Kolomoiskyi Is More Dangerous Than Ever – Even If You Think Otherwise

Kolomoiskyi beats everyone again. The only intrigue is whether he is doing it in collusion with the president or to spite him?

I know, I know, he is locked up in the pre-trial detention center of the Security Service of Ukraine. In a solitary cell, without a mobile phone, the secrecy of communication with a lawyer is not guaranteed, the bail is UAH 2.5 billion, he can’t be released on bail by prominent media persons and is not allowed to undergo medical examinations.

All the restaurant meals, unhindered access to the lawyer's phone and interesting visitors of the “prisoner of conscience” remain off-screen; the only thing that is shown is pure destitution.

It is this picture that Kolomoiskyi, who is moving to the endgame in the United States, needs.

Unlike in London, where Privatbank is seeking to recover the damages from the ex-owners, in the US, Ihor Kolomoiskyi and his partner Hennadii Boholiubov are facing a criminal case (the story has been described by us a long time ago). In fact, the development of the American storyline of this saga may become the most dramatic one for our heroes. The fact that this plot is not actively developing at the moment does not mean that the main characters have forgotten about it.

Among other things, the American cases await the conclusion of the court proceedings in Ukraine and the finalization of three key aspects in this story. It is about the constitutionality of nationalization, its appeal by former owners and “loan” processes. The first two have already been dealt with: the constitutionality has been proven, the last proceeding on the “cancellation of nationalization” is in cassation, without court hearings, without excitement. Surprisingly, the “loan” story is also coming to a close.

Let us recall its essence. Enterprises under the control of Kolomoiskyi and Boholiubov, led by the Nikopol Ferroalloy Plant, filed numerous similar lawsuits demanding that their credit obligations to Privatbank be recognized as fulfilled. They literally asked for certificates of repayment of loans.

The figure shows a simplified example of how a fraudulent scheme was organized in Privatbank for the purchase of only one of the real estate objects in the United States. This is just one episode out of many because the scheme existed for years — companies received credit lines, withdrew money from the bank, split the amounts: something was laundered, something was redistributed among other companies of the Privat group, something was returned to the bank. In fact, the scheme lasted so long due to the fact that previous loans were periodically repaid at the expense of new loans. Therefore, the lawsuits of the Nikopol Ferroalloy Plant and the rest were divided into specific loan agreements, according to which it is easiest to get a decision that the plant really returned the money to the bank. In essence, the court was given pieces of a huge puzzle, they are completely uninformative and do not allow to assess the entire fraud scheme as a whole.

But in the London-based High Court of Justice, according to the information of our sources, it seems that they were able to see not small pieces, but the whole scheme. The decision is already being written — we will definitely see it by the end of spring. Oh, how unpleasant it will be if it sharply contrasts with the “certificates” from Ukrainian judges. What’s worse, these “certificates” have already become an aid to Kolomoiskyi in his battle with US justice.

Case No. 910/12559/20 is the finish line of the “loan” stories. On Monday, March 26, the bank’s appeal on the decision will be heard, or rather, on the “certificate” issued by the judge of the Kyiv-based Economic Court Vita Bondarchuk to the Nikopol Ferroalloy Plant on the fulfillment of the obligations to the bank, specified in the lawsuit. Here is what’s of interest there: the plaintiff did not hide his motives, frankly stating that the reason for the appeal was the information published in the media about the lawsuit of the bank in the state of Delaware. The judge was not confused by this. Thanks to our judicial system, with similar decisions used like fig leaves, the former owners of Privatbank will at least try to cover up some episodes of one of the largest financial schemes in the world.

Those same decisions could help them in another duel with the US Department of Justice — the investment protection arbitration.

At the beginning of 2021, the lawyers of Ihor Kolomoiskyi and Hennadii Boholiubov appealed to the International Center for Settlement of Investment Disputes (ICSID) regarding the expropriation by the United States of their investments in American commercial real estate. “Famous tycoons” (that's what they call themselves, not us) intend to prove that the United States violated the provisions of the Treaty between the United States and Ukraine on the mutual protection of investments by confiscating their American assets.

