There are many skeletons in PrivatBank's closet. The first of these was planted when the bank was founded, and then more were steadily added. But the most compelling skeletons, in my opinion, were planted by former NBU heads Valeriya Gontareva and Kateryna Rozhkova. Published on the website Business Censor.
These skeletons cost us all over $10 billion. First, the National Bank stood by silently for three years (2014, 2015, and 2016) as PrivatBank owners Ihor Kolomoisky and Gennady Bogolyubov siphoned billions of dollars out of the bank, doing nothing to stop it. Then, the NBU did everything it could to carry out the nationalization under terms unfavorable to Ukraine. And when the state nationalized PrivatBank for 155 billion hryvnias, it did nothing to return taxpayers' money for the third time.
The latest skeleton is, one might say, a product of the connections of its predecessors. PrivatBank's new board is simply sitting on a portfolio of government bonds, which the Ministry of Finance injected into the bank during the 2016 nationalization. The state pays billions in interest on these bonds every year, while the board and supervisory board are scheming to award themselves bonuses, supposedly for good management.
PrivatBank holds over UAH 155 billion in index-linked government bonds, and it monetized UAH 27 billion worth of these securities with the NBU. PrivatBank receives 10,5% annual interest on the remaining UAH 128 billion from the Ministry of Finance—over UAH 13 billion annually. This represents half of the bank's declared profit for 2020—UAH 25,3 billion. Without this money, the bank would likely be unprofitable.
The bank's clients note that the institution has not only stopped implementing convenient products, but is actively losing previous developments. Well, God bless them, the products. The only thing required of PrivatBank's new management was to win the lawsuits against PrivatBank's former owners. But there's nothing to brag about. The responsibility for this lies not so much with them as with the NBU, which created a ton of problems in its time.
Today, it seems like the entire world is fighting for Ukraine's interests, except for us. Last week, the US imposed personal sanctions on Kolomoisky. Admittedly, a travel ban is nothing serious.
The oligarch's key vulnerability—the PrivatBank case—remains untouched, despite ongoing trials in Ukraine, London, and the United States. It's worth remembering that PrivatBank's supervisory board and management were appointed by our international partners. While declaring a fight against the oligarch, they're merely pretending to fight for the return of stolen funds. Even if they manage to recover assets from Kolomoisky and Bogolyubov, it's clear no one will return them to Ukraine.
It's more than strange. An entire country was robbed of $10 billion, and no one is responsible. Quite the contrary, Kolomoisky secured a court ruling in Ukraine back in 2019 that the nationalization of PrivatBank was illegal. Since then, he's been hinting that he wouldn't mind receiving another $2 billion in compensation from the state for the unjustly stolen bank. Is it nonsense? Absolutely. But it happened before our eyes. Kolomoisky's further advancement was allegedly halted by the passage of the "anti-Kolomoisky" law.
How could this have happened? I'm certain there was some secret agreement between Gontareva, Rozhkova, Poroshenko, Kolomoisky, and several IMF employees. And it appears Valeria Gontareva and Kateryna Rozhkova played a significant role. Rumors are circulating in banking circles that Rozhkova has begun acting entirely in Kolomoisky's interests, helping to siphon off assets, and the media attacks against her are simply a distraction from the real motives. Isn't that true? Why?
WHAT THE IMF AUDITORS FOUND
The Memorandum signed between the International Monetary Fund and the Ukrainian government in April 2014 included a special section on financial sector recovery. The following month, in an attempt to obtain at least some information on the state of affairs, the NBU began an assessment of the largest banks. This was carried out by specially selected auditors. Specifically, PrivatBank's financial situation was audited by PWC, but its data was later found to be unreliable.
The IMF was clearly unsatisfied with the audit results, but it took temporary measures. I suspect the IMF, upon accepting the report, recognized that integrity and audit were slightly different things. And already in 2015, at the IMF's instigation, the National Bank began independently verifying the true state of affairs in banks. For this purpose, in 2015, the IMF deployed three teams of people to the National Bank, selected by specially hired international recruiting agencies.
Apparently, there was also a lack of trust in the National Bank. Three groups included employees who had never worked in the NBU system before and were therefore not imbued with the regulator's spirit of corporate solidarity. They were involved in:
— on-site inspections (led by Tatyana Lebedinets)
— checking the quality of banks' assets (Anna Murina)
— diagnostics of related parties of banks (Alexander Zavadetsky).
