A few weeks ago, the investigation officially filed charges against Oleksiy Kargapolov, former deputy chairman of the board of the Ukrainian Professional Bank (UPB), who was heading it at the time of the introduction of the provisional administration in May 2015. The banker is accused of more than 220 million USD fraud. Thus, the case of bringing to the insolvency Ukrainian professional bank got off the ground. However, people are interested if businessman and owner of Milkiland holding and, in fact, real owner of the mentioned bank, Anatoliy Yurkevych, to be punished.
UPB bankruptcy is one of the most revealing and cynical banking frauds in the history of Ukraine. The day before the bank was declared insolvent, all non-current assets, including furniture and computer equipment, were withdrawn from it. “On the eve of the introduction of the temporary administration, the UPB loan portfolio with a total nominal value of 85 million USD was secured by highly liquid assets. Thus, entering into collateral agreements, assignment of rights of claim, crediting funds from the accounts of individual clients of the bank to borrowers’ accounts for early repayment of credit indebtedness, UPB gratuitously carried out the alienation of the creditor’s property rights and refused its own property claims," Deposit Guarantee Fund said in its official statement.
As a result, more than a billion hryvnias of debt to creditors – that’s all that remains after the bank.
In 2014, UPB was not included in the list of the largest banks, and in terms of assets, it was a typical middle bank (ranking 36th). Actually, it was a usual “pocket bank,” designed to collect deposits from the public and to lend a large business owner. Officially, UPB belonged to some Eugen Balushka. However, the media and the National Bank (NBU) considered Anatoliy Yurkevych, co-owner of the Milkiland-Ukraine dairy company, the bank’s actual controller. In recent years, Ukrainian courts have officially confirmed that Yurkevych was directly related to the bank. Yurkevych denies contact with the bank and is suing the NBU and the Deposit Guarantee Fund on this issue. During the trial, the Guarantee Fund indicated that Yurkevych exercised the “actual management” of UPB while being the chairman of the bank’s board (as evidenced by a copy of the bank’s charter of the general meeting of shareholders). The court agreed with it.
According to the materials of criminal cases set out in a number of court decisions, in March 2014, the UPB applied to the National Bank (headed by Stepan Kubiv) for refinancing. The bank requested 4,3 million USD to maintain liquidity. The bank placed property rights to the UPB assets (land plots) of debtor firms Rozvytok-2012 and AURUM FINANCE, a Milkiland deposit for 2,1 million USD, UPB shares for 10 million USD, and also guarantee of "Milkiland-Ukraine" for 4,3 million USD. However, all these funds were “empty shell.” That 4,3 million USD received for refinancing, bypassing the correspondent account of the NBU, were transferred to the empty shell companies. This money was immediately spent on the loan contracts with UPB, taking the land out of the loan collateral. As a result, UPB did not return the refinancing loan to the National Bank and also left it without the pledged land assets.
UPB provided the National Bank with unreliable information. For example, it concerned the quality of pledges. Thus, a number of land plots that acted as collateral for multi-million loans turned out to be ten times less than stated in the bank’s documentation, and some were not included in the inventory at all.
However, UPB did not repay the refinance, and in April 2015 the National Bank decided to check the bank. It turned out that the funds were clearly not enough to fulfill obligations to depositors and creditors of the bank. Therefore, on April 30, the NBU recognized the bank as a troubled one. According to the investigation of Forbes Ukraine, at that time “UPB worked around the clock for a week” and reduced assets from 0,16 billion USD to about 0,046 billion USD (as it turned out, they actually cost only 6 million USD) for just a few days.
May 29, 2015, an interim administration was appointed. The management of the bank knew about it, and therefore in recent days, before transferring the bank, the Deposit Guarantee Fund staged a real carve-up there; it plundered everything, up to the last chair. On the eve of the introduction of the temporary administration in the UPB (in favor of Anatoliy Yurkevych), the management of the bank led by Kargapolov made some void transactions that caused the damage of 0,086 billion USD. All the transactions were carried out without actual receipt of funds.
May 26-28, 39 contracts of assignment of rights of claim on loans were concluded between UPB and mentioned AURUM FINANCE. In other words, the liquid loan portfolio was transferred in favor of the company close to Yurkevych. 41 loan agreements were processed, the loan debt on which amounted to 8,7 million USD.
At the same time, seven surety contracts were concluded between UPB and Yurkevych, and the businessman carried out an artificial repayment of the credit debt of a number of related borrowers. In addition, Yurkevych registered two artificial transactions of alleged "financial assistance," as a result of which the credit debt of two more borrowers was repaid. The consequence of such insignificant transactions and transactions was the artificial repayment of credit debt in the amount of 15,7 million USD. Of course, the funds did not reach the bank accounts.
Two days before UPB temporary administration was launched, Rozvytok-2012, owned by Yurkevych, carried out a number of insignificant transactions aimed at artificially paying off the borrowers ’credit debt in the amount of 20,7 million USD. A similar transaction was made by another Yurkevych’s company (Kilchensky bereh) in the amount of 260,000 USD. At the same time, the so-called repayment took place without depositing the funds into the bank accounts.
To secure the interbank lending contracts, UPB concluded a number of contracts aimed at the alienation of real estate or rights of a claim for loans in the amount of 35 million USD, after which it lost the right to recover these loans from the debtors.
In addition, former employees of the bank, as well as persons related to the bank, made a number of insignificant transactions aimed at artificial paying off the borrowers' credit debt in the amount of 1,75 million USD.
Well, the icing on the cake was a quick “sale” of the real estate and movable property of the bank in the last days of May 2015. They have sold everything for 5 million USD, without conducting an expert assessment of prices. They have even sold licensed software. Of course, this transaction took place without crediting real funds to a correspondent account or cash in the bank's cash office. May 29, the Deposit Guarantee Fund has already got an empty bank.
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Today, 99.5% of UPB assets are negatively classified. The securities portfolio and loan portfolio are unsatisfactory. According to the documents, the book value of the UPB assets amounted to 46 million USD, but the assessment carried out by independent experts showed that the cost was overestimated by 8 times.
Anatoliy Yurkevych tried to prove in court that he was not a part of UPB, although the National Bank called him the real owner of a financial institution, and it was Yurkevych’s company Milkiland-Ukraine that was a guarantor of a stabilization loan.
All these schemes and theft are being investigated by the Security Service of Ukraine.