Investigation and details of the Ukrainian oligarch's scams
In the inner circles of billionaires, oligarch Oleh Bakhmatyuk is known as an unscrupulous con man. One of the richest men in Ukraine, he is known primarily for his agribusiness. The "Egg Baron," Bakhmatyuk, is the owner of the AvangardCo agricultural holding and the Ukrlandfarming group, which together comprise two dozen poultry farms, six feed mills, six sugar factories, and 125 farms. He is a monopolist, owning 650,000 hectares of land and 66000 head of cattle. For many years, Oleh Bakhmatyuk has also been active in the financial sector, where he is nicknamed the "Bank Vacuum Cleaner." The oligarch earned this nickname for defrauding over 400,000 depositors of two bankrupt banks—VAB and Financial Initiative. Analysts estimate he siphoned off around 20 billion hryvnias from there. Now, Oleh Bakhmatyuk is trying to master a new venture – creating a maritime industrial and transport network. Let's discuss the "business executive" who stole billions from the country in detail.
"Oligarchic banking is like a 'vacuum cleaner' of money from the population. It lends it out to itself and builds its phony empire on it. Then comes the time to pay it back, but it doesn't want to," said NBU Governor Valeriya Gontareva, describing Oleg Bakhmatyuk's financial business.Read more about it in the article Valeria Gontareva. The Glitter and Machinations of the Queen of Coins).
As a banker, Bakhmatyuk defrauded not only 400,000 depositors but also the state. He cynically bankrupted both of his banks by taking money from financial institutions (read: himself) for an agricultural business and then not repaying it. The money used to refinance the bank from the NBU similarly ended up in the oligarch's pocket. At the end of last year, Bakhmatyuk's bank, Financial Initiative, owed the NBU almost 9,6 billion hryvnias, while VAB owed 5,2 billion.
Despite irrefutable evidence of illegal withdrawal of funds from these financial institutions, Bakhmatyuk still feels at ease.
HISTORY OF THE BANK "FINANCIAL INITIATIVE"
"A captive bank that served Bakhmatyuk's companies and other clients at the same time," is how the chairman of the foreign bank's board describes Financial Initiative.
The bank was founded in 2005 but achieved little success. However, bankers unknown in the industry managed to propel the institution into the top 20 banks within ten years. In terms of assets (19,2 billion hryvnias), Financial Initiative ranked 16th. It issued 15,6 billion hryvnias in loans to legal entities. However, the bank was reluctant to lend to the public, with individuals borrowing only 2 million hryvnias. Bakhmatyuk, however, actively accepted deposits—5,2 billion hryvnias from individuals and 1,5 billion hryvnias from companies.
The bank specialized in lending to farmers and spared no expense. But as it turned out, no one was in a hurry to pay it back. This wasn't surprising, as the borrowers were primarily agricultural firms owned by the bank's owner, Bakhmatyuk.
The bank remained in troubled condition (meaning it could not guarantee the return and payment of depositors' money) for six months. At that point, its deposit portfolio stood at 68%. Interestingly, the Financial Initiative had been promising throughout this time that the bank's situation was stable.
"The bank's shareholder and management plan to constructively cooperate with the temporary administrator to ensure the fulfillment of all of the bank's obligations, as well as to take measures for its further recovery and return to the market through a sale to a strategic investor," according to a statement from the press service of FI Bank.
But no one intended to stabilize the situation. In June 2015, the NBU declared the bank insolvent, installed a temporary administration, and began paying depositors back their deposits through the Investment Guarantee Fund. In other words, using budget funds to repay the "disappeared" billions. And it's not all that simple: the Guarantee Fund must pay not only 3,7 billion hryvnias to 59,000 clients of Financial Initiative Bank. To this sum (which will be taken from the budget), refinancing loans from the National Bank must be added. These, quite reasonably, went into the same pocket as private deposits. In total, the NBU reported losses of over seven billion.
"The total debt of Financial Initiative Bank to the NBU for liquidity support loans amounts to UAH 7,1 billion," the NBU press service said.
It's easy to calculate that the state's losses from Oleh Bakhmatyuk's "Financial Initiative"—after payments to depositors and the return of NBU refinancing—amounted to a total of 10,8 billion hryvnias. Even after the possible sale of assets for 3,5 billion, the losses would amount to 7,3 billion hryvnias. These losses, of course, will eventually be taken out of Ukrainians' pockets.
HISTORY OF VAB BANK
Oleg Bakhmatyuk purchased the retail VAB Bank in 2011. Already a billionaire, he continued to seek funding for his agricultural business. According to the official version, Bakhmatyuk intended to transform VAB into an agrobank and offer loans beyond his own companies. Depositors were lured in with a higher interest rate, several percentage points below the market rate. Television advertising explained, "Money should work." And so, people poured their hard-earned money into VAB. The money flowed to businesses. It's important to understand, however: the public's short-term savings were invested in long-term loans to businesses—and again, to businesses directly linked to Bakhmatyuk.
