Igor Kolomoisky
PrivatBank, the country's largest bank, received refinancing from the NBU and spent over 11 billion hryvnias on loans for failed transactions. An investigation by Glavkom revealed that the money ended up in the accounts of foreign companies, and the bank's lending scheme appears to make its return to Ukraine unlikely.
However, bank co-owner Igor Kolomoisky may have little cause for concern. Three dozen little-known borrowers, as well as their foreign partners, into whose accounts the billions were subsequently transferred, are, ironically, longtime acquaintances of the Privat business group. Therefore, a logical question arises: is this a scheme to funnel money abroad?
Prehistory
PrivatBank suffered more than others from Russian aggression. The annexation of Crimea alone cost the financial institution over a billion hryvnias—the bank estimated its investments in the peninsula at that amount. The losses were mitigated by the state. In the first half of the year, the NBU issued the largest refinancing loan to PrivatBank. Media estimates ranged from 11 to almost 15 billion hryvnias. Kolomoisky's bankers did not deny these figures.
As Glavkom has discovered, liquidity and asset problems did not prevent Ihor Kolomoisky's bank from handing out billions in loans for various transactions after receiving state funding. The Unified Register of Court Decisions contains three dozen identical lawsuits from little-known PrivatBank borrowers totaling over $1 billion (equivalent to 11,6 billion hryvnias). All of these loans were issued in the summer of 2014 after the bank received a comparable amount of state financial assistance.
According to the Register of Court Decisions, each of these borrowers (see table) has a similar story: having taken out loans from PrivatBank—some for $30 million, others for $50 million—the companies made 100% prepayment to UK suppliers. However, the foreign partners failed to deliver the goods on time. As a result, almost 10% of the refinancing amount for the country's banking system (the NBU has issued 142 billion hryvnias since the beginning of the year) ended up outside of Ukraine.
At the same time, PrivatBank's chances of compensating for its losses are close to zero, since the collateral for the loans issued in this case is non-existent goods.
Factage
The examples of Faboris and Viitela illustrate what failed transactions are like.
Last summer, these companies signed contracts with a London-based partner, Trade Point Agro Limited, worth $51,5 million and $52 million, respectively. The British company committed to supplying each of them with approximately 25 metric tons of polyethylene terephthalate (lavsan). This material is used in food packaging, as well as in the manufacture of X-ray films, tires, and beverage bottles. The deals were financed by PrivatBank, which received the property rights to the goods as collateral. The funds were transferred to the supplier shortly thereafter, but the polyethylene never arrived in Ukraine.
It was not possible to obtain comment from the borrowing companies on the reasons for the contract disruptions. The top management of the companies contacted by Glavkom was either absent or did not respond to the request.
A Faboris employee who answered the phone promised to forward Glavkom's questions to higher-ups. Top management was also absent from the office of Rudnex, the company that transferred Privatbank's $40 million to London. The executive secretary, who identified herself as Olga Romanovna, promised to forward the publication's questions to her superiors. At the time of publication, no responses had been received.
Left without goods and money, the borrowing companies went to court. There, they demanded that the unscrupulous suppliers repay their debts and, separately, terminate their collateral agreements with PrivatBank.
Formally, the largest bank found itself in a stalemate: having handed out billions, the financiers received in return only property rights to a product that does not exist.
Who ends up winning?
However, for the bank's co-owner, Igor Kolomoisky, things are not as bad as they might seem at first glance.
The fact is that many of Privatbank's "failed borrowers" have much in common with the Dnipropetrovsk businessman's Privat Group. For example, Real-Standard sold its stake in Igor Kolomoisky-controlled Ukrnafta to Merista (a company listed as a Privatbank investor) five years ago. Viglon, Investgroup, Vesta-Company, and Inkeria were involved in the battle for Kyiv's Mir Hotel, which was waged by Privatbank structures. A year ago, Transmoloko and Tekhspetsmontazh, along with Privat Intertrading, were involved in a criminal case against a private company suspected of tax evasion.
Privatbank borrowers share more than just a common past. As Glavkom has discovered, some of them share the same founders, the same place of residence, and even the same lawyers. For example, according to the Information Resource Center, the Dnipropetrovsk companies Faboris, Campbell, Tekhspetsmontazh, and Rudnex have common owners from Belize and the Virgin Islands. The offices of Intorno and Orbela are located in adjacent rooms. Solmbridge and Inkeria share offices in Dnipro. The cases of some of the companies on this list are handled in court by the same people: for example, the interests of Faboris, Inkom 2001, Rudnex, Solmbridge, and Rapit are represented by a lawyer with the initials A.I. Lyubchenko.
Unscrupulous British suppliers also had overlapping interests with Privat. For example, the court records show that Trade Point Agro Limited had a contract with the Zaporizhzhia Oil and Fat Plant for several years. The latter is also linked in the media to the Dnipropetrovsk governor's financial and industrial group. According to the documents, the Ukrainians supplied vegetable oil to the Europeans, in exchange for palm oil. The partners resolved monetary disputes through mutual settlements.
Such coincidences may indicate that "problematic" borrowers may not actually create financial difficulties for Privat's owners, but rather the opposite...
According to capital.ua, PrivatBank's total refinancing debt as of July 1, taking into account previous years, amounted to UAH 18,1 billion.
Data: Unified Register of Court Decisions.
P.S. Glavkom attempted to obtain a comment from PrivatBank itself. However, our efforts were futile, even though we know that all inquiries from the financial institution were received.
Perhaps the bank has been writing us a legally sound version of events all week? If so, Glavkom is prepared not only to review it but also to publish it, perhaps to dispel the suspicions expressed in this article.
PPSA few hours after publication, the financial institution's press secretary, Oleg Serga, wrote on Facebook that a response to Glavkom's inquiry had been previously provided, but the editorial staff had not used it. Unfortunately, this is not the case. The editorial staff email address from which the information request was sent does not contain a comment from PrivatBank. Serga simultaneously posted the comment on social media. Below is the financial institution's representative's full comment:
“PrivatBank fully compensated for the decrease in the volume of funds in the accounts of individuals and legal entities due to the political crisis and military actions in the East of Ukraine using its own funds (22,4 billion UAH) and refinancing provided by the NBU.
Since the beginning of 2014, the volume of funds in the accounts of individuals and legal entities has decreased by UAH 36,8 billion (in hryvnia equivalent), including deposits and accounts in hryvnia by UAH 10,9 billion, the volume of dollar deposits and customer accounts has decreased by $1,64 billion, in euros by EUR 267 million.
PrivatBank covered the outflows using its own funds, including attracting more than UAH 10,1 billion through the repayment of loans to legal entities and individuals, UAH 4,3 billion in the bank's funds in a correspondent account, and by reducing the volume of interbank transactions by UAH 8 billion, as well as refinancing from the NBU.
As of November 1, 2014, the amount of refinancing received by the bank from the NBU was UAH 17,597,950,768.
Dynamics of changes in the volume of NBU refinancing (account balance):
12/31/13 — 3,472,210,000 UAH
12/31/13 — 3,472,210,000 UAH
12/31/13 — 3,472,210,000 UAH
12/31/13 — 3,472,210,000 UAH
+ data on all financial indicators. The commentary was prepared today after the audit of the balance sheet indicators as of November 01.11.
Fedor OrischukCommander-in-Chief
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