September 12, 2017 / 9:33 AM / a year ago

Ukraine won't rule out legal action against PwC over Privatbank

LONDON (Reuters) - Ukraine has not ruled out legal action against the local unit of the PwC consultancy in order to recoup some of the costs of bailing out lender Privatbank which had been audited by the firm, Finance Minister Oleksandr Danylyuk told Reuters.

Ukraine's finance minister Oleksandr Danylyuk speaks to a Reuters journalist during an interview in London, Britain July 5, 2017. REUTERS/Hannah McKay

Kiev has withdrawn PwC’s right to audit Ukrainian banks as punishment for what the central bank says was its failure to flag risky lending practices at the country’s largest lender, PrivatBank. PwC has said the ban is unjustified.

Ukraine took over Privatbank in December after finding a capital shortfall of more than $5.5 billion. Its nationalisation has so far cost taxpayers $4.3 billion, but an Ernst and Young audit of the lender’s 2016 annual report showed additional funds worth $1.5 billion were needed to meet capital adequacy requirements.

The logo of accounting firm PricewaterhouseCoopers (PwC) is seen on a board at the St. Petersburg International Economic Forum 2017 (SPIEF 2017) in St. Petersburg, Russia, June 1, 2017. Picture taken June 1, 2017. REUTERS/Sergei Karpukhin

“We invested so much of taxpayers’ money into Privatbank and we are looking for ways to recoup the losses. If PwC played some role, they should be held liable for that as well,” Danylyuk told Reuters late on Monday after a meeting with investors in London.

Asked if the government planned legal action against PwC he said nothing had been prepared as yet but added:

“At the moment I just don’t exclude this ... not because we are preparing something, but I just understand the significance of the nationalisation and the responsibility that we have taken, and that would mean that we are asking questions.”

The central bank estimates that 97 percent of PrivatBank’s corporate loans had gone to companies linked to its shareholders, who include the tycoon Ihor Kolomoisky, Ukraine’s second-richest man according to Forbes magazine.

Reporting by Sujata Rao and Karin Strohecker; Editing by Raissa Kasolowsky

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