‘I won’ says Ukraine tycoon as court rules PrivatBank nationalization illegal

FILE PHOTO: Women use PrivatBank ATM machines in Kiev, Ukraine November 9, 2018. REUTERS/Gleb Garanich/File Photo

April 18, 2019

By Polina Ivanova and Natalia Zinets

KIEV (Reuters) – Ukrainian tycoon Ihor Kolomoisky won a victory on Thursday in his battle with the government over the 2016 nationalization of PrivatBank as a court ruled the change of ownership was illegal.

Kolomoisky, who co-founded PrivatBank, has fought legal battles against the government since the Kiev authorities took over the bank, Ukraine’s largest lender, in December 2016. As he cheered the court’s decision on Thursday, the finance ministry said it would appeal the ruling.

“That means I won. I won the lawsuit,” Kolomoisky said after Reuters told him the news of the court’s decision, which was announced while Reuters was conducting a phone interview with him. “Well, excellent,” he added.

The central bank said it would also appeal the ruling and that it was impossible to reverse the nationalization.

The ruling is a blow to the government, which wrested PrivatBank from Kolomoisky in 2016 and then shored up the lender with billions of dollars. The government wants to recover money it says was siphoned out while Kolomoisky owned it. Kolomoisky denies any wrongdoing and says the bank was forcibly nationalized without proper justification.

The fate of PrivatBank has also loomed over Ukraine’s ongoing presidential election campaign.

Kolomoisky has publicly supported the candidacy of Volodymyr Zelenskiy, the frontrunner to beat the incumbent President Petro Poroshenko at an election run-off this Sunday. Zelenskiy has repeatedly denied that he would endeavor to hand PrivatBank back to Kolomoisky if elected.

Thursday’s ruling could boost Kolomoisky’s chances of winning compensation or retrieving the bank.

PrivatBank was nationalized as part of an clean-up of the banking system backed by the International Monetary Fund, and the authorities have previously warned that any step to reverse the decision could derail Ukraine’s $3.9 billion loan program.

Kolomoisky played down the prospect of the central bank and finance ministry trying to appeal the decision.

“But you understand that the National Bank has no options because they, I know it for sure, did all this unlawfully,” he said. He then suggested the central bank should admit defeat and “submit a confession about how they did everything unlawfully.”

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The authorities have spent nearly $6 billion since the nationalization to plug a hole in PrivatBank’s balance sheet, caused by what the government says were fraudulent lending practices and money laundering.

Kolomoisky disputes that assessment of the bank’s health when it was nationalized. The case led to hundreds of lawsuits and the authorities see it as a test of their fight against corruption.

“The court ruling has yet to come into effect and will be appealed by the NBU (National Bank of Ukraine),” Viktor Hryhorchuk, head of litigation at the central bank’s Legal Department, said in a statement.

Lawsuits challenging the nationalization of PrivatBank “deal irreversible damage to Ukraine’s international image,” the central bank said in the same statement.

The IMF was not immediately available for comment. The finance ministry said it had followed the law in nationalizing PrivatBank and said making sure banks met capital requirements “is crucial for ensuring the stability of the banking system and supporting public confidence.”

President Poroshenko had warned this week that any backsliding on PrivatBank would spark a “deep crisis in relations with the IMF. With respective risks for macroeconomic stability, for the exchange rate, it may lead to a new crisis.”

Zelenskiy, a 41-year-old comedian with no prior political experience, has had to fend off accusations from Poroshenko that he is a puppet of Kolomoisky, whose TV channel airs Zelenskiy’s shows.

Zelenskiy insists his relationship with Kolomoisky is strictly professional. In an interview with Reuters in February, Zelenskiy said he would not hand back ownership of PrivatBank to Kolomoisky if he becomes president.

(Reporting by Polina Ivanova, Natalia Zinets and Pavel Polityuk; writing by Matthias Williams; Editing by Susan Fenton)

Source: OANN