December 20, 2017 / 6:09 PM / a year ago

Ukraine central bank to appeal court ruling barring PrivatBank investigations

KIEV, Dec 20 (Reuters) - Ukraine’s central bank said on Wednesday it would appeal a local court decision that bars Ukrainian and foreign firms from investigating the causes of the insolvency of leading Ukrainian lender PrivatBank.

The case is the latest in a slew of lawsuits launched by ex-shareholder Ihor Kolomoisky that the central bank says are meant to derail investigations into alleged risky lending practices that brought about PrivatBank’s nationalisation last year.

The central bank said a Kiev district court on Dec. 15 ruled in favour of an appeal by Kolomoisky to block the regulator, the finance ministry and PrivatBank from cooperating with legal advisers or consultants who are working on a forensic analysis of PrivatBank’s finances.

“The Ukrainian central bank expresses its outrage and emphasises the inadmissibility of creating unlawful obstacles to the investigation of events which led to a multi-billion-dollar capital shortfall and forced the state to use taxpayer funds to save PrivatBank,” the central bank said in a statement.

The court has ruled to block the authorities from working with external companies while it considers its final judgement.

“In order to protect the interests of the state, the central bank will soon file an appeal against the decision of the court.”

Kolomoisky could not immediately be reached for comment.

According to online court documents, Kolomoisky petitioned for the lower court ruling on grounds that the central bank had violated state procurement laws by hiring global advisory firm AlixPartners and risk consultancy Kroll to analyse how PrivatBank wound up with a capital shortfall of over $5.5 billion.

In the meantime, the ruling threatens to further snarl the work of AlixPartners and Kroll.

In November, Kolomoisky told Reuters he had filed a lawsuit against New York-based AlixPartners over their work on PrivatBank.

Kolomoisky and PrivatBank’s other main former shareholder, Gennadiy Bogolyubov, have challenged the justification for the nationalisation and accused the central bank of misrepresenting PrivatBank’s finances.

According to its commitments under a $17.5 billion programme from the International Monetary Fund, Ukraine is required to produce an audit of PrivatBank’s financial situation with the participation of Kroll.

Reporting by Natalia Zinets; Writing by Alessandra Prentice; editing by Mark Heinrich

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