The High Court in London published on December 4 its ruling on the claims of Ukrainian state-owned Privatbank against its former owners, oligarchs Igor Kolomoisky and Gennadiy Bogolyubov, saying it has no jurisdiction to hear this case, it was reported on December 4.

The two oligarchs have claimed the decision as a victory and have protested the National Bank of Ukraine (NBU) acted outside of its mandate when it took the bank over. The government nationalised Privatbank in December 2016 after it failed to fulfil a three-year recapitalisation plan

The UK court also decided to “set aside” a worldwide freezing order of the defendants’ assets. The Ukrainian financial authorities claim that the two oligarchs emptied Privatbank of its assets by making over $5bn worth of fake loans, and are trying to recover the money. In December last year the UK froze $2.5bn worth of their assets worldwide while investigations are ongoing.

The court also concluded that “a realistically arguable claim” of Privatbank is $515mn, not $1,911mn as claimed by the bank (the defendants recognise a $248mn loss caused to the bank). Privatbank was ordered to pay the defendants full legal costs of about £7.5mn, Kolomoisky’s lawyers reported. They also highlighted the court’s findings about "serious non-disclosure and misrepresentation" in Privatbank’s claims.

In its view of the ruling, Privatbank stressed in a December 4 statement that the court has allowed it to appeal the decision, also insisting that the worldwide freezing order remains in place. The bank cited the court’s finding that “there is no difficulty with the Bank’s proving a good arguable case of a fraudulent scheme” and that the artificial complexity of transactions with the bank “is itself indicative of a fraudulent scheme”. 

“In reality, the judge decided that the bank has well-grounded claims for damages exceeding half a billion dollars,” Privatbank commented, adding that it remains sure that it will be able to bring all its claims for judgement in a London court.

“From our view, this ruling is more in favour of Kolomoisky, regardless the lack of clarity surrounding the freezing order. Despite the court's expectations of Privatbank's new owners “having no difficulty” in proving the existence of fraudulent schemes under the bank's prior owners, the bank’s lawyers have yet to do so in a court of law. That means the case of Privatbank against Kolomoisky and Co. will drag on for years, and may indicate a lack of competence of the bank's new management and counsel to prove the allegedly apparent wrongdoings of the former shareholders. This lack of competence would be advantageous for the bank's bailed-in bondholders, which have an ongoing claim against the bank in a UK court,” Alexander Paraschiy of Concorde Capital said in a note.