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Economy 2020-11-15T06:17:58+02:00
Ukrainian news
International Investigation: PrivatBank's Ex-Owners Cause USD 5.5 Billion Of Loses To Bank

International Investigation: PrivatBank's Ex-Owners Cause USD 5.5 Billion Of Loses To Bank

NBU, investigation, fraud, PrivatBank, nationalization, Kroll

In compliance with results of the international investigation conducted by Kroll, during 10 years before the nationalization, PrivatBank had been an object of a large-scale and well-coordinated fraud that led the financial institution to the losses worth USD 5.5 billion.

This is said in the results provided to the National Bank of Ukraine, Ukrainian News Agency reports.

According to the investigation, the former owners of the bank withdrew their funds abroad, concealed sources for the funds, and established a shadow banking structure.

In particular, Kroll established clear evidence indicating that credit funds of PrivatBank had been used to purchase private assets and financing private businesses in Ukraine and abroad to the benefit of former stockholders and a group of affiliated persons.

The origin of the fund flows was skillfully concealed, leading the Kroll investigators to believe there had been a well-coordinated fraud scheme set in place.

The Kroll investigators revealed that in center of this fraud was a shadowy structure that operated 'in the grey' inside PrivatBank.

According to the Kroll investigators, this shadowy structure administered movement of funds worth billions of dollars, under hundreds of loan agreements, all to the benefit of the bank's stockholders and affiliated persons.

Hundreds of PrivatBank employees were involved in the structure operations.

According to the Kroll investigators, the secret banking structure managed an insider loan portfolio, and for this purpose attracted and disbursed new loans that were usually used for payment of the principal amount and interest on the outstanding loans of related parties (cyclic refinancing).

The aim of the structure was to sustain the scheme; and in order to make the scheme running as long as possible the bank officials many times provided false data to conceal the actual state of the bank's finances, and this could only be done by falsifying financial reporting by former top managers of the bank.

Before PrivatBank's nationalization in December 2016, over 95% of corporate loan portfolio had been held by persons with close ties to former stockholders and affiliated parties.

In late 2016, 75% of all loan portfolio was consolidated in loans of only 36 borrowers with close ties to former stockholders and affiliated parties.

Most of the loan portfolio has not been repaid and remains outstanding, causing the bank suffering losses worth at least USD 5.5 billion.

The National Bank said it was ready to reveal the results of the investigation to law enforcement bodies.

As Ukrainian News Agency earlier reported, the Kroll investigative agency conducted investigation into the alleged economic fraud at PrivatBank to reveal and assess losses suffered by the bank, caused by mismanagement or intentional fraud by former bank's officials before the nationalization of the bank, as part of Ukraine's responsibilities before the International Monetary Fund.

The Kroll investigative company was founded in 1972; it headquarters in New York.

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