Ukraine tycoon hopes to resume talks on PrivatBank as lawsuits fly

May 24, 2019

By Natalia Zinets

KIEV (Reuters) – Tycoon Ihor Kolomoisky told Reuters he hoped Rothschild bank could help broker an out-of-court deal with the Ukrainian authorities over PrivatBank, to end his legal tussles with the state.

One option he hopes could be agreed upon is for Kolomoisky to regain a 25 percent stake in the country’s largest lender, he said.

Kolomoisky was PrivatBank’s main owner until December 2016 when the government nationalized the lender as part of a donor-backed clean-up of the financial system. He has fought a series of legal battles to overturn the nationalization.

The authorities say overturning the nationalization would rock investor confidence and rupture relations with the International Monetary Fund, which helps keep Ukraine’s economy on an even keel with a $3.9 billion aid-for-reforms program.

A Kiev court ruled in April that the nationalization of PrivatBank was illegal but the central bank said on Friday it had appealed the decision, as it had previously said it would.

Rothschild had an official mandate in 2017 to try to broker a compromise between the two sides, which failed.

“We have always said that we are open to negotiations. We believe that we are the injured party, that we have been robbed,” Kolomoisky told Reuters by phone.

Kolomoisky calculates he is due a 25 percent stake in the bank because of the capital he had put into it.

“Give us then our 25 percent and keep 75, we will have a joint-stock company. There will be a 25 percent participation and 75 percent by the state, as one of the options,” he said.

PrivatBank, the finance ministry and IMF declined comment. Rothschild did not immediately respond to a request for comment.

The legal wrangle took another turn when Volodymyr Zelenskiy was elected as the new president in April. Zelenskiy had business ties to Kolomoisky but denied he would hand back PrivatBank to him or pay state compensation.

A source familiar with Kolomoisky’s talks with Rothschild played down the prospects of the IMF agreeing to any deal that would involve giving Kolomoisky a partial stake in PrivatBank.

The central bank said it would not be involved in any resumption of negotiations, which would be a matter for the ministry of finance and Kolomoisky.

The central bank believes PrivatBank was used as a vehicle for fraud and money-laundering while Kolomoisky owned it, and said the government was forced to inject $5.6 billion of taxpayers’ money into the lender to shore up its finances.

Kolomoisky emphatically denies any wrongdoing, rejects the central bank’s assessment of PrivatBank’s financial health and said the lender was nationalized on spurious grounds.

PrivatBank launched a case against Kolomoisky in the Delaware Court of Chancery in the United States this week, accusing the tycoon and associates of misappropriating and laundering the proceeds of corporate loans from the bank.

(Additional reporting by Karin Strohecker in London Writing by Matthias Williams; Editing by Elaine Hardcastle)

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