Ukraine’s Supreme Court has appealed to the Prosecutor-General’s Office because court officials feel they’re being “pressured” in a key court case that could decide the future of the nationalization of Ukraine’s largest bank, PrivatBank.
The case, involving the Surkis brothers – business partners of PrivatBank’s former owner, oligarch Ihor Kolomoisky – has now been “removed from consideration” by the nation’s high court. The planned April 27 session will now not be held.
Hromadske has confirmed this with the National Bank of Ukraine, which is one of the parties to the case, stated that the case will continue after the Prosecutor-General’s Office determines whether or not there truly has been pressure on the court.
How does the case threaten nationalization?
PrivatBank was initially nationalized in December 2016, after auditors discovered a $5.5 billion hole in the bank’s finances. Oligarch Ihor Kolomoisky, who had founded and owned the bank, was accused of using the bank to provide his other business with cheap or free loans that he would then neglect to repay.
Ukraine was forced to nationalize PrivatBank following this discovery, as it was Ukraine’s largest by market share. But Kolomoisky has been challenging this nationalization through various means – including the Surkis brothers’ case.
The Surkis brothers are challenging the “bail-in” procedure used during the nationalization, which directly converted some individuals’ PrivatBank deposits to shares, while declaring those individuals connected to the $5.5 billion fraud – by making those people shareholders of PrivatBank.
The government then purchased the shares of those individuals, including the Surkis brothers, Kolomoisky himself, and Kolomoisky’s business partner Hennadiy Boholyubov, for a single hryvnia.
But Kolomoisky considers the entire process to be illegal, and has launched upwards of 100 court cases in a “war” to win back what he believes to be his bank. Meanwhile, Ukraine’s international partners with a stake in ensuring a clean banking sector, including the International Monetary Fund and the European Union, have made it clear that maintaining government control of PrivatBank is a condition for receiving aid Ukraine desperately needs, especially on the eve of the coronavirus-induced economic crisis.
Ukraine’s Sixth Administrative Appellate Court, another court considering one of Kolomoisky’s many PrivatBank cases, has tied its decision on the legality of the nationalization order to the decision of the Supreme Court on the Surkis case, and has delayed its own consideration of a government appeal against a previous court decision that had in fact found the nationalization to be illegal.
This tangle of legal maneuvers extend as far as the shores of the United Kingdom, where both the government and Kolomoisky have launched counter-suits. On March 16, the U.K.’s High Court considered a case involving PrivatBank and eurobonds issued in 2010 and 2013. That case, however, did not go in the oligarch’s favor – PrivatBank was absolved of the need to pay any debts to its former owners.