As previously reported, on 18 December 2019, PrivatBank initiated a claim against Igor Kolomoisky, Gennadiy Bogolyubov, Israel Discount Bank (IDB), one of the largest banks in Israel, and other defendants before the District Court of Tel Aviv, Israel. The claim concerns an alleged misappropriation scheme by which at least USD 600 million was unlawfully extracted from PrivatBank between 2007 and 2011 and transferred to a bank account held with IDB.
PrivatBank sues IDB in Israel as one of several defendants, claiming that IDB facilitated the misappropriation of the Bank’s funds and breached its duties to PrivatBank through enabling the obviously fraudulent transfers to be made into a bank account held with IDB in Israel, and failing to take any actions to refuse or block those transfers despite the many obvious ‘red flags’ indicating fraud and money laundering.
In a clear sign of its grave concerns at having to answer for its historic actions, IDB took measures to try to avoid or at least delay the proper consideration of the Bank’s claims. In particular, IDB brought motions before the Israeli court seeking to have the claim dismissed, or otherwise stayed until other claims brought by PrivatBank in England and the USA have been determined. PrivatBank strongly resisted those motions. In December 2020, the Tel Aviv District Court refused IDB’s motions in their entirety. IDB subsequently appealed to the Israeli Supreme Court.
On 26 March 2021, in a significant decision which should assure PrivatBank’s entitlement to take its claims against IDB to a full public trial, the Israeli Supreme Court handed down its decision refusing IDB’s appeal. By its ruling, the Israeli Supreme Court upheld the District Court’s decision that the claims brought by PrivatBank against IDB should proceed in full and should not be struck out or stayed, as IDB had argued.
PrivatBank is once again gratified that the Israeli court has found in its favour in refusing IDB’s appeal and recognising the importance of the Bank’s claims proceeding in a timely manner and without reference to the claims in England and the USA which concern different losses suffered by the Bank arising from different fraudulent schemes to that in respect of which the Israel claim has been brought. IDB will now be required to set out in full its defence to the Bank’s claims, which it has unsuccessfully tried to escape doing, including what became of the more than USD 600 million unlawfully extracted from the Bank once that had been paid into the bank account held with IDB.
PrivatBank is confident that, alongside IDB, its former owners and the other defendants to the claim will also be required to answer for their conduct before the Israeli court in due course so that the full scope of their alleged frauds can be exposed and appropriate financial recoveries received by the Bank.