Here's a partial list of these borrowers, which emerged thanks to insider investigations:
1) Star-Master LLC (took 354 million UAH). This is one of the obvious cases: both at the time of the loan and now, it belongs to Bakhmatyuk’s Ukrlandfarming through the chain Gadyach Meat Processing Plant LLC – Agro Alfa LLC – AgriAlfa LLC.
2) JSC Zheleznodorozhnik (borrowed UAH 938 million). The loan was issued under the direction of Bakhmatyuk's managers. At the time of the loan, the company was a public joint-stock company, whose chairperson and two members of the supervisory board (Oleg Soloshchuk, Nadezhda Gromyko, and Andriy Dzundza) were his company, Stanislavskaya Trading Company (STK). Zheleznodorozhnik has now been liquidated, but STK is officially listed as its legal successor, and Bakhmatyuk is the ultimate beneficiary.
3) Leder Plus LTD LLC (a loan of UAH 438 million). It was, and still is, owned by Bakhmatyuk's managers. Previously, it was owned by Zernotreyd LLC (remember that name), which belonged to Oleg Vasilishin—a man with that name heads Bon-Exim LLC, one of Bakhmatyuk's Ukrlandfarming companies. When Leder took out a loan from VAB, it was temporarily transferred to 25-year-old Anton Filimonenko, a man with that name known as a top manager at Ukrlandfarming. After the loan, there was a new owner again, but he, too, is from Bakhmatyuk's group—Vladimir Simotyuk, director of PIK OJSC (also part of Ukrlandfarming).
4) Ukraina-Agroinvest LLC (loan of 406,000,000). The company's ties to Bakhmatyuk are not particularly hidden; sometimes it seems they're just teasing them. When this company took out the loan, it was owned by three of Bakhmatyuk's employees. Natalia Kostyrkina is a member of the Supervisory Board of PJSC Oktyabr and OJSC Ritm (a subsidiary of Ukrlandfarming). Yaroslav Shulgan is a member of the Audit Commission of the latter company. Andriy Stolpnikov is the director of Ukrprodzerno LLC, which belonged to the aforementioned ZERNOTRADE. Meanwhile, another co-owner is the Cypriot company Extrar Holding Limited, whose beneficiary is listed in the United Register of Registered Enterprises (EDRI) as Bohdan Prokosa, Chairman of the Supervisory Board of PJSC Avangard.
So, the money was never returned to VAB, and the bank itself eventually went into sudden bankruptcy. As with the Financial Initiative, the NBU declared the bank problematic. A temporary administration was appointed, and depositors' debts were partially liquidated.
"During the period of temporary administration and liquidation of the bank, 108,000 depositors received funds totaling 6,3 billion hryvnias, which constitutes 91,8% of the total guaranteed amount," the press service of the Deposit Guarantee Fund reported.
After the liquidation, outstanding refinancing loans, according to the NBU, amounted to 5,1 billion hryvnias. Adding these two amounts together, the total state budget losses would amount to almost 12 billion. If the bank's assets were sold at 18,3% of their value, the figure would decrease to 7,6 billion hryvnias. And this money would once again be taken from Ukrainians' pockets.
THE STORY CONTINUES
There have been no government attempts to hold Oleg Bakhmatyuk accountable. Feeling impunity, the owner of two bankrupt banks—VAB Bank and Financial Initiative—continued his financial fraud. It is reported that the day before the announcement of a temporary administration at Financial Initiative Bank, Bakhmatyuk's companies transferred 200,000 hryvnias to their employees under the guise of salaries and other payments. The Deposit Guarantee Fund, however, somehow paid out the money.
Depositors from bankrupt banks have already marched outside the Verkhovna Rada of Ukraine, requesting a pre-trial investigation into Oleh Bakhmatyuk. But to no avail. The Prosecutor General's Office then issued a formal reply. But those affected by the fraud are not despairing. Especially given the personnel changes within the Prosecutor General's Office.
Some say this is tilting at a windmill, and I agree. As long as the BPP is in power, O. Bakhmatyuk can live and work in Ukraine peacefully. "We're fighting," Arsen Marinushkina, the organizer of the protest, shared his impressions on Facebook. As a reminder, after the bankruptcy of the banks Financial Initiative and VAB, it turned out that almost their entire loan portfolio (approximately UAH 18 billion) consisted of loans to companies within Bakhmatyuk's agricultural holding, Ukrlandfarming. According to the NBU, the list of these companies runs (!) 21 pages. Among those affected by the nouveau riche oligarch's financial scam are a number of Ukrainian and foreign banks. There are also large companies abroad.
How Oleg Bakhmatyuk "cheated" them out of money - in the second part of our investigation.
Yulia Kostenko for Facenews.ua
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