PrivatBank case: court rejects Kolomoiskyi and Boholyubovʼs appeals. They must pay over $3 billion

The High Court of England has ruled that former owners of “PrivatBank” Ihor Kolomoiskyi and Hennadii Boholyubov, must pay the bank more than $3 billion in damages and legal costs. In July of this year, the court found them guilty of fraud and misappropriation of “PrivatBank” funds.

This is stated in a press release from “PrivatBank”.

The court determined that Kolomoiskyi and Boholyubov must pay “PrivatBank” $1 761 957 792. They must also pay $1 190 083 824 in interest and cover $99 575 371 in costs to “PrivatBank”.

Kolomoiskyi and Boholyubov asked the court to allow them to appeal the decision and to stay its execution pending the appeal. However, the court rejected both requests.

The former owners must pay the specified amounts by November 24, 2025. In case of non-payment by this date, interest will be accrued on it. If the money is not paid voluntarily, “PrivatBank” will initiate the collection process and seek enforcement of the court decision at the expense of the assets of the former owners. The assets of Kolomoiskyi and Boholyubov have been under a court order on the worldwide seizure of assets since December 2017.

The court ordered Kolomoiskyi and Boholyubov to fully reimburse “PrivatBank” for its legal costs. The reason was that Kolomoiskyi and Boholyubov tried to mislead the court.

Nationalization of “PrivatBank” and the court

In 2016, the National Bank, under the leadership of Valeria Hontareva, began to reform the banking market and, among other things, analyzed the capital of banks using a methodology it developed with the IMF.

The National Bank found a “black hole” in “PrivatBank” capital: it arose because 97 percent of PrivatBank’s loans were issued to “related parties”, most of whom were companies without assets and cash flows. Valeria Hontareva spent a long time persuading shareholders to “put” real assets into the bank, and the shareholders fought a positional battle with her.

In December 2016, the National Bank of Ukraine declared “PrivatBank” bankrupt and proposed to the Cabinet of Ministers to nationalize it. On the same day, the National Security and Defense Council, headed by Petro Poroshenko, proposed to the government to recapitalize the bank from the budget, and to the Deposit Guarantee Fund (DGF) and the National Bank to monitor the stability of the financial system.

Poroshenko put the National Security and Defense Council’s decision into effect by presidential decree. After that, the Cabinet of Ministers decided to nationalize “PrivatBank”.

The FGV was responsible for the nationalization, it appointed a temporary board of “PrivatBank”. After that, it carried out a bail-in — it forcibly converted money in the accounts of “related persons” into shares of the bank’s capital.

Under Ukrainian law, “related persons” declare their relationship themselves — or the NBU establishes this relationship. In this case, the relationship was established by the Department for Monitoring Persons Related to Banks, which Valeria Hontareva created in June 2015. Five days before the nationalization, a special commission of the NBU issued Resolution No. 105, which listed 1,092 such “related persons”.

The DGF conducted a bail-in and then sold 100 percent of “PrivatBank” capital to the Ministry of Finance for one hryvnia. After that, the Ministry of Finance recapitalized “PrivatBank” by $5.8 billion.

Then, the state-owned “PrivatBank” sued its former shareholders — Ihor Kolomoiskyi and Hennadii Boholyubov — for fraud and demanded compensation for $1.9 billion in losses with interest.

In July, the High Court of London ruled in favor of “PrivatBank” and its shareholder, the government of Ukraine.

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