All three, each on their own, discovered Kateryna Rozhkova's corruption and were immediately fired. All three testified to the NABU about this, but we have yet to see any action from the authorities.
They then developed several new procedures that allowed for a more realistic assessment of the situation. In particular, the asset quality assessment procedure was called "stress tests," and the methodology for this was specifically developed from scratch and is still used today.
The stress test was designed to assess the bank's resilience in the event of a financial market shock, where some clients default on their loans. The methodology incorporated several advanced provisions that the NBU had not previously used. Specifically, for the first time, banks' indicators were calculated not separately, nor even in conjunction with related insurance and financial companies. Instead, they were assessed alongside large borrowers who had received the largest loans.
The same applied to the criteria used to identify affiliated parties—bank owners and their close associates. By law, lending to insiders was practically prohibited. But loopholes were found in the existing regulations, and everyone was siphoning off billions. It was no secret that this was a common method of siphoning off money: loans were issued to shell companies, the owner took the money, and it was never repaid. The bank would then extend, refinance, cancel, or write off the loans, all the while "fabricating" the financial statements.
Previously, the NBU turned a blind eye to such games, allowing billions to be issued to seemingly unrelated companies. Since June 2015, related-party lending has been under scrutiny to determine who is actually receiving the loans. PrivatBank's related-party map, for example, appeared in late 2015 and caused quite a stir within the Presidential Administration.
The IMF "paratroopers" only worked for a couple of years before the NBU system forced them out. But they managed to produce excellent results.
Result one. A tacit conspiracy between banks and the NBU, with the participation of auditors, was uncovered. Moreover, the "bank collapse" proved that the auditors' assessments were often completely unfounded. The liquidated banks were shells. On paper, the 100 liquidated banks had almost 400 billion hryvnias in assets and excellent collateral, but in reality, they failed to recover even 100 billion.
Result two. The banks surveyed had an unhealthy asset structure. Loans were often issued using shell companies, and collateral was often either insufficient or fictitious. Moreover, the volumes of such loans were so enormous that normal loans were more the exception than the rule.
Based on the stress tests, banks were divided into healthy, remediable, and hopeless. Remediation was reserved for banks that engaged in minor tinkering. For example, state-owned banks had an exorbitant amount of loans to politicians' firms, some of which were poorly secured. Many banks lacked adequate collateral, or the financial condition of major clients prevented them from servicing their loans (naturally, since shell banks had no cash flow).
Result three. The volumes of loans issued to related parties were simply off the charts. The new methodology confirmed that a huge number of banks were captive, meaning they served primarily the interests of their own group.
Many banks violated related-party lending regulations, exceeding legal limits by dozens of times. Moreover, these loans were often backed by fictitious or insufficient collateral. This means that repayment of these loans would be impossible in the event of bankruptcy.
PrivatBank and Platinum were in particularly poor shape. Almost all of their large loans were issued to themselves.
Based on the work of the "paratroopers", some of the holes began to be closed as early as 2015.
The NBU Board adopted significant changes to its own regulations. At the IMF's instigation, the regulator overrode ambiguous provisions that allowed for almost no collateral for loans. The most decisive changes were scheduled to take effect on January 1, 2017. Just remember this fact; it's very important.
Moreover, lending to related parties was finally cracked down on. The Rada passed a law strengthening the NBU, and the National Bank passed two resolutions: No. 314 (secret) and No. 315. The process of unbundling (separating banks from their owners' businesses) began.
WHAT WAS DISCOVERED IN "PRIVATE"
So, the banks' sins have been exposed. The worst offenders of all were PrivatBank and Platinum. The latter was recently headed by Kateryna Rozhkova, who by then had already transferred to the NBU and taken over... banking supervision.
The Privat case proved particularly unique. It was found to have extensive violations both in the quality of its assets and in its lending to related parties.
It turned out that at that time (2015), the bank had almost no collateral for the loans it issued. More than 200 large borrowers turned out to be essentially shell companies and shell companies.
Stress tests showed that these companies didn't even have the cash flow to service the loans they received. In other words, they were paying interest solely because Kolomoisky wanted it that way. If problems arose, they would immediately stop paying, making it impossible to trace the trail.
