial.
“With regard to the documentary evidence presented to the court, the Judge ruled that “Mr. Kolomoisky made deliberate decisions to destroy data that could be relevant to the current proceedings” and noted “the practice adopted by Mr. Bogolyubov to destroy documentation that could be relevant to this proceeding,” Privatbank said.
The next stage is asset recovery
In 2017, the Bank received a court order for a worldwide freezing order against the defendants’ assets. Now the Bank and its legal advisors will move to the stage of recovery of losses and will try to enforce the court decision in respect of these assets to obtain compensation for the Bank and, accordingly, for its shareholder, the Government of Ukraine.
“We believe that this decision will be the first in a series of international victories that will ensure justice for the Bank and, more importantly, for the people of Ukraine. This is not the end of our process – we will start collecting the amounts that rightfully belong to PrivatBank,” emphasized Nils Melngailis.
Nationalization of PrivatBank
The nationalization of PrivatBank took place in 2016, when the bank was declared insolvent due to a significant capital shortage. According to the NBU’s decision, the bank was unable to fulfill its obligations for financial rehabilitation, which was confirmed by an international audit company.
In order to avoid a systemic crisis in the banking sector, the Ukrainian government decided to withdraw the bank from the market with the participation of the state, which helped to maintain financial stability in the country.
The state provided additional capitalization of over UAH 155 billion.
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What Kolomoisky is accused of in Ukraine
Ihor Kolomoisky is currently in a Ukrainian pre-trial detention center. Ukrainian law enforcement officers have served him with three notices of suspicion under several articles and cases.
on September 2, 2023, the SBU notified Kolomoisky of suspicion on two articles: fraud and legalization (laundering) of the proceeds of crime. According to law enforcement officials, between 2013 and 2020, Kolomoisky legalized more than half a billion hryvnias, transferring them abroad and using the infrastructure of controlled banking institutions.
on September 7, NABU detectives served another suspicion on Kolomoisky and five members of the group he organized – of misappropriating PrivatBank’s funds worth more than UAH 9.2 billion.
on September 15, the SBU served Kolomoisky with the third suspicion – of illegal actions with bank documents, seizure of property by an organized group through abuse of office, and money laundering. According to the investigation, between 2013 and 2014, Kolomoisky illegally seized UAH 5.8 billion through a criminal group consisting of employees of his PrivatBank.
on September 3, 2023, the court for the first time imposed a pre-trial restraint on Kolomoisky: detention with an alternative to bail in excess of UAH 509 million. However, already on September 15, after a new suspicion was announced, the court re-selected the measure of restraint and increased the amount of bail for Kolomoisky to UAH 3 billion 891 million.
After that, the court extended Kolomoisky’s detention four times, while reducing his bail twice – on November 28 to UAH 3 billion and on December 21 to UAH 2.7 billion.
on February 28, Kyiv’s Shevchenkivskyi District Court extended Ihor Kolomoiskyi’s detention for another two months – until April 25 – and reduced his bail to UAH 2.4 billion.
It should be noted that on May 8, Kolomoisky was notified of being suspected of ordering the murder of a law firm director for personal revenge.
At the same time, back in 2005, a criminal case was already initiated against Kolomoisky in this regard, which was later closed. Back in 2015, former MP and current advisor to the head of the OP Serhiy Leshchenko wrote in his blog why the case was closed and what it had to do with former Prosecutor General Sviatoslav Piskun and oligarch Viktor Pinchuk.
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