LATEST NEWS IN THE CASE:
The “Anti Corruption Action Centre” team addressed the National Anti-Corruption Bureau of Ukraine (NABU) with an application of the withdrawal of funds from a number of Ukrainian banks.
Over the past two years 64 banks in Ukraine went bankrupt. As you know, the Deposit Guarantee Fund reimburses depositors of insolvent banks no more than 200 thousand UAH. The “bank fallout” caused an excessive load on the Deposit Guarantee Fund. This led to the effect of the state having to financially support the Fund. Thus, the burden falls on the shoulders of the Ukrainian taxpayers.
However, not all banks were bankrupt because of the difficult economic situation. In some cases, the bank owners and management deliberately rendered their institutions insolvent.
NGO “Anti Corruption Action Centre” happened upon some facts that may indicate crimes of the commissions of some commercial banks in Ukraine in complicity with officials of certain banks in Liechtenstein and Austria as well as officials of the National Bank of Ukraine (NBU).
The scheme looks like this:
- A Ukrainian bank opens a correspondent account in a foreign bank, where it places a significant amount of money.
- Subsequently, the Ukrainian bank enters into a security agreement with the foreign bank, the subject of which is placed on the correspondent account funds. The purpose of the contract is to ensure the implementation of the loan agreement between the foreign correspondent bank and a third party. Usually, the third party is a company that is associated with the management or owner of the Ukrainian bank, but which never entered into a contractual relationship with the same bank.
- Thus, the Ukrainian bank, contrary to Ukrainian laws and NBU regulations, does not account for the transfer of funds on correspondent accounts secured in its accounting and does not form the required financial reserves for commitments.
- After the emergence of the bank’s financial problems and the introduction of an interim administration, the foreign correspondent bank writes off the funds from the correspondent account in favor of a third party (associated with the owners of the bank) as the enforcement of the loan agreement.
The “Anti Corruption Action Centre” is well aware of which owners are using such a scheme: JSC “Bank Tavrica”, JSC “Pivdencombank”, JSC “Bank “Kyiv Rus”, JSC “City Commercial Bank”, JSC “Avtokrazbank” and JSC “Energobank”. An earlier edition of “Forbes” reported the withdrawal of funds through this same type of scheme by JSC “Delta Bank”.
It is clear that the actions of the bankers was known to officials of the NBU, who were in charge of banking supervision, and obviously didn’t witness anything.
In particular, we are aware of the circumstances surrounding the embezzlement of funds through the “Tavrica Bank”. The Shevchenko Kyiv Court, on June 2nd, 2014, approved the verdict against former acting Chairman of the board of JSC “Tavrica Bank”. The Court of Appeals of Kyiv upheld the sentence on 11/06/2015. However, in the judgement files some interesting facts were found.
On 16.11.2011, JSC “Bank Tavrica” opened a correspondent account in Austrian bank “Meinl Bank Aktiengesellschaft” and received an authorized registration number of open accounts through the register of the Main Department of the NBU in Kyiv and Kyiv region.
On December 22nd, 2011 the Austrian bank and Cyprus company “Trading Vinten Ltd”, signed a loan agreement in the amount of 50 million dollars to finance construction projects in Ukraine, which should be constructed by OJSC “Trust Pivdenzahidtransbud”. At the end of 2011, the owner of “Trust Pivdenzahidtransbud” was state enterprise “Management of Material-Technical Provision”, who was owned by LLC “Budkomplekt-2014” (later renamed LLC “High Tower”).
In 2012, the owners of “Trust Pivdenzahidbud” became Ltd. “High Tower”, JSC “Kyiv Jewelry Factory” and Austrian East Advisors Vermogensverwaltung GmbH. The founder of East Advisors, in turn, is said to be Meinl Bank AG.
On the day of the loan agreement the Chairman of the Board of JSC “Tavrica Bank”, being at his place of work: Dmitrivska St. #92-94, Kyiv, Ukriane, at the request of the former Chairman of the Supervisory Board of JSC “Tavrica Bank”, concluded a custody agreement with Meinl Bank AG and pledged funds in the amount of 26,502,636, 59 dollars, which was accredited to the above correspondent account, as guarantees of fulfillment of obligations by “Vinten Trading Ltd”.
Along with this, the Chairman of the Board of JSC “Tavrica Bank” did not record the above obligation of custody and collateral, and also formed a reserve fund to cover credit risk to avoid losses from non-repayment of debt due to the insolvency of the company “Vinten Trading Ltd”.
As a result of its failure to meet its obligations, “Vinten Trading Ltd.”, under the loan agreement from 22.12.2011 with Meinl Bank AG, the latter, acting in accordance with the terms of the custody and bail funds from 22.12.2011, signed by the Chairman of the Board of JSC “Tavrica Bank”, on 27.11.2012, wrote off the funds from the correspondent account of JSC “Tavrica Bank” in the amount of $26 502 636, 59.
The result of the conclusion of the above contract without the formation of the necessary reserves and the improper accounting, was the loss of the bank’s assets and inability to perform the requirements of its depositors and other creditors, and as a result, on December 20th, 2012, the NBU adopted resolution №548, in which PJSC “Bank Tavrica” was declared insolvent. The state has committed to return 211,837,947,47 UAH to the the bank’s depositors through the Deposit Guarantee Fund of physical persons.
Losses suffered by the state due to the criminal acts of officials of four banks (“Tavrica”, “Kyiv Rus”, “Pivdenkokombank”, “City Commerce Bank”) is at least 5.6 billion UAH.
LEGAL ASPECTS OF THE CASE:
Therefore, the “Anti Corruption Centre” team:
- Addressed Austrian General Prosecutor’s Office.