Oligarch Kolomoisky's Return Has Already Sparked Scandal for Ukraine's New Government
17 September, 2019

Privatbank, the nationalized bank formerly owned by Ukrainian oligarch Ihor Kolomoisky, is once again at the forefront of Ukrainian news. The new government, led by President Volodymyr Zelenskyy and Prime Minister Oleksiy Honcharuk, have begun researching the situation surrounding the $5.5 billion fraud uncovered at the bank, according to comments made by the prime minister to the Financial Times.

This news comes at the same time as talks between the Ukrainian government and the International Monetary Fund (IMF) began for a new $5 billion loan. The IMF has also stated that any movement on Privatbank, such as its re-privatization, would constitute a violation of the current $3.9 billion credit line negotiated by the ex-President Poroshenko's administration in 2018. The Fund has previously said that it expects Ukrainian authorities to work to recover the $5.5 billion hole at the bank.

But it may be that the IMF’s hopes are unfounded. During an interview at the Yalta European Strategy conference, the oligarch seemed confident that the new authorities in Kyiv were open to negotiations with his team, and he has repeatedly stated his belief that the nationalization was "theft", pointing out that he had assets totaling $2 billion in the bank at the time of its nationalization. One Ukrainian court has also ruled the nationalization of Privatbank to be illegal.

Another sign that the ice may be thawing between the embattled oligarch and Ukrainian authorities is the fact that the president’s office has taken the lead on the Privatbank situation, according to the prime minister. But both the president, and the president’s chief of staff, Andriy Bohdan, have close ties to the oligarch, sparking criticism of a conflict of interest. Kvartal 95, a production company co-founded by the president in 2003, has been airing their shows and films on the Kolomoisky-owned 1+1 channel, while Bohdan worked as a lawyer representing Kolomoisky on the Privatbank case.

However, the prime minister stressed that the government is only researching the question, and negotiations, or ‘compromises’, have not yet begun, despite claims that back-channel talks have already started. 

The prime minister also emphasized, in a statement posted on the PM’s website, that he is confident "everything will be done to protect Ukrainian taxpayers and Ukraine’s national interest."

Former head of the National Bank of Ukraine, Valeria Gontareva, criticized the entire process in a comment to FT, saying that Kolomoisky has failed to fulfill his promises and that talk of a settlement is untenable, a position likely shared by the IMF. For his part, Kolomoisky has submitted over 600 lawsuits related to the nationalization of Privatbank, while Privatbank has launched a lawsuit against the oligarch in the United States, where the oligarch is under investigation by the FBI. 

READ MORE: Ukraine Takes Court Battle Against Kolomoisky to the US

/By Romeo Kokriatski