Ukraine's oligarch Kolomoysky's real shot in turning his former bank

Author : Natalia Lebed

Source : 112 Ukraine

Kolomoysky’s bare-bones agenda is to terminate the courts both in Ukraine and abroad, his ultimate goal is to receive compensation or bargain for some business preferences
18:00, 15 April 2019

Open source

We have already talked about a chance of Ukrainian oligarch Ihor Kolomoysky to return his expropriated PrivatBank. After the first round of elections, these encroachments acquired clearer forms: the oligarch said that he did not claim the bank to be returned back, but was seeking compensation in the amount of 2 billion USD.

However, we have three news and all of them are good. First: the re-nationalization of Privatbank is still impossible, so this option should not be even considered. Second, compensation is possible, but unlikely, because it carries too many risks. Third: rumors about “puppet” are somewhat exaggerated. Presidential hopeful Volodymyr Zelensky, often associated with his business partner Kolomoysky, comes to the conclusion that he needs to win parliamentary elections. So, Zelensky’s Servant of the People party should not cause a sharp idiosyncrasy in the society, whose leader puts his hands into the pockets of the ordinary taxpayers to satisfy oligarch.

Related: Court delays consideration of Kolomoysky's lawsuit on purchase of Privatbank by Ukraine's govt

The presidential candidates are preparing for the political debates, the most important debates of spring 2019 would be held in the court. The district administrative court of Kyiv, having heard the parties to the conflict, on April 18 will put an end to the consideration of the claim on recognition of the nationalization of PrivatBank as illegal. Back in 2016, PrivatBank, one of the largest banks in Ukraine was recognized as insolvent. The state bought its shares for 1 hryvnia, and the owner went to such a deal voluntarily.

Subsequently, the National Bank of Ukraine has spent about 4,17 billion USD to stabilize the situation in a financial institution. Later on, the ex-owner of PrivatBank declared that the procedure was unlawful, it was violated, therefore, the value of the assets should be compensated. At the same time, Kolomoysky established the amount of compensation: 2 billion USD, motivating the figure by the fact that this amount of money was in the bank at the moment of its nationalization.

Kateryna Rozhkova, National Bank deputy chairman, refutes it. “The decision to nationalize PrivatBank should have been made much earlier. At the time of making this decision, a bank had negative capital and virtually had no liquidity.”

Related: Ukraine's oligarch Kolomoysky demands to return him USD 2 bn from Privatbank

Economist Oleksandr Okhrimenko notes that Ukraine does not have any legal framework for conducting renationalization.

For example, in December 2017, the High Court of London first accepted a lawsuit against Kolomoysky, his partner oligarch Hennadiy Bogolyubov and companies affiliated with them, and even issued an order to arrest the assets of oligarchs in the amount of more than 2,5 billion USD, but then decided that it did not have enough jurisdiction to handle this claim. However, the matter did not leave the limits of the kingdom. Now the case to be considered by the Court of Appeal.

As for Switzerland, local Themis is studying an episode related to debts on refinancing loans for 273 million USD. And in Ukraine, as already mentioned, the main intrigue revolves around the recognition or non-recognition of the nationalization of PrivatBank as illegal. However, in general, the Ukrainian courts are considering 150 lawsuits relating to the “PrivatBank issue.” So, for example, in March 2019, the Pechersk court of Kyiv seized the assets of companies associated with Kolomoysky’s and Bogolyubov’s Privat group.

Related: Record of Tymoshenko-Kolomoysky talk published: We will not settle down until we reach goal

Political suicide

On the one hand, oligarch Kolomoysky is fighting for his interests, and on the other, the state of Ukraine is fronting for its own. However, after a couple of weeks, the state might change its official head, but will Kolomoysky benefit from it? The rumors that Kolomoysky is controlling Zelensky are a bit exaggerated.

“I don’t care what would happen to Kolomoysky... PrivatBank is now a state organization, why should it go back to Kolomoysky?” the presidential aspirant said.

Perhaps Zelensky’s voice is still not very confident and not very convincing, however, the hypothetical leader of Ukraine will not use the so-called “telephone justice.”

Actually, the payment of 2 billion USD “would be a heavy burden on Ukraine’s budget.”

Kolomoysky’s real aspirations

In short, the final resolution of the dispute is postponed. However, does Igor Kolomoysky really want to take 2 billion USD from Ukraine's budget? The current year will be particularly tense for the state treasury, given the need to return 14.2 billion USD to Ukraine’s external creditors. We cannot cope with this task without the participation of the IMF. And in the Fund might negatively react to the squandering of the seventh part of our debt obligations.

Related: Wannabe prez Zelensky as Kolomoisky's bargaining chip in struggle for his lost business

However, we should not appeal to Kolomoysky’s patriotism here. Such an experienced player could start a scheme with a lawsuit not to “punish” Ukraine, or to get revenge on Poroshenko. Experts say that the real goal of Kolomoysky is connected with some other business interests.

“Here, the “ask more, and you’ll get exactly what you need” principle works. Kolomoysky’s bare-bones agenda is to terminate the courts both in Ukraine and abroad. For Kolomoisky, international courts are a constant danger that his assets can be arrested again. That is, the bare-bones agenda is to neutralize such risks. And the ultimate goal is to receive compensation or bargain for a business preference,” Oleksiy Kushch, financial analyst, states.

In addition, Kolomoysky’s perseverance might mean a trump card in the sleeve for a more advantageous negotiating position on his Ukrnafta, Ukraine’s largest producer of oil and gas (controlled by Kolomoysky, - ed.), says Kushch.

Related: Russian millions and oligarch Kolomoisky: Secrets of Ukraine's wannabe prez Zelensky

However, the desire to obtain moral satisfaction also cannot be completely discounted. Vadym Karasiov, director of the Institute of Global Strategies, says that PrivatBank is a special pearl in Kolomoysky’s empire. And this is not only about the financial side of the issue. He created this bank and implemented the plan, drawing modern management to the development of the idea.

Perhaps he is right, and perhaps those who believe that the administrative justice is just a platform for further bidding. Big business is incompatible with big passions, and therefore, if Kolomoysky seeks to get out of the situation with the least losses and the greatest profit, he probably should forget about his “special pearl.” At least for the sake of preserving the other “values.”

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