The first theft came when they opened a bank (requiring no disclosure of ownership before 2014), took deposits from an unsuspecting public, sometimes promising exorbitantly high interest rates. They then lent the deposits to themselves or their friends or their companies, with no intention of repaying.
The second theft came when the shell game could no longer be sustained and the bank collapsed. So they robbed the Ukrainian taxpayers, who have had to fork over $3 billion and counting to guarantee the insured deposits of individuals (up to a legal maximum of Hr 200,000 or $8,000 per person).
The third theft came when some of these bank owners, until earlier this year, were able to buy confiscated assets on the cheap from failed banks in rigged, unpublicized and uncompetitive auctions.
In America’s bank-robbing gangster era of the 1930s, John Dillinger, Bonnie & Clyde, Alvin Karpis, Pretty Boy Floyd, Baby Face Nelson and “Slick” Willie Sutton cleaned out bank after bank, often violently.
Financially, however, these Americans were amateurish pikers compared to the likes of Ukraine’s great bank robbers of the early 21st century: Andriy and Serhiy Klyuyev, Dmytro Firtash, Viktor Polishchuk, Mykola Lagun, Kostyantyn Zhevago, Serhiy Kurchenko and Leonid Klimov. The list is likely to grow.
These and others managed to wreck Ukraine’s banking system and rack up $11.4 billion in losses for a nation that teetered on the edge of bankruptcy as the looting came to light after the EuroMaidan Revolution in 2014.
Who is to blame? Plenty of people, including President Petro Poroshenko, who served many years on the board of directors of a National Bank of Ukraine that did not even demand to know who owned the banks they were supposed to regulate. The whole mess stinks of insider dealing at the expense of poor Ukrainians, once again.
Top 5 deadbeats from failed private banks and amounts they owe to nation’s central bank
These five people ran banks, now insolvent, that still owe Ukraine’s central bank Hr 42 billion ($1.7 billion) in unpaid refinancing loans, more than half the Hr 81 billion ($3.2 billion) owed. When Valeria Gontareva took over as NBU governor in 2014, the total was Hr 110 billion ($4.4 billion), but Hr 29 billion ($1.2 billion) has been paid off. Sources: National Bank of Ukraine, Deposit Guarantee Fund of Ukraine.
Blame continues to today as central bank governor Valeria Gontareva and members of parliament, some of whom defaulted on multimillion-dollar bank loans, guard bank secrecy at the expense of the public’s right to know what happened. They are also not pressing hard for criminal prosecutions of bank fraud.
Can it still happen? Of course it can. Law enforcement has shown that nobody is in danger of being prosecuted so, without the fear of legal consequences, why wouldn’t crime keep flourishing? Excessive bank secrecy is guarded by gatekeepers like the ultimate insider Gontareva, who will keep protecting the shenanigans from ordinary Ukrainians who, as usual, are treated as human trash whose job is to pay the bills.
Poroshenko takes even more blame because he installed loyalists as heads of the three key government institutions — General Prosecutor’s Office, Deposit Guarantee Fund and National Bank of Ukraine. Together, they refuse to get their act together (“it’s not my responsibility”) and see to it that justice is done and people are prosecuted for bank fraud.
Consequently, poor Ukrainians will not see these looted billions again. They will also be repaying international loans for years to come from their taxes to cover this financial hole as billionaires and millionaires drive the streets of Kyiv in their Mercedes or take up residence in their mansions in exile abroad, with no fear of punishment or seizure of their ill-gotten riches.
Westerners, this is not reform, so temper your praise with the hard recognition that nobody’s been punished here for one of the world’s great robberies of all time.
Raw sewage smells sweeter than the Great Ukrainian Bank Robbery of the first 16 years of the 21st century.
But there are solutions. First, the NBU must make a public registry of those who are not repaying loans. Second, there must be special prosecutors working on asset recoverycases. Third, convicted crooks must finally be put in jail and have their assets seized in civil proceedings so that others will not be tempted to do the same.
