The written judgment of Mr Justice Fancourt was finally handed down in the High Court in London today.
The same judge has already given the Bank permission to appeal the first instance decision on jurisdiction at a hearing that took place in London on 23 November 2018.
The Bank will file its appeal soon.
The US$2.6 billion worldwide freezing order against the Bank's former shareholders, Igor Kolomoiskiy and Gennadiy Bogolyubov, and six companies believed to be controlled by them, remains in place in the meantime. The Defendants continue to be prohibited from, among other things, disposing of their assets without the consent of the Bank or permission of the English Court.
Today's judgment records the judge's findings that "There is no difficulty with the Bank’s proving a good arguable case of a fraudulent scheme… the evidence is nevertheless strongly indicative of an elaborate fraud… and money laundering on a vast scale… There is a highly complex network of multiple loans and prepayments to suppliers…. The artificial complexity of this is itself indicative of a fraudulent scheme" (Judgment, para. 25-26).
The Bank's claim relates to a fraudulent scheme concerning US$1.9 billion of loans which were used to make pre-payments to the six corporate defendants pursuant to "sham" supply agreements which "could not have been performed and the obvious inference is that there was no intention that they would be. They were used as a deceptive basis on which to justify very large of sums of money flowing out of the Bank" (para. 26). US$1.8 billion flowed through the three English companies.
The judgment records that "For the purposes of these applications, all Defendants do not dispute that there is a good arguable case that US$248 million of loss was caused to the Bank by the pleaded fraud… (para. 11) It is, of course, unattractive for the First and Second Defendants [Kolomoisky and Bogolyubov] to admit a good arguable case of fraud on an epic scale against them and yet seek to prevent this court from investigating the matter" (para. 104). In the event, the judge found that the Bank has a good arguable case of fraud in an amount exceeding half a billion US Dollars.
The Bank maintains its case that this fraudulent scheme caused losses of US$1.9 billion plus interest (which accrues at around US$500,000 per day), and remains confident that it will ultimately succeed in bringing the claims to trial in London. As at today, the Bank's claims (including interest) amount to almost US$3 billion.
As previously https://en.privatbank.ua/news/2018/11/23/795, PrivatBank's CEO, Petr Krumphanzl said "The judge found that the Bank has a good arguable case that the former shareholders are responsible for a multi-billion Dollar fraud on the Bank. We remain committed to recovering these funds through the London court process and retain our faith that the English court will ultimately do justice between the parties".
Richard Lewis, Partner at Hogan Lovells, added "This decision involved a number of complex areas of the law in the jurisdictional context, which the judge himself accepted were far from straightforward. It was all but inevitable that those points – which were critical to the determination of the Defendants' jurisdiction challenges – would ultimately fall to be determined by the Court of Appeal, and we are confident that they will be resolved in the Bank's favour. If, as we expect, the Bank's claims ultimately proceed to trial in England, the fact that the Defendants have made no attempt to justify the documentation used to justify the misappropriation will make it very difficult for them to defend the Bank's claims on the merits".
