The High Court of Justice in London has ruled against two Ukrainian tycoons in a landmark case involving the siphoning of nearly $2 billion from Privatbank, the country’s largest lender.
Claiming a “resounding victory,” Privatbank said the judgment against its former owners, Ihor Kolomoyskiy and Hennadiy Boholyubov, revealed fraud “of Byzantine complexity.”
The state-owned bank filed the lawsuit in December 2017, one year after it was nationalized amid fear it could collapse and take down the economy with it. The state pumped $5 billion into Privatbank to keep it afloat.
According to the case, Privatbank alleged that in 2013 and 2014 Kolomoyskiy and Boholyubov funneled $1.9 billion to companies they secretly controlled in Great Britain via “sham” loans and fake trade documents. They then used the money to buy foreign assets.
On July 30, Judge William Trowler ruled in favor of the lender, saying the two Ukrainians were "jointly and severally liable" for the embezzled amount, excluding any sums previously returned to the bank.
Both Kolomoyskiy and Boholyubov had denied any wrongdoing, saying the case was politically motivated. The bank was seized by the government of then-President Petro Poroshenko, who clashed with Kolomoyskiy. The nationalization of Privatbank was backed by Ukraine's Western partners.
The 62-year-old Kolomoyskiy rode the waves of privatizations in the 1990s following the collapse of communism to become one of the nation's richest men,. Known for his ruthless business practices, including using force to seize companies, he snapped up valuable metals and mining assets.
Like other tycoons of the time, he parlayed his wealth into political influence, financing candidates and parties. Local media claimed he controlled a significant bloc of lawmakers in parliament who reliably did his bidding.
In 2019, his media business backed the candidacy of Volodymyr Zelenskyy, who went on to win the presidency that year in a landslide, raising fears that Kolomoyskiy would control the former comedian and novice politician.
However, his influence has been waning in recent years amid domestic and foreign pressure. Zelenskyy's administration has sought to distance itself from the tycoons of the 1990s who had dominated the country's political landscape during its first three decades of independence.
Kolomoyskiy was detained in Ukraine in September 2023 on suspicion of fraud and money laundering and remains in custody. Boholyubov, according to state investigators, used forged documents to flee Ukraine around one year ago to avoid arrest on corruption charges.
In August 2020, the US Justice Department filed civil lawsuits to seize several US commercial buildings purchased by the two tycoons, claiming they did so using money laundered from Privatbank. At the same time, the FBI confirmed the two men are under criminal investigation. The forfeiture cases and criminal investigation are still ongoing.
In 2021, in a rare move, the US State Department publicly announced that Kolomoyskiy and his family were henceforth banned from entering the United States.
Privatbank's latest victory came amid anti-corruption protests in number of major Ukrainian cities, sparked by the government's attempt to strip country's anti-graft agencies of procedural independence.
Just days before London ruling, the National Anti-Corruption Bureau of Ukraine (NABU) and the Special Anti-Corruption Prosecutor’s Office (SAPO) said they had completed an investigation into the former ultimate beneficial owner of Privatbank regarding the embezzlement of funds.
SAPO claimed that the pre-trial investigation revealed that, from January to March 2015, one of Privatbank's owners developed a plan to steal the bank's funds.
In the statement, SAPO said one of the bank's owners used its funds to finance an offshore company, thereby increasing their share of the bank's authorized capital. To accomplish this, he has enlisted the help of bank officials, including the chairman of the board and his deputy.
While the agency did not name the suspect, the circumstances largely point to Kolomoyskiy.
