Name: Rostyslav Kravets
Position: Private lawyer
Key point: Pressuring the government over clients who lost money in banks
Rostyslav Kravets no longer trusts bankers.
“I used to look at them with great reverence,” he says.
Now, after years of experience in the Ukrainian banking system, he represents depositors defrauded by bankers. And in a country where unregulated insider lending among bank owners is the norm, Kravets has no shortage of cases.
“After all these court cases and from interacting with them, it seems like the words ‘fraudster’ and ‘banker’ have become synonymous,” he said.
Kravets is one of many lawyers in Kyiv who have made a career out of rampant fraud in the country’s banking sector, which could end up costing taxpayers $20 billion in losses. So far, nobody has been convicted of bank fraud, even as the National Bank of Ukraine has declared half of the nation’s 180 banks as insolvent.
Kravets and other lawyers have filed lawsuits against the Deposit Guarantee Fund. The aim is to force the institution into paying people who lost their money in fraudulent schemes operating under bank cover. More controversially, he also represented the former CEO of Bank Mikhailivsky, Igor Doroshenko, before ending the contract after his client attempted to flee in January.
The cases have put pressure on the government. A round of court cases and public protests over Bank Mikhailivsky, for example, forced President Petro Poroshenko into signing a law in November that made the bank’s former depositors eligible to receive DGF payouts even though the Mikhailivsky fraud funneled clients’ money outside of the insured portion of the bank.
Located in an office building down the street from the country’s Deposit Guarantee Fund, Kravets has assembled a white collar law firm since the 2008 global financial crisis, when he got his start.
Called Kravets & Partners, the group focuses on filing civil lawsuits on behalf of people who claim to have been defrauded by Ukraine’s banks.
“I was at a bank last week that was still working, and it was like I’d come to speak with a walking corpse,” Kravets said. “They say that they’d develop some sort of program, but I can tell that even the bankers don’t believe what they’re saying.”
Kravets talks publicly about legal issues involving banking, but doesn’t take part in protests by defrauded depositors. But the Kyiv attorney has no problem leveling scandalous accusations against National Bank of Ukraine Governor Valeria Gontareva.
“We’ve filed tons of cases against Gontareva,” Kravets told the Kyiv Post. “All of Gontareva’s actions are directed towards the destruction of Ukrainian banks.” At the same time, he conceded: “There’s no one better to replace her, that’s the problem.”
Protest attorney
Kravets is not the only lawyer trying to recover money for depositors who have lost their uninsured money in banks – there’s plenty of people like this in Ukraine.
The depositors themselves also share part of the blame, with many placing their savings in banks that offered astronomical annual interest rates of 40 percent.
Arsen Marinushkin, a Kyiv lawyer fond of wearing pinstriped suit, practices in an office off Khreshchatyk Street. He got involved after losing money in VAB bank.
“If you don’t take any notice of us, then we promise you a third, ‘financial Maidan,'” Marinushkin was quoted as saying at a 2014 protest over the bank’s collapse. Since then, he has represented clients in civil cases against banks and the government, including Bank Mikhailivsky depositors.
Defrauded depositors from Bank Mikhailivsky protest outside of the Ukrainian parliament on Feb. 7. Arsen Marinushkin, a Kyiv lawyer, has represented the group in court. (Anastasia Vlasova)
Political ends?
Both Marinushkin and Kravets have crossed paths with political forces that have much to lose from the central bank’s cleanup of the sector.
News website Ukrainska Pravda associated Kravets with ex-Justice Minister Andrey Portnov, who worked in the era of ex-Ukrainian President Viktor Yanukovych, driven from power on Feb. 22, 2014 by the EuroMaidan Revolution.
He was reportedly part of a group of lawyers that Svoboda member of parliament Andrey Ilenko had called for police to disperse, saying they were former Portnov associates.
When Kravets met with the Kyiv Post, he had a red pamphlet in his office accusing Gontareva of corruption. The pamphlet was produced and released by Donbas businessman and member of parliament Sergiy Taruta at an International Monetary Fund meeting in Washington, D.C., in October.
The pamphlet was seen by many in Kyiv as part of a campaign by billionaire oligarch Ihor Kolomoisky to discredit the NBU to prevent it from nationalizing his PrivatBank.
Kravets says that most of his clients are defrauded depositors, and that he took the pamphlet from some of Taruta’s people who visited his office. But he says he doesn’t work with Taruta.
One week after the Taruta pamphlet was released, Bank Mikhailivsky protesters staged a massive action that shut down the center of Kyiv.
“I sympathize with them, but I don’t organize protests,” Marinushkin said. “If you look at it, other banks like Forum and VAB had much better-organized protest campaigns.”
Regardless of whether they will have success in recovering lost money, these lawyers are making their name by criticizing central bank policies they say hurt Ukrainian nationalism.
Kravets faults the NBU for turning for giving state-owned and foreign banks majority control of Ukraine’s banking system. With the nationalization of PrivatBank, state-owned banks now account for nearly 52 percent of the sector. Assets held in Ukrainian banks account for 13 percent.
Russian banks make up 11 percent by assets.
“The NBU needs to focus on Ukraine, not foreign investors,” Kravets said, although he conceded that Ukrainian banks set a poor example: “The average insider loans rate at Ukrainian banks is around 60 to 70 percent.”
Marinushkin, however, was far less positive.
“I don’t keep my money in the banks here because I’m not crazy,” he said. “The Ukrainian banking system is built so that depositors take responsibility for the risks of the government and the bank owners.”
If that’s true, then it doesn’t look like lawyers will be winning any civil lawsuits on behalf of clients anytime soon.