Moreover, the loans they received had almost no reliable collateral. That is, instead of factories, real estate, or inventory, they were secured by castles in the air. Yet the bank itself described this collateral as incredibly high-quality. This allowed it to record these loans in its financial statements as oversecured and build up paltry reserves against them. Another know-how of Privat's managers was the accrual of profits on loans in future periods. All this led to a paradoxical phenomenon: despite the abysmal asset quality, Privat was profitable and even regularly replenished its capital with this fictitious profit.
In this noble endeavor, Privat was assisted by an auditor from the Big Four. He recognized those same bad loans as good ones—though, really! And the National Bank followed suit.
But that's far from all. Almost all of PrivatBank's largest borrowers turned out to be related parties! That is, more than 200 recipients of large loans were companies belonging to Kolomoisky and his associates.
In other words, almost the entirety of Privat's gigantic corporate portfolio—137 billion hryvnias—is self-insured. The result surprised even the IMF. They, of course, expected that insiders were being lent more than permitted. But for almost all major borrowers to be insiders was a shattering blow to humanity.
In addition to self-loans, PrivatBank discovered deposits with higher interest rates for its own clients (200%). Legally, this is considered the same type of insider trading as self-loans.
And one more thing. As soon as the NBU presented Privat with the facts, the offshore companies began changing almost weekly. Just yesterday, the scheme featured companies 1 and 2, and now it includes companies 216 and 183. National Bank specialists had to regularly redraw Privat's asset schemes. It must be said, they managed to do so.
What's next?
The collected evidence proved to be sound. Incidentally, two years later, Kroll relied on data previously obtained by the IMF "paratroopers." They merely verified these calculations and proved that everything had been calculated correctly.
Based on this, Kolomoisky could have been cornered and the bank could have been rehabilitated. Otherwise, there was every reason to impose a temporary administration.
Nationalization might not have happened if the oligarch had been faced with a simple choice: temporary administration followed by liquidation, or bank rehabilitation.
By choosing recovery, Kolomoisky would be obliged to:
— within a few months, provide good collateral such as factories, Ukrainian or foreign real estate;
— and then, over the course of several years, clear the bank of its own loans. These loans could be repaid, sold to other banks, or secured with good collateral;
— add a few billion to the capital so that it meets the standards (Kolomoisky had money, we remember);
— return refinancing to the NBU.
If the National Bank had acted this way, PrivatBank would still be a private bank, but would operate within the legal framework. And if Kolomoisky had thwarted the program, PrivatBank would have been nationalized on entirely legal grounds. Then law enforcement began to pursue the oligarch based on information obtained by the IMF's "paratroopers."
But that's if it's legal, of course. As we'll see later, the NBU only pretended to follow the law. But then it did the exact opposite.
In February 2016, the NBU entered into an agreement with PrivatBank, obligating it to improve collateral. Later, in a separate letter without any figures, the bank's owners agreed to reduce the amount of loans they extended to themselves until the summer of 2017. Everything seemed to be in order.
But no. Numerous flaws were discovered in the NBU's actions. Let's take a look at some of them:
— the inspection data were ready at the end of 2015;
— there was still a whole year left before nationalization;
— However, for an entire year, the National Bank failed to compel Kolomoisky to provide adequate collateral. Thus, it allowed a hole to exist that would later drain 155 billion hryvnias of taxpayers' money.
— The National Bank and law enforcement agencies DID NOT INVESTIGATE the schemes through which Kolomoisky withdrew $5,5 billion, and that is why today the oligarch is winning lawsuits that he should have lost;
— The National Bank INCORPORATES LEGAL ERRORS in the nationalization mechanism and carried out the procedure poorly, which is why Kolomoisky is currently defeating PrivatBank, the NBU, and the Ukrainian state in court.
There is every reason to believe that during this period—from late 2015 to late 2016—underhand dealings were taking place. The NBU leadership, armed with ironclad facts, chose not to follow the law and logic. Instead, it did the opposite, thereby creating $10 billion in problems for the entire country.
Why did they do this?
Let me offer my guess. As we know, personnel is everything. We already know about Gontareva. But it would be unfair to ignore the person responsible for banking supervision at the time—Ekaterina Rozhkova.
GONTAREVA AND ROZHKOVA
Sometimes an official's background explains his actions.
Valeria Gontareva was undoubtedly a strong and authoritarian leader. Personally, I expected her to be an excellent head of the NBU. Instead, she turned out to be a Grand Inquisitor, burning banks at the stake, declaring them witches. The banks were certainly not perfect, but to destroy half the system, and to do so with such damage to the economy that Ukrainians lost 400 billion hryvnias—Gontareva's colossal energy was channeled in some bizarre way.
