Privatbank fraud cost Ukrain $5.5 B

The investigation was part of Ukraine’s commitment to the IMF “to perform a forensic audit of Privatbank’s operations to identify whether wrongdoing or bad banking practices took place prior to the bank’s nationalization,“ the NBU reported. Recall, Privatbank was declared insolvent and nationalized in December 2016, with total funds spent for its bailout having reached UAH 185 bln (over USD 6.8 bln), including a UAH 155 bln (USD 4.2 bln) contribution from the state and the rest from the bank’s bailed-in creditors.

The results of the Kroll investigation have already been sent to Ukrainian law enforcement bodies and Ukraine’s international partners, Deputy NBU Head Kateryna Rozhkova said during the report’s Jan. 16 presentation. “We are sure that the investigation’s conclusions will help bring the Privatbank case to an end,” she said. In response, former shareholder Ihor Kolomoyskyi called the report “a rant that makes no sense in commenting on.” In his comments to the news site, he stressed that the alleged “fraud” has yet to be proven, calling the presentation just part of the NBU’s attempts to distract public attention from other scandals.

Alexander Paraschiy: According to the NBU, Privatbank was using a scheme to collect deposits to finance the businesses of the bank’s shareholders. This “business model,” in our view, was typical for some other failed banks, including Oleg Bakhmatyuk’s VAB Bank and Finansova Initsiatyva; Kostiantyn Zhevago’s Finance & Credit Bank; and even Platinum Bank, which was headed by Rozhkova herself. In its activities, Privatbank was much bigger and possibly much more creative than the mentioned banks. Therefore, it generated much bigger losses for the state and it will be much harder to prove the bank did something unlawful.

Kolomoiski needs to go to jail. Ukraine can’t let this slide.