Zelenskiy steps up his assault on the oligarchs as ex-Privatbank CEO named as fraud suspect
After doing nothing about the $5.5bn that oligarch and former owner of PrivatBank Ihor Kolomoisky allegedly stole from his bank, the Ukrainian state has named the former CEO of the bank as a suspect in the related fraud investigation on February 22.
Prosecutors have named former PrivatBank CEO Oleksandr
Dubilet along with his first deputy, Volodymyr Yatsenko, as suspects in the
embezzlement of UAH136mn ($4.8mn) in 2016 before the bank was nationalised.
Ukraine’s general prosecutor forced a private jet carrying
Yatsenko to land after he tried to flee the country on February 22. He has now
been taken into custody. The local media reported that Dubilet is in Israel.
The identity of the third person remains unknown.
The arrest and charges come as Ukrainian President Volodymyr
Zelenskiy apparently has launched an offensive to deal with “The Oligarch
Problem“ which is undermining his authority and attempting to capture the
state, a problem that is common throughout the former Soviet Union (FSU), where
corruption is the system.
PrivatBank is the biggest commercial bank in the country and
was set up by Kolomoisky. The bank was nationalised in December 2016 after the
central bank found a $5.5bn hole in its balance sheet. The regulator’s
investigation was partly prompted by the scandal that broke out following the
publication of a bne IntelliNews cover story “Privat investigations” detailing
the related party lending, after bne IntelliNews got hold of the bank’s loan
book.
The Ministry of Finance took over the bank and pumped over
$5bn into it to prevent its collapse, one of the biggest bank bailouts in
post-Soviet history and money the Ukrainian state could ill afford.
Since then, the state-appointed management team has turned
the bank around and it is now the most profitable in the sector.
In general, the National Bank of Ukraine's (NBU) clean-up of
the sector has seen dozens of oligarch-owned banks closed down, but the
sweeping reforms have left the sector in a much healthier state, which got through
the shocks of 2020 without difficulty and still in profit.
PrivatBank still suffers from very high non-performing loans
– what the new management call the “fraud loans” from the scams used by the
previous management to whisk money out of the bank – of over 80% of the loan
book, but these have all been provisioned for and are slowly being written
down. PrivatBank estimates it will take at least three years to clean up its
balance sheet completely.
Criminal investigation
The case that has been opened against Yatsenko is new and
significant development. The National Anti-Corruption Bureau of Ukraine (NABU)
has only managed to indict one senior official so far, but he was never
prosecuted. Roman Nasirov’s arrest a few years ago was billed as the “first big
fish” to be netted. The head of the government’s financial control office and a
personal friend of former President Petro Poroshenko, he was accused of giving
an order that cost the state budget UAH2bn (€70mn). But within a month Nasirov
was released from custody in Kyiv after his wife posted the UAH100mn (€3.5mn)
bail in the case, and eventually not only were the charges dropped, but he also
unsuccessfully ran for president in 2019.
NABU is independent of the government, which has been
working hard to undermine its powers. On February 15 the government proposed a
bill that would allow it to dismiss the well-respected head of NABU, to the
International Monetary Fund's (IMF) chagrin, which had insisted the body be set
up to fight corruption. Moreover, according to local reports the bill
originated with the president’s office.
The charges against Yatsenko come from General Prosecutor
Iryna Venediktova, who was appointed by Zelenskiy in March last year,
indicating these charges are part of Zelenskiy's wider campaign against the
oligarchs.
Zelenskiy imposed sanctions on the leader of the pro-Russian
Opposition Platform – For Life leader Viktor Medvedchuk on February 23, after
the government closed down three of his TV stations. Medvedchuk is a personal
friend of Russian President Vladimir Putin and one of Zelenskiy's main
political rivals. He is also a business partner of Kolomoisky and co-owns
several more TV stations. Medvedchuk has
also had business with Kolomoisky’s Privat Group in the past.
The PrivatBank managers case is a litmus test of President
Volodymyr Zelenskiy’s willingness to crack down on corruption, which he has so
far failed to do.
Privatbank’s previous owners, Kolomoisky and his partner
Gennady Bogolyubov deny any wrongdoing.
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