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Ukraine's PrivatBank wins London court battle against Kolomoisky and Bogolyubov

Ukraine's PrivatBank wins London court battle against Kolomoisky and Bogolyubov Photo: Ihor Kolomoyskyi (Getty Images)
Author: Liliana Oleniak

The High Court of London ruled in favor of PrivatBank. The court considered the bank's lawsuit against its former owners, Ihor Kolomoisky and Hennadiy Bogolyubov.

"PrivatBank has won an unconditional victory in a multi-billion dollar English court case against Kolomoisky and Bogolyubov," PrivatBank says.

Court ruling

The High Court of London ruled that Ihor Kolomoisky and Hennadiy Bogolyubov illegally withdrew nearly $2 billion from PrivatBank. The court described the scheme as a very complex refinancing scheme that operated in the interests of the individual defendants.

The court found that this was a case of Byzantine complexity fraud directed against the bank in 2013-2014. Judge William Trauer rejected the defendants' claim that there was no evidence of their involvement and stated that their position was entirely based on dishonest grounds.

"He (Kolomoisky - ed.) seems to have regarded himself as above the law," the ruling says.

The statement says Bogolyubov acted dishonestly, using misleading documents to distance himself from the fraud.

Total amount of compensation could exceed $2 billion

The court upheld PrivatBank's claim in full. Although the exact amount of compensation has not yet been determined, it could exceed $1.7 billion, excluding interest. Including interest and legal costs, the amount of the payment could exceed $2 billion. The final figure will be determined at the next court hearing this year.

The defendants did not testify in court on the merits of the case. In particular, Kolomoisky was under temporary arrest in Ukraine. The judge noted that they both realized that by testifying in person, they would be questioned about their role in the illegal appropriation of funds, to which they would not have convincing answers.

The court also found that Kolomoisky deliberately destroyed data relevant to the case and that Bogolyubov engaged in the practice of destroying documentation.

PrivatBank to begin asset recovery process

A court order for a global freeze on the defendants' assets has been in effect since 2017. Now, PrivatBank and its legal team are moving on to the stage of enforced recovery of damages.

The goal is to obtain compensation for the bank and its shareholder, the Ukrainian state.

PrivatBank: This is a victory for the entire Ukrainian people

Nils Melngailis, Chairman of the Supervisory Board of PrivatBank, said that this is a significant victory for the Bank and its shareholder, the Ukrainian government, as well as for millions of Ukrainians who depend on PrivatBank every day. It demonstrates what the bank is willing to do to protect the interests of depositors, customers, employees, and taxpayers.

According to him, the evidence confirms that billions of dollars were illegally appropriated as a result of a long-term fraudulent scheme.

He adds that this decision underscores the strength and integrity of Ukraine's largest financial institution, and they are beginning the process of recovering the amounts rightfully belonging to PrivatBank.

Lawyers: Respondents gave false testimony and concealed documents

Richard Lewis, a partner at Hogan Lovells, the law firm representing PrivatBank, said this trial was one of the most complex in the history of English jurisdiction. The bank provided substantial evidence of how billions of dollars were illegally appropriated by Kolomoisky and Bogolyubov.

According to him, the court upheld all claims, finding that the defendants had given false testimony, deliberately destroyed and concealed documents, and attempted to shift the blame onto others.

Court case

PrivatBank, which was nationalized in December 2016, filed a lawsuit in the High Court of London against its former owners. In December 2017, the court ruled to freeze the assets of Kolomoisky and Bogolyubov worldwide, as well as the property of six companies associated with them.

The court's decision was based on evidence that Kolomoisky and Bogolyubov had withdrawn about $2 billion from the bank. According to the plaintiff, the money was transferred to accounts belonging to or controlled by the former owners. PrivatBank's claims amounted to $2.5 billion, including accrued interest.

In October 2019, the English Court of Appeal upheld the jurisdiction of the London court over PrivatBank's claims. The court found that the bank had presented convincing evidence of large-scale fraud under the leadership of the former shareholders.

Kolomoisky and Bogolyubov reimbursed the bank for court costs of £10 million. The court order for a global freeze on the defendants' assets remains in force.

Amount of claim

The final hearings in the High Court of London began in mid-June 2023. Their postponement was partly due to the war, which caused the judge to adjourn the proceedings. By that time, according to the bank, the amount of the claim had risen to almost $4.5 billion.

This was due to interest accruals of approximately $500,000 per day.

Ukraine's largest bank was nationalized in December 2016. The nationalization of the bank cost taxpayers UAH 155 billion, or approximately UAH 4,000 per Ukrainian citizen.

In 2019, Kolomoisky tried to get the bank back and even got a court ruling. But then the ruling was overturned, and Ukraine passed a law that won't let him get PrivatBank.

Kolomoisky has been in jail since 2023. He's charged with a bunch of crimes.