Archive for July 9th, 2017


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July 9, 2017

9th July witnesses Messrs Guterres, Tillerson and Stoltenberg all in Kyiv – Thus a busy Sunday in the Kyiv Bubble for the President, Bankova and certain Cabinet Ministers and parliamentarians.  After all it’s not often the Head’s of the UN, NATO and the US Secretary of State all arrive simultaneously yet with seemingly otherwise independently insofar as agendas are concerned.

The timing therefore perhaps something to do with the G20 and the right people being in the region anyway.

Lo, as interesting (or not) as any outcomes of these meetings may be, the blog will look briefly at the still unfinished PrivatBank story – a tale that appears to be moving from an agreement between the previous owners and the State regarding nationalisation, to something more akin to an open war between the previous owners and the State that will be fought in the public and judicial realm.

Firstly it should be noted that, following the politically brave decision to nationalise Ukraine’s biggest bank, which in all honestly was probably the right decision vis a vis letting it collapse (it has been effectively insolvent for years), that the process actually occurred surprisingly smoothly from the point of view of customers and the Ukrainian banking system.

Not without cost, however, to the Ukrainian taxpayer – at least currently – as the scale of bad insider loans by the previous bank owners Messrs Igor Kolomoisky and Gennady Bogolyubov will require massive bails outs with public money to turn the bank around for eventual re-privatisation.

It has thus far received an injection of approximately UAH 145 billion.

For comparison, that figure is, it is claimed, in excess of the pension fund deficit that the IMF requires Ukraine to address (not that there will be another IMF tranche this year as the blog predicted last year).

Ergo this sum appears simply far too big to be quietly allowed to be written off or negotiated down via grubby deals between the oligarchs in question and The Bankova behind the curtain as would perhaps otherwise be the case.

However, as to be expected when dealing with Messrs Kolomoisky and Bogolyubov, prior to agreeing to nationalise what was otherwise their personal piggy bank, shenanigans with the loan portfolio occurred that would only later come to light.  If a reader may ponder the diligence with which the bank audit was carried out – it is perhaps a matter for the “Big 4” auditor in question to explain.  Suffice to say that the outcome of the audit appears to be particularly beneficial for the oligarchs involved and not the Ukrainian taxpayer.

Further, needless to say, Messrs Kolomoisky and Bogolyubov prima facie appear not to have upheld their side of the agreement within a stated 1 July time frame.  Instead something approaching 30 court cases have been instigated by these oligarchs via a number of their offshore companies relating to the legalities of the nationalisation of their former grossly mismanaged piggy bank and loan liabilities (that were hastily rearranged prior to the nationalisation agreement with the State).

Thus the NBU has appointed an internationally known forensic fiscal company to delve into the bank’s operating actions – a report that will no doubt provide yet further “scandals” when it is completed sometime during the Autumn.

(A reader should rightly prepare themselves for similar “scandals” relating to Mr Kolomoisky (and others) when Naftogaz and its associated subsidiaries and supply chain is unbundled per the Third Energy Package.)

Meanwhile the consensus candidate between former and current owners to run PrivatBank, Oleksandr Shlapak, leaves his post having steered the bank through its transition period.  The longer that PrivatBank remains without a CEO. the more chance the former owners can influence those that are still within their former piggy bank, and possibly a leaderless PrivatBank is not the best witness to appear at the 30 (and growing) pending court cases.  A quality replacement with unquestioned integrity is therefore something of a priority.

There is also a matter of the unreformed courts and the harlot that poses as Lady Justice in Ukraine who most certainly still willing to turn a trick for the affluent punter.  It is this wanton woman that is expected to deliver what would be a something akin to a precedent – a legal and punitive judgement against two of the best known and (in)famous of the oligarchy in full public gaze (rather than the usual striking of grubby deals behind the curtain).

No doubt this will be a tale revisited in the Autumn when the forensic fiscal detectives produce their findings.

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