By the end of 2022, the case was neither alive nor dead — the parties were in the process of agreeing on the least of arbitrators. Then they tried to find out whether this case could be considered by the ICSID. Finally, there was a recent update that all three objections raised by the US Department of Justice as a defendant were rejected by the arbitrators, meaning the case will be heard on the merits (document). This potentially gives Kolomoiskyi and Boholiubov an additional defense tool against American justice. The fact that the impoverished “tycoon” is locked in a Ukrainian casemate only benefits him.

Imagine hearing about Kolomoiskyi for the first time, and look at the picture through the eyes of ICSID arbitrators.

A citizen of Israel, deprived of Ukrainian citizenship, claims that the US Department of Justice expropriated his investments and abused its powers because the alleged “criminal acts and damages” took place on the territory of Ukraine and have not yet been proven by anyone. He has court certificates about loans returned to the bank. He is defended by Avichai Mandelblit, Israel's former chief military advocate and longtime legal adviser to the Israeli government. The lawyer publicly (and far-sightedly in English) shares his disappointment from what he saw in Ukraine. His client has been in custody for six months on suspicion, but without charges “due to the lack of sufficient evidence at the moment.” A renowned lawyer emphasizes that detention without charge is a violation of the defendant's fundamental rights. What’s worse, there really isn't even a hint of a charge.

Currently, there are two suspicions from the Security Service of Ukraine (SSU), and the Prosecutor-General's Office, and one more from the National Anti-Corruption Bureau of Ukraine (NABU). In the first one, everyone, except for Kolomoiskyi and the head of the Kyiv branch of the bank in 2013, were not identified by the investigation, and the aggrieved party was also incorrectly identified. In the third one, there is no more clarity, but a larger amount of money and a criminal group “of bank employees,” but again unknown. By the time they get to the charges, Kolomoiskyi will have time to appeal and win the case at the European Court of Human Rights (as he has already hinted).

The second suspicion from the NABU looked more convincing: the main suspects have been identified, legal entities too, there are recordings of the suspects' conversations about the scheme, there are financial statements to confirm it, even arrests were imposed on the assets of those involved. But then everything quickly came to naught — the pre-trial investigation was suspended, the arrests were lifted, and, apart from the statement of the head of the Specialized Anti-Corruption Prosecutor’s Office (SAPO) Oleksandr Klymenko about “high odds of completing the investigation,” nothing was left of it.

The bottom line is that all the President Zelenskyy's anger, whether feigned or sincere, including the cancellation of Kolomoiskyi's Ukrainian citizenship and his detention in the pre-trial detention center of the SSU on the latter’s own suspicions, is to Kolomoiskyi's benefit. Now he is a foreign investor who has been stripped of his assets and is being held without charge on strange suspicions. None of which, by the way, gives even a hint to confirm the existence of those schemes described by the US Department of Justice. On the other hand, there are decisions of the Ukrainian courts, with which, with a certain zeal, these schemes can be denied.

A ready-made political persecution with the taste of violation of investor's rights. Then there’s also the henchman Boholiubov, who should have been, if not an accomplice, then a key witness; however, he is outside of all court processes altogether. He is going to Vienna in the capacity of the better half of the permanent representative of Ukraine at international organizations. He might already have a diplomatic passport.

If Kolomoiskyi and Boholiubov prove to the arbitration that everything that is happening in Ukraine is pressure on investors typical for our region, the arbitration may decide that the encroachment of the US Department of Justice on their property is also unjustified. And with such a trump card in their hands, they will feel much more confident in other US affairs. There, every little thing is worth its weight in gold, and this is a whole ingot.

When we kept writing for years that any decision made in Ukraine is important, including for other jurisdictions, it was not a poetic exaggeration. So far, the results are unimpressive, and even when you think that Kolomoiskyi is over and done with, he is definitely not.

Read this article in Ukrainian and russian.