Page 74 - bne Magazine February 2023

74 I Eurasia bne February 2023
became famous to the international audience. The DIA successfully brought a case against him in London accus- ing him of extracting money from
the bank for his personal benefit after
it became insolvent but had already been bailed out by the central bank.
He was convicted of contempt of court in the UK in 2016 for lying to the court during the case and sentenced to two years in prison, but had already jumped bail and moved to France where, as a French passport holder, he cannot be extradited.
The Kremlin has put Pugachev’s name on the Interpol wanted list and success- fully managed to get the UK courts to freeze $1bn of his assets, limiting him to
names were fake shell companies that were connected to the owners.
The results of the bne IntelliNews investigation were published as a cover story “Privat Investigations” the same month and caused a scandal in Ukraine. The local press followed up with their own investigations that showed even more the names on the list were fake. By December the scandal had become so big that the NBU stepped in and nationalised PrivatBank, which remains in state hands to this day.
After the bank was nationalised, the NBU carried out its own audit and found that 95% of the loans were sham, leaving a $5.5bn hole in its balance
in the bank at the time. In 2019 the NBU accused Kolomoisky of orchestrating
a “terror campaign” against its staff as part of this effort. Among other things Gontareva's house in Kyiv was burnt down by unidentified arsonists. She told bne IntelliNews that she quit her
job as NBU governor after a coffin with a mannequin dressed up as herself was delivered to the front door of the central bank and said Kolomoisky had person- ally threatened her with violence.
Kolomoisky has also been a mentor
to Ukrainian President Volodymyr Zelenskiy and threw his media empire’s weight behind Zelenskiy's presidential election campaign in 2019, although the president has since distanced himself from his oligarch friend, and stripped him of his citizenship in July this year.
Moldova’s $1bn bank frauds
In Moldova’s notorious $1bn bank frauds around $1bn was stolen via three local banks in one of Europe’s poorest coun- tries. The money was siphoned off from three major Moldovan banks, Banca de Economii, Unibank and Banca Sociala. The funds were transferred to shell companies in the UK and Hong Kong and then deposited in Latvian bank accounts opened under various names.
News of the frauds rocked Moldova when it was revealed that the central bank had extended MDL13.6bn ($1bn) in emergency loans to the three banks, which were later liquidated. In 2016, Moldova’s government issued bonds
to compensate the central bank for the loans. This means that unless the funds can be recovered, ultimately the cost will be borne by Moldovan taxpayers, as the bonds will be repaid from the public purse over a 25-year period.
Like Ukraine’s NBU, the Moldovan authorities called in Kroll, which identi- fied businessman and politician Ilan Shor as the visible beneficiary of the frauds. Shor has been convicted, but he fled the country before receiving a final sentence. He remains a key player in Moldovan politics, directing from abroad the regular protests against the pro-EU government in Chisinau his Shor Party has been holding this autumn.
“The Kremlin has put Pugachev’s name on the Interpol wanted list and success fully managed to get the UK courts to freeze $1bn of his assets”
GBP10,000 ($12,100) a week spending money. There is a warrant on Interpol on charges of “misappropriation or embezzlement” outstanding.
Privat investigations
Ukraine’s banking sector was as rotten as that of Russia, only even more so. In the last decade the National Bank of Ukraine (NBU), under the leadership of former NBU governor Valeria Gontar- eva, took a leaf out of the CBR’s playbook and carried out an identical clean-up
of the sector, which is now considered to be healthy and well run. But that was not until the state had shelled out $5bn in 2016 to bail out the country’s biggest lender PrivatBank, which had been virtually emptied of all its money by its owners oligarch Ihor Kolomoisky and his partner, Hennadiy Boholyubov.
bne IntelliNews played an instrumental role in the collapse of PrivatBank.
In November 2016 we carried out an investigation after sources leaked a copy of its loan book. Checking the names
of the bank’s creditors on the list it transpired that about two thirds of the
www.bne.eu
sheet. As by far the largest retail bank in the country, the Ministry of Finance had to step in to bail the bank out with a $5bn cash injection – in relative terms to the size of their respective economies, the Ukrainian bailout of PrivatBank was far bigger than the CBR’s bailout of Bank of Moscow.
The NBU hired corporate investigator firm Kroll to find the missing money and then started civil cases against the owners in both London and Cyprus. A lot of the money was also found in Cleveland in the US, which triggered a Grand Jury investi- gation there and got Kolomoisky sanc- tioned by the US. The London court has frozen some $2bn worth of Kolomoisky’s assets as the legal battle continues and the Cypriot case is ongoing.
Almost none of the money has been recovered, yet no charges have been brought against Kolomoisky, who has been living openly in Ukraine and until the war started was lobbying vigorously for the state to return the ownership of PrivatBank to him or pay him $2bn in compensation for capital he says he had