The strength of the PrivatBank's claims is reflected in the Defendants' acceptance that it has a good arguable case of fraud against former bank owners Ihor Kolomoiskyi and Hennadii Boholiubov.
Press service of the bank said this after the hearing at the High Court in London, Ukrainian News Agency reports.
The High Court in London held a five-day hearing in relation to JSC CB PrivatBank’s claim against Messrs Ihor Kolomoiskyi and Hennadii Boholiubov, the bank’s former shareholders and officers, and six companies they are alleged to control.
Shortly before the case came to be heard, the defendants abandoned approximately half of the arguments they were scheduled to make.
Those concessions included accepting that the Bank has established a ‘good arguable case’ of fraud against them and that there is a real risk that they will dissipate their assets unless prevented from doing so by a freezing order.
The hearing in the High Court commenced on Wednesday, 25 July and concluded on Tuesday, 31 July 2018 before Mr Justice Fancourt.
During the course of the hearing, the Bank presented the High Court with detailed arguments and evidence in relation to its claim and the worldwide freezing order that was granted in support of it.
The claim that forms the basis for the freezing order involves allegations that Messrs Kolomoiskyi and Boholiubov misappropriated US$1.9bn from the bank in 2014 through a series of sham transactions, which had the effect of transferring funds to companies that they secretly owned or controlled.
During the hearing, PrivatBank’s lead barrister, Stephen Smith QC, explained that, between April 2013 and August 2014, Messrs Kolomoiskyi and Boholiubov orchestrated a scheme involving fraudulent loans to 46 borrowers, payments under 54 sham "supply agreements" for the provision of wholly improbable volumes of commodities, such as manganese ore, PET and apple juice concentrate, and loan recycling schemes to seek to disguise the fraud.
The loans were granted without proper approval or due diligence processes, whilst the supply agreements were produced as a façade to enable $1.9 billion to be paid to six companies: TEAMTREND LIMITED, TRADE POINT AGRO LIMITED and COLLYER LIMITED (all English companies), and ROSSYN INVESTING CORP, MILBERT VENTURES INC and ZAO UKRTRANSITSERVICE LTD (all BVI companies).
None of the companies had websites, offices, staff, warehouses, a workforce or any other public presence.
The scheme was the brainchild of Messrs Kolomoiskyi and Boholiubov who at the time were the owners of more than 90% of the shares in the Bank and sat on its supervisory board.
As Ukrainian News Agency earlier reported, the High Court of England and Wales decided in December 2017 to freeze assets worth USD 2.5 billion belonging to former PrivatBank owners Kolomoiskyi and Boholiubov.
The decision to freeze the assets was based on detailed evidence provided to the court, which proved that Kolomoiskyi and Boholiubov performed a number of illegal transactions, through which almost USD 2 billion was transferred from the bank to companies they secretly owned or controlled by them.
PrivatBank aims to recover funds totaling more than USD 2.5 billion, including interest, through this lawsuit.
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