As evidenced by the relevant ruling of the Pechersk district court of Kyiv obtained by Censor.NET, the pre-trial investigation found that Privatbank employees colluded with the National Bank of Ukraine officials, owners and managers of several firms, including Kroll Associates, to siphon off funds from the state-owned Privatbank by granting knowingly loss-making loans to firms in exchange for a 3-5 percent kickback.
Kroll Associates U.K. Limited screened Privatbank for possible frauds prior to its nationalization, when the bank was still owned by Ihor Kolomoiskyi and Hennadii Boholiubov.
Between mid-2015 and mid-2016, Privatbank, the largest bank in Ukraine, handed out over US$ 1 billion in loans to firms owned by seven top managers and two subordinates of its owner at the time, Ihor Kolomoisky, according to a copy of its 2016 loan book reviewed by a reporter for Organized Crime and Corruption Reporting Project (OCCRP).
As reported, the Prosecutor General's Office has initiated a case into bringing Privatbank to insolvency on July 4, 2017.
Bank's Board Chairman Oleksandr Shlapak said 36 loans were signed by the former chairman of the board, Oleksandr Dubilet, with him exceeding the powers. The National Bank was provided unreliable data on uncovered credit risk and undeveloped reserves, and borrowers were not checked for relatedness, their financial position was artificially overstated.
On Dec. 18, the Cabinet of Ministers announced its decision to nationalize Privatbank, the largest privately-held bank of Ukraine. The government intends to issue 30-year domestic government loan notes worth 150 billion hryvnia ($5.54 billion) and become a 100-percent owner of the bank. The bank's first deputy CEO announced the decision was made after an unprecedented information attack on the bank and a threat it posed to its clients. The bank's leadership assured the clients their savings will be safe, naming it the key condition in the talks. In his turn, Minister of Finance Oleksandr Danyliuk confirmed the clients' money will be safe and protected by the state. Due to the nationalization procedure, Privatbank halted corporate transactions for one day, till 9 a.m. Dec. 20.
According to the National Bank of Ukraine, Privatbank needs 148 billion hryvnia in additional capitalization. The finance minister said that after Privatbank is stabilized, the state plans to sell it. In turn, President Poroshenko said the state guarantees safety and integrity of the client's funds.
The decision on the Privatbank nationalization has been supported by IMF, EBRD, the G7 countries, the EU and the U.S.