Rumor has it that she continues to influence the NBU through people she appointed. Specifically, her former deputy, Vladislav Rashkovan, represents Ukraine at the IMF's U.S. office. And until recently, Kateryna Rozhkova was in charge of the Ukrainian National Bank. Now that her powers have been curtailed, Rozhkova is undeterred and is seeking support from foreign embassies and the IMF.
Rozhkova had previously worked at the National Bank in 2008-2009, heading oversight. In 2015, she returned and also took over oversight. The "Bankopad" scandal was, in fact, more her brainchild than Gontareva's.
If Valeria Alekseyevna became a saint, then Ekaterina Viktorovna became her dark alter ego. We learned how she managed the surveillance from the so-called "Rozhkova tapes."
In 2016, recordings of conversations between Rozhkova and other bankers surfaced online (the release of the tapes benefited Kolomoisky — BC). In them, she negotiated blatantly corrupt matters, for which she should have been immediately fired and placed under investigation by the National Anti-Corruption Bureau of Ukraine (NABU). But, strangely, the National Anti-Corruption Bureau deemed these recordings insufficient evidence of guilt by the head of the NBU's oversight agency. The Security Service of Ukraine (SBU) also decided not to pursue Rozhkova.
But something even more surprising is that at that time, the so-called Banker's Reputation Law was already in effect. It stated that if a banker managed a bank that had fallen on hard times, they were automatically disqualified from working in the banking system.
Rozhkova returned to the NBU from her position as acting chairperson of Platinum Bank, and most of the "Rozhkova tapes" are dedicated specifically to Platinum. While working at the NBU, Rozhkova actively delayed the bank's insolvency declaration by helping shareholders build up capital, during which time the bank was completely gutted. She committed direct violations, including attending NBU board meetings regarding Platinum and influencing decisions (even though this is prohibited due to conflicts of interest). Well, I don't know. Listen to the tapes and read the official documents. What other shadows do you need? What more could you want?
However, this did not stop her from heading the supervision.
WHAT HAS THE NATIONAL BANK BEEN DOING ALL YEAR?
As I said, what followed was a strange year. Little is known about it. We can only compare what could have been and what happened.
At the end of 2015, IMF "paratroopers" handed Gontareva and Rozhkova a full report on PrivatBank. The time had come to act. And action had apparently begun.
According to the theory repeatedly advanced by Kateryna Rozhkova in her interviews, the NBU's leadership trusted the wily Kolomoisky, who then scammed the trusting ladies. But all these statements seem very much like an attempt to shirk responsibility.
First, what immediately catches the eye. Let's assume that even over the course of a year, Kolomoisky couldn't reduce the share of insider loans, which were calculated at 137 billion hryvnias. But he certainly could have provided adequate collateral for these loans within a month. Instead of cashless offshore companies, collateral could have been, for example, shares in ferroalloy plants, the Ukrtatnafta refinery, a stake in Ukrnafta, gas stations, or (who knows) shares in the 1+1 TV channel. Then, perhaps, the nationalization wouldn't have been necessary.
But instead of forcing Kolomoisky to provide adequate collateral for the entire loan portfolio, the National Bank did not do so.
Yes, he took out collateral, but only for refinancing. And refinancing isn't UAH 137 billion, it's just over UAH 20 billion.
Besides, what kind of collateral were those? Kolomoisky's personal guarantee appeared in the refinancing obligations. What?! The man who always said, "Only cowards pay their debts"? And this after the personal guarantees of Dmytro Firtash for Nadra Bank and Mykola Lagun for Delta Bank were revealed to be fictitious.
So what happened to the 137 billion? According to multiple sources, a document signed by Kateryna Rozhkova appeared, in which the NBU ordered PrivatBank to provide adequate collateral for loans from its largest borrowers. Two years later, Kateryna Rozhkova would confirm the existence of such a document in an interview. According to her, the agreement with PrivatBank's owners was reached in February 2016. It concerned the restructuring of loans totaling 119 billion hryvnias.
Instead of offshore companies, loans were supposed to be secured by "hard" collateral, which could be sold to pay off the debt if necessary. Once the document was issued, the collateral was exchanged—and things only got worse.
