31 Mar 2020
Ukraine’s parliament has passed a bank law critical to unlocking international financial assistance in its first reading.
Colloquially known as the “anti-Kolomoisky law” after oligarch Ihor Kolomoisky, the bill’s adoption is the main requirement for Ukraine to secure a much-needed $5.5-billion loan program from the International Monetary Fund (IMF).
The draft law received the support of 267 lawmakers, primarily from President Volodymyr Zelensky’s 248-member Servant of the People party and two opposition parties, Voice and European Solidarity. Without the support of the opposition, the law would have fallen one vote short of passing the first reading.
Lawmakers also voted to speed up the adoption of the law, giving the parliament’s finance committee less than two weeks to prepare it for the second reading.
If passed in the second reading, the law would ban the return of nationalized banks to their previous owners. Most prominently, that would include Ukraine’s largest bank, PrivatBank, which was nationalized in 2016. Previously, it had belonged to Kolomoisky and his business partner, Gennady Boholyubov.
Prior to PrivatBank’s nationalization, the National Bank of Ukraine discovered that $5.5 billion were missing from its ledgers. Later, a forensic audit by American corporate investigations firm Kroll revealed that the vast majority of the bank’s loan portfolio was insider lending and money laundering operations.
Currently, state-owned PrivatBank is suing Kolomoisky and Boholyubov in Kyiv, London, Geneva and Tel-Aviv. Kolomoisky is suing to take back the bank in Kyiv. He accuses the state of raiding his property.
The U.K. courts have called PrivatBank an example of “fraud on an epic scale.”
The bank law
According to the draft law, if a court rules against the National Bank’s declaration that a bank is insolvent, this would not restore the former bank’s status, nor would it void any transactions carried out to withdraw the bank from the market or liquidate it.
It would also grant no rights to anyone who participated in the bank’s management at the time of the court’s decision. If the court did rule against the National Bank, the only legal recourse that would be available to a bank’s former owners would be to seek compensation.
By Oleksiy Sorokin, Kyiv Post, 30 March 2020
Read more at Kyiv Post
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