NBU has published the report of the international investigators Kroll on multi-billion dollar fraud in “PrivatBank”

The national Bank of Ukraine published the results of an independent investigations company Kroll, said that “PrivatBank” has been the object of large-scale and coordinated fraudulent actions, at least within ten years prior to nationalization.

About it reported in a press-service of the regulator.

According to the survey, losses estimated at least $ 5.5 billion dollars. USA.

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The company Kroll believe that “the loan funds were used to purchase assets and financing business in Ukraine and abroad in favor of the former shareholders and groups affiliated with them persons.”

“The mechanisms that were used to disguise the real sources and destination of loans, are characteristic features of the co-ordinated scheme of money laundering. The volume of transactions and the speed of their conduct (within a few minutes between operations), the lack of sound economic connection between the person who repays the loan and the original borrower, as well as the widespread use of offshore special purpose companies (SPV), evidence of attempts to hide the true destination of funds from regulators and other stakeholders”, – noted in the investigation.

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According to the authors of the report, the Central element of organized fraud with the loan portfolio and the withdrawal was the shadow banking structure within the PJSC “PrivatBank”. “This secret structure provided payments and facilitated the movement of funds over a hundred credit agreements worth billions of US dollars in the interests of persons connected with the former shareholders and groups affiliated with them. In this shadow banking system was involved hundreds of employees of PJSC “PrivatBank””, – convinced the company Kroll.

While shadow banking structure allegedly led by corporate loan portfolio to affiliated persons. “Under its control provided new loans, which are usually used for the repayment of principal and interest on existing loans to related parties (cyclical lending). It provided the implementation of the transaction to conceal the source and true purpose of the loan funds, creating the appearance of a normal, customer-oriented Bank. The Bank attracted funds of Ukrainian and foreign investors to support the scheme of cyclical lending”, – says the document, which is published on the NBU website.

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Specialists Kroll noted that “PrivatBank” has repeatedly provided false information about its financial condition that could be achieved because of the systematic falsification of financial statements by the former management of the Bank.

Also in the report it is reported that before the nationalization in December 2016, more than 95% of the corporate loan portfolio was granted to parties related to former shareholders and groups affiliated with them. “At the end of 2016, 75% of the portfolio was consolidated into 36 loans to borrowers associated with the former shareholders and groups affiliated with them. Most of them are not settled and is overdue, which led to losses of the Bank at least 5.5 billion dollars. USA”, – reported in the report.

We will remind, “PrivatBank” works in the Ukrainian market since 1992 and is the largest Bank in terms of assets.

The Cabinet 18 December 2016 decided to nationalize the Bankin line with the recommendations of the Council of national security and defence, on the proposal of the NBU.

For the capitalization of “PrivatBank”, the government issued sovereign bonds for 117 billion, while securities 25.8 billion UAH, the national Bank bought in late December of 2016, more by 1.4 billion UAH in January of this year.

In June 2017, the Cabinet adopted a decision on recapitalization of the Bank by another 38.5 billion UAH, while in the first phase in the capital of the Bank was made sovereign bonds at UAH 22.5 billion.

NBU has published the report of the international investigators Kroll on multi-billion dollar fraud in “PrivatBank”

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