According to Rozhkova, PrivatBank failed to keep its word, and the situation worsened. "The bank failed to meet this challenge," she said evasively.
An audit completed in December 2016 revealed the bank's insufficient capital to the tune of UAH 198 billion. This, according to the NBU, is why the bank had to be nationalized.
Let's engage in critical thinking for a second. Let me ask: what kind of beast is this, "failed to cope"?
I readily admit that Ihor Kolomoisky screwed everyone in that situation. On the other hand, what was the NBU thinking all year? Did the whole team go fishing? Or maybe the respectable ladies believed Kolomoisky and stopped receiving the bank's daily reports? Why should we believe that PrivatBank could have walked free for a year and then, under the Christmas tree, keep its promise? That's a very strange way to put it.
It's far more likely that the NBU and PrivatBank's owners coordinated their actions. It's entirely possible that Gontareva and Rozhkova agreed with Kolomoisky to cover his back at the NBU, as Volodymyr Stelmakh, who chaired PrivatBank's supervisory board, had done until now.
Of course, we weren't involved, and this is just an assumption. But there is an indisputable fact. The NBU ordered it, and PrivatBank carried out a massive collateral swap. But their quality was poor, and it only got worse. Meanwhile, PrivatBank claimed it was fully complying with the NBU's orders. They claimed there were good collateral (not true), but the NBU ordered us to swap them for bad ones. That's why, when nationalization occurred, the state was forced to pump 150 billion hryvnias into the bank's capital—almost the entire loan portfolio. There was no collateral available to sell and reimburse the state for its expenses.
Wait, where's the real estate? Where did the rumors come from that PrivatBank used Bukovel as collateral? Indeed, there was Bukovel and UIA planes. There's even Kolomoisky's aforementioned personal guarantee. But instead of 170 billion hryvnias worth of collateral, Kolomoisky and his company only provided 35 billion hryvnias worth of collateral, and even then, they even withdrew some of that collateral.
These collaterals weren't secured by loans, but by refinancing, which PrivatBank received from the National Bank. The NBU has always been meticulous about refinancing, because if it wasn't repaid, prosecutors would come to the NBU board. Therefore, all banks, even the most blatantly shady ones, always had perfect refinancing collateral. This was a kind of banking ethics. But the NBU never bore any responsibility for the remaining loans; the prosecutor never approached it about them. Therefore, I think Gontareva and Rozhkova deliberately didn't insist that Kolomoisky provide 170 billion hryvnias in collateral. They only needed to cover their own backs, not the state's.
What am I getting at? The National Bank allowed Kolomoisky to avoid providing adequate collateral. Why? I don't know. But for a whole year, the NBU failed to demand liquid collateral from PrivatBank. Even though it could have done so in just a month. And this, incidentally, is directly the responsibility of Rozhkova as the head of banking supervision.
This relaxed stance has led to direct losses for us. Today, we're reaping the benefits of government officials' generosity. Not only has the state injected 155 billion hryvnias into the bank's capital, but the Ministry of Finance also pays over 13 billion hryvnias in interest on its own bonds each year. Thanks to this money, PrivatBank reports a profit. Although, in reality, it's not a profit. It's a profiteering at the expense of the budget. I find it extremely difficult to imagine something like this happening in Germany or the US.
THE PLAN TO REDUCE INSIDE ALSO FAILED
So, the NBU failed to improve asset quality. Perhaps it succeeded in reducing the share of insider loans? Perhaps it negotiated a reduction of 137 billion to 100, then 50, and then 10?
And this is a real detective story. The thing is, according to official procedure, the NBU was supposed to issue two documents. The first was about improving asset quality—the one I just talked about (it failed). And the second was about restructuring loans issued to related parties.
So, according to my sources, there was no second document regarding Privat.
On the other hand, Rozhkova said in an interview that Privat carried out an "uncoordinated transformation." Well, naturally. There was nothing to coordinate because there was no transformation plan.
This is a violation, not on Privat's part, but on the part of the National Bank. Oops...
The interview gives the impression that the bank did whatever it wanted, and the NBU couldn't do anything about it, simply "watching." But wait. Is the NBU a regulator or a spectator in the cold? It's the regulator. Or is it a spectator?
