On 18 December 2019, PrivatBank initiated a fraud claim in Israel against, among others, its billionaire oligarch former owners, Igor Kolomoisky and Gennadiy Bogolyubov. The Bank argued the defendants had perpetrated an unlawful scheme, in which at least U.S.$600 million was misappropriated between 2007 and 2011 and transferred to an account held at one of Israel’s largest banks, Israel Discount Bank (“IDB”).
In a recent judgment issued on 28 May 2023, the Tel Aviv District Court found that PrivatBank has a “good arguable case” against Kolomoisky and Bogolyubov. The court held that it had been sufficiently proven by PrivatBank for the purposes of its assessment on jurisdiction that, during Kolomoisky and Bogolyubov’s ownership of PrivatBank, funds were funnelled to Israel through a complex and elaborate series of transfers. The Israeli court criticised Kolomoisky and Bogolyubov for failing to provide any factual account in response to the claims made against them and for failing to submit themselves for cross-examination, which, PrivatBank maintains, makes it clear they have engaged in fraudulent behaviour. The court also dismissed the former owners’ claim that they had been persecuted by the Ukrainian government, which it said weakens their argument to have the dispute adjudicated in Ukraine.
The court further held that the claim raises serious issues for public consideration, due to the involvement of IDB. In this regard, the court found that because IDB intends to use an Israeli law procedure to summon the former owners to appear in the case for the purposes of the determination of PrivatBank’s claims against IDB, there can be no doubt that they are required to defend PrivatBank’s claim in Israel.
Despite its various favourable conclusions, the court held that Israel is not the appropriate forum to hear the claim. PrivatBank is entitled to appeal this decision, as it continues seeking justice for the unlawful conduct of its former owners.
PrivatBank’s Chairman of the Management Board, Gerhard Bösch, said: “We welcome the court’s finding that we have a good arguable case against the former owners for a fraud against PrivatBank totalling hundreds of millions of dollars. The lack of any credible defence offered by Kolomoisky and Bogolyubov and their total refusal to give evidence is consistent with their efforts, at every step, to avoid taking any responsibility for their blatant and unlawful conduct. We remain confident that Israel is indeed the appropriate forum to hear this claim and we will continue to pursue justice in every jurisdiction where it is right to do so.”