Vadim Novinsky
Ordinary investors and Ukrainian entrepreneurs will pay for the conflict between the oligarch and the government.
This week, the Kyiv Commercial Court is scheduled to rule on the Deposit Guarantee Fund's lawsuit against billionaire Vadym Novinsky's Cypriot company, Yernamio Consulting LTD, and minority shareholders of Forum Bank for approximately UAH 2,3 billion. Forbes investigated why the Forum case is politically motivated.
What happened to Vadim Novinsky's bank?
Bankers at Forum Bank are calling them practically a "prisoner of conscience" in the hands of the Ukrainian financial administration, represented by the National Bank and the Deposit Guarantee Fund. As a reminder, a temporary administration was appointed at Forum Bank on March 14. This decision came as a surprise to both bankers and DGF employees. The bank did have problems, but they were incomparable to the behavior of some other financial institutions, which have been defaulting on their clients for months. Indeed, virtually all of Forbes' sources indicate that the reasons for declaring the bank insolvent were largely political in nature.
By the time the temporary administration was installed, no significant amount of valuable assets had been withdrawn from the bank, and the Deposit Guarantee Fund (DGF) found itself in the hands of a fully functioning bank. "We've never been involved in a bank like this before," noted a DGF employee after reviewing the bank's assets.
Few could have predicted that the bank would end in liquidation. Almost immediately, former NBU Governor Stepan Kubiv announced that three investors were vying for the bank. According to Forbes, Prime Minister Arseniy Yatsenyuk advised Kubiv not to overthink things. If the owner is ready to save his bank, then there's no point in refusing. However, for three months, the parties tried to reach a consensus on saving the bank. They were unable to reach a common denominator. Before the bank's liquidation, Alfa-Bank was chosen as a potential investor, but at the last minute, it pulled out of the deal.
As Forbes previously reported, the parties ultimately became embroiled in legal proceedings from the start of the liquidation. Vadim Novinsky wanted to challenge the liquidation decision. The Deposit Guarantee Fund, in turn, attempted to sue the owner for assets to cover payments to depositors. At one point, it seemed the Pechersky District Court was indeed determined to side with the Deposit Guarantee Fund.
But on September 5, the freeze on Vadim Novinsky's assets was lifted. The court denied the Deposit Guarantee Fund's claims. Forbes sources admit that the decision was made even before the trial. "A decision was drafted the day before the hearing," says one of the participants in the case.
This is confirmed by the fact that neither Pavel Shevchenko, director of the legal department of the Federal Deposit Insurance Fund (FGV), who had previously represented the FGV's interests, nor a third party, who had filed separate claims on behalf of the plaintiff, appeared at the hearing. "Vadim Vladislavovich settled his dispute with the Presidential Administration," said a participant in the proceedings, speaking on condition of anonymity.
The trial is also undermined by the fact that the case was heard by the infamous Judge Serhiy Vovk, who has been "passed along" with politically motivated decisions in various cases. Judge Vovk's "accounts" include the conviction of Yuriy Lutsenko and the eviction of teacher Nina Moskalenko from her modest home, located among the elite mansions in Kyiv's Pechersky district.
The Fund must file an appeal, but the Fund no longer shows much enthusiasm for the process. Following this decision, the Fund's administrator, Vasily Pasechnik, even began to consider resigning.
According to Forbes, the Kyiv Commercial Court will also rule in favor of Vadym Novinsky in the 2,3 billion case. The challenge to the bank's liquidation also failed: the parties, as they say, "stayed their ground." The victims of such agreements are the bank's depositors, whose deposits were not covered by the Deposit Guarantee Fund's guarantees, and the legal entities that suffered significant losses due to the bank's liquidation.
"The bank's clients included over 100,000 legal entities, including large and medium-sized companies, as well as private entrepreneurs from across Ukraine," states the business plan for the transfer of all assets and some liabilities of the Forum Bank depositor initiative group. Medium-sized entrepreneurs and depositors with lost deposits have unsuccessfully attempted to reach out to various government agencies to transfer the assets to the state-owned receiving bank.
The logic of the business plan is quite simple: now is not the best time to sell off Forum's assets. Therefore, the initiative group proposes that the state take over the bank's assets at a valuation of 43% of the book value, which would amount to UAH 5,1 billion and cover deposits of over 200 million. Depositors are also willing to renew their deposits for longer terms.
The initiative group's plan does not envisage funding from the Ukrainian state budget. However, officials interviewed by Forbes are quite skeptical about such prospects. However, Forum is the only bank being liquidated whose asset sales would be sufficient to cover the Deposit Guarantee Fund's expenses for paying out guaranteed deposits.
Alexander Moiseenko, Forbes
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