It seems to be a regulator. This means the NBU could do more than simply observe how the bank's owners manipulated insider loan documents. It could block any transaction, including the re-registration of documents. Furthermore, back in 2014, the bank appointed a permanent supervisor, who was located within the structure and was required to sign off on absolutely all major transactions. At many banks, the supervisor had the authority to halt transactions deemed questionable until the circumstances were clarified. Did PrivatBank's supervisor have such authority? Certainly.
What's the secret behind this softness of the unusually principled National Bank? Just recently, it had shut down nearly a hundred banks for far lesser offenses. And here it was, "watching and doing nothing."
WHY DECEMBER 16TH?
Now comes perhaps the main intrigue of the whole story. It's still unclear why the authorities were in such a rush to nationalize the bank on December 16, 2016.
After all, the sudden nationalization allowed the former owners and management to claim that the state had raided a perfectly healthy business. And then—killed it.
I can just picture Igor Valerich’s sly smile as he says in court: “They robbed me!”
But they could have waited just two weeks. As of mid-December 2016, Privat's audited financial statements looked good. However, a new asset valuation procedure would come into effect on January 1, 2017. Under it, the bank would immediately become insolvent, as the tricky provisions that allowed it to "fudge" its financial statements would no longer apply.
President Petro Poroshenko would still be delivering his New Year's address, but PrivatBank's capital, recalculated using the new formulas, would already be in the red. Right on New Year's Eve, while the holidays were still in progress, the state would have been able to legally install a temporary administration at the bank, only to nationalize it properly the following day. From a legal perspective, such an operation would have been far more justified.
But the authorities were in a hurry. And for some reason, instead of going the official route, they decided to nationalize based on... the Ernst & Young auditor's report. "At the time of nationalization on December 19, 2016, Ernst & Young confirmed the loan portfolio write-down of UAH 192 billion. Taking into account the bail-in (UAH 29,4 billion) and previously established reserves, the amount is close to the size of the 'transformed' portfolio," Rozhkova said in an interview.
What actually happened? It was an auditor-versus-auditor dispute. The NBU brandished the Ernst & Young audit and argued that nationalization was necessary. PrivatBank, in turn, brandished the PWC audit and argued that there were no grounds for nationalization.
It's unclear to an outside observer whose side to take. The court, too. Both companies are members of the "Big Four," and both have roughly equal reputations. And—crucially—at the time of nationalization, PWC's image was untarnished. The National Bank declared the company's valuation errors the very next year after nationalization. It appears the NBU chose the most unreliable basis for nationalization. Did Rozhkova understand this? Of course!
Kolomoisky simply gave a standing ovation to these actions by these "state managers." After all, in any court, the NBU's decision would have appeared biased and partisan. Simply their personal decision. If I were the oligarch, I would have paid a lot for the NBU to act in exactly this way.
Later, in numerous interviews, Valeria Gontareva and Ekaterina Rozhkova would say that panic should have been prevented. That the former owners should never have been allowed to withdraw their last money from the bank. This is all just a lyric.
In 2017, Rozhkova cited "lack of capital and liquidity" as the reason for the nationalization. But this isn't entirely true. Capital was healthy (according to PWC's audit). And liquidity was present because Privat was engaged in extremely shady transactions.
By mid-2016, the bank was no longer allowed to accept deposits from the public. PrivatBank was sanctioned and banned from accepting new deposits. But the bank found a way around the ban. Through its branches and even the Privat24 app, it began offering clients a new type of deposit. These weren't deposits with PrivatBank, but direct P2P (peer-to-peer) loans—from one person to another. In this situation, the bank acted as a kindly friend, bringing together buyers and sellers of money.
This scheme closely resembles outright fraud. A similar scheme was carried out at the time by Mykhailovsky Bank, whose shareholders were similarly assisted by Rozhkova. It also collected deposits through bank branches for a completely different entity. Like Mykhailovsky, Privat didn't inform its clients of the risks involved. After all, such "deposits" are not guaranteed by the Deposit Guarantee Fund. And if the bank goes bankrupt, no one will return the money. Privat collected over 5 billion hryvnias through this scheme.
The NBU's supervisory authorities knew about this but didn't intervene, saying there was nothing they could do. This lack of intervention cost Ukrainian taxpayers a significant amount of money. During the nationalization, those same 5 billion hryvnias were included in PrivatBank's deposits. Naturally, the bank's owners didn't return the money—the state budget paid for it instead. Were there any criminal cases related to these incidents? Of course not.
