Ukraine’s prime minister has said Kiev is seeking a “compromise” with billionaire oligarch Igor Kolomoisky over a $5.5bn banking scandal, a move that risks alienating the western backers of President Volodymyr Zelensky’s new government.
Oleksiy Honcharuk told the FT that the president wanted to reach a settlement with Mr Kolomoisky over the 2016 collapse of Ukraine’s largest lender Privatbank, which Kiev nationalised amid allegations of staggering fraud.
“I’m completely convinced that we need to concentrate on growth now and look for joint solutions instead of spending our resources on destroying each other. So I am very positive about any rhetoric directed towards searching for a compromise,” Mr Honcharuk said in an interview.
The IMF has warned Ukraine that backsliding on Privatbank’s nationalisation would jeopardise its $3.9bn standby programme and that officials expect Ukraine to push for recovery of the $5.5bn spent on rescuing the bank..
Mr Honcharuk said: “Whatever solution we find, we have to find it together with the IMF.”
PrivatBank was nationalised in 2016 to save it from collapse when regulators found a $5.5bn black hole in its balance sheet. Ukraine launched legal proceedings against Mr Kolomoisky and his partner Gennady Bogolyubov, accusing them of running a “Ponzi-like scheme” to launder money and use the bank’s retail deposit base to fund their own businesses.
The businessmen deny the allegations and they and related parties have launched more than 600 lawsuits challenging the nationalisation.
Mr Honcharuk’s comments are likely to deepen concern over Mr Zelensky’s ties to Mr Kolomoisky, which are threatening to overshadow the former comedian’s ambitious reform agenda and efforts at detente with Russia.
The oligarch owns 1+1, the television channel on which Mr Zelensky shot to stardom playing a fictional president. Last week, parliament appointed MP Oleksandr Dubinsky, who criticised the nationalisation during his time as a reporter at 1+1, as head of a commission that will control board appointments to state-owned banks.
Mr Zelensky -— along with his chief of staff Andriy Bogdan, a former lawyer who represented Mr Kolomoisky in the legal disputes over Privatbank — hosted the oligarch in the presidential office last week, a step one aide described as “disturbing”. The two denied they discussed Privatbank.
The meeting came days after police raided Privatbank’s offices in Mr Kolomoisky’s hometown of Dnipro and searched the home of Valeria Gontareva, former central bank chief, under a new investigation into the officials who led the nationalisation.
Ms Gontareva said she and the current management of PrivatBank had been subjected to a campaign of intimidation by Mr Kolomoisky’s allies. “How is it possible to settle?” she told the FT. “Our recapitalisation plan was a settlement. He failed to fulfil his promises.”
In the early hours of Tuesday Ms Gontareva’s house outside Kiev was set ablaze and destroyed. Mr Kolomoisky has denied involvement in any campaign to intimidate her.
Though Privatbank is owned by Ukraine’s finance ministry and is therefore part of Mr Goncharuk’s remit, he said Mr Zelensky and Mr Bogdan would take the lead on the case, despite their apparent conflict of interest as former employees of Mr Kolomoisky.
“We understood from the very beginning that this is a special issue, so it was never my responsibility. Mr Bodgan and the president have personally handled this issue from the very beginning,” he said.
“I am counting on them to find the right way to solve it, because they know the situation much better. But I have no doubt that the president and his office will be on the side of the state.”
Back-channel talks over a possible settlement have accelerated since Mr Zelensky took power, according to people briefed on the negotiations.
Under Petro Poroshenko, Mr Zelensky’s predecessor, Ukraine agreed a deal with Mr Kolomoisky last year that would have seen him give up his stake in state oil producer Ukrnaftain exchange for a mutual cessation of legal hostilities over Privatbank.
The deal collapsed after Mr Poroshenko’s cabinet decided making concessions to Mr Kolomoisky was untenable in an election year.
Unofficial talks resumed after Mr Zelensky took office this spring, but any outcome is unlikely to require Mr Kolomoisky to surrender any assets or compensate Ukraine for Privatbank’s losses, according to a person briefed on the talks.
Speaking to reporters at a conference in Kiev last week, Mr Kolomoisky said there was a “good window of opportunity” for a settlement.
Mr Honcharuk said “the very fact that there’s a public discussion […] is a step forward.”
In April, as Mr Zelensky was on course for a crushing 73 per cent electoral win, a court in Kiev ruled the nationalisation was illegal. The central bank is appealing against the decision and has said it will declare the bank insolvent again should control be awarded to Mr Kolomoisky.
Mr Honcharuk said Mr Zelensky would avoid interfering with Ukraine’s courts or the central bank’s independence, while trying to “defend the interests” of the country. “Of course, they used to work together. But we inherited a very tricky situation,” he said.
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