A STRANGE LETTER AND A STRANGE NATIONALIZATION
On December 16, the owners of PrivatBank wrote the now-famous letter to the Prime Minister, stating:
— asked the state to enter into the bank's capital
— they promised to restructure 75% of the insider loan portfolio within six months, and the entire 100% within another six months.
The second point already indicated that this was some kind of scam. Why would Kolomoisky and Bogolyubov simply hand over the bank to the state, and then take $5,5 billion from their pockets and give it to the budget?
Or did they really mean to repay insider loans totaling UAH 10 billion? After all, that's exactly how much (not UAH 137 billion) the auditors they hired, PWC, found at Privat. This is a contradiction that arose because the NBU board failed to sign an agreement with Privat's owners to restructure the insider loans. It turns out that the NBU's assessment uncovered these loans, but Privat's former owners refused to acknowledge them as their own—and so they continued to insist that PWC's audit report was the only correct one. Wow!
The letter from Kolomoisky and Bogolyubovat was more than strange. It guaranteed nothing. Accepting their offer was impossible. It was a Pandora's box.
But strangely enough, the letter had an effect. That same day (!), the state nationalized PrivatBank, committing a host of purely legal errors in the process.
Of course, this doesn't mean the parties involved are naive fools. Rather, it suggests that some kind of behind-the-scenes agreement existed. It likely occurred at the presidential level, which is why everything happened quickly and quietly. And, of course, the NBU was part of this agreement.
And while Prime Minister Groysman may have been unaware of the situation, Rozhkova, as the head of oversight, could have clearly demonstrated that Kolomoisky and Bogolyubov's promise to repay the entire insider portfolio within a year was a sham. That the nationalization would have been far more appropriate to take place not on December 16th, but on New Year's Eve. And so on.
But she remained silent. The nationalization took place. Essentially, Gontareva and Rozhkova supported a scam that resulted in losses for the Ukrainian budget. Although the National Bank could have insisted that PrivatBank's nationalization take place under terms favorable to the Ukrainian state.
A more than bizarre letter—legalized by the fact that it formed the basis for nationalization. Now it plays against PrivatBank and the state. Along with the battle of audit reports, the absence of a restructuring program, and the absence of objective evidence of Kolomoisky's guilt.
Guess what happened next. Do you want to understand why Gontareva and Rozhkova agreed to nationalization so easily?
Because the very next moment after the nationalization, the National Bank withdrew from the PrivatBank case. The reason was an alleged conflict of interest. The NBU was supposed to act as the main battering ram against Kolomoisky. But it didn't. Incidentally, it pulled this same trick many times during the "bank collapse." Since the bank's transfer to the Guarantee Fund, the NBU has maintained its innocence in any lawlessness that might have occurred there. It was no longer "its war."
Isn't this a song?
All this intrigue surrounding PrivatBank cost us first $5,5 billion, then UAH 155 billion, and then at least another UAH 13 billion every year. PrivatBank also regularly pays exorbitant fees to lawyers handling lawsuits against Kolomoisky in Ukraine, the UK, and the US. But so far, these cases have favored the oligarch.
And overall, it seems these courts will ultimately collapse. You never know, Kolomoisky might even get compensation, even though this is outrageous and a crime against taxpayers. So, the authorities benefit from stalling for time, so everyone forgets who Kolomoisky is and how it all happened. This means the courts can only be a defense mechanism. They could drag on for many years, because their purpose is to delay the actual investigation. And then either the donkey will die, or the US president will be re-elected.
Having combed through a multitude of sources, I'm left with the firm conviction that the authorities in the PrivatBank case not only committed a huge number of screw-ups, each costing billions, but also acted in a manner that was not in the best interests of depositors. Kolomoisky, of course, is also vulnerable. After all, his schemes for siphoning off money are quite easy to prove. If only there was a will. Moreover, it's not in his interests to win the final case to reverse PrivatBank's nationalization—that would mean having to dig up $5,5 billion. But Kolomoisky claims he didn't take any money.
The question remains: did Kolomoisky promise anything to Rozhkova? You'd agree, that would explain why the government isn't planning to win Kolomoisky's lawsuits.
It's surprising that Kateryna Rozhkova is now being actively defended by Ukraine's international partners. It seems to me that in any country, such actions would be considered damage to the state and would automatically lead to a corruption investigation.
Sergey Felt
FILE: Valeria Gontareva. The Glitter and Machinations of the Queen of Coins
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