That a major commercial bank here in Ukraine would choose to locate most of its ATMs throughout Roshen confectionery shops and factories might seem strange, but for International Investment Bank, or IIB – 60 percent owned by Ukrainian President Petro Poroshenko – that’s where the confusion begins.
On its website, IIB says they provide a range of commercial banking services to private and business clients. They list 24 ATMs across the country, mostly in Kyiv-located Roshen chocolate shops (and one, strangely, at a Poroshenko-owned shipbuilding center).
But locating IIB customers, clients or anybody who knows much about the bank is a difficult task. Investment bankers in Kyiv say they don’t have any dealings with the bank and don’t seem sure what it’s for.
One senior investment banker who asked not to be named because he’s not authorized to speak with the press, simply said “this is the president’s bank” and didn’t elaborate.
Finding company filings and reports on the bank is equally difficult, although the company does disclose some information on its website, it isn’t independently verifiable.
YouControl, an online service that aggregates official data from open government sources and court registries here in Ukraine, has almost no information on the bank, only that it has declared $9.7 million in authorized capital. At the same time, as of January 2018, NBU data shows that IIB has Hr 9.4 billion ($334.3 million) in declared assets.
Where this money comes from, who it belongs to and what it’s being used for remains less clear.
In most categories related to the company’s finances, YouControl reports that there is “no data in the public registers.”
IIB aren’t forthcoming with extra information or explanations. In fact, they come across as evasive and secretive. Unlike most commercial and investment banks in Ukraine, IIB doesn’t have a press service or public relations department. The bank declined multiple requests for an interview, nor did they reply to multiple official requests for comment. Some phone numbers on their website don’t work and when an employee finally did answer she said the bank doesn’t engage with media.
“We don’t give comments or any information to the media,” she said, declining to give her name. “We suggest you use open data sources and media to find your information.”
The shroud of secrecy around IIB and the difficulty in obtaining information about the bank’s clients, activities and purpose is fueling speculation that it’s a pocket bank for Poroshenko and his closest confidants.
Now, it also seems to have attracted the scrutiny of the central bank.
NBU-IIB battle
On March 28, Ukrainian news magazine Novoe Vremya cited court documents when they reported that the National Bank of Ukraine had investigated the IIB and decided to fine them.
The amount of the fine and details of the alleged offense are not disclosed, but the NBU did say the IIB fine was justified, citing “violation of the principles of the rule of law, legality, validity and prudence.”
IIB didn’t take it lying down. They responded by launching a counter-action against the NBU.
Novoe Vremya reports that IIB filed the lawsuit against the NBU in Kyiv District Court to challenge the fine that same month, but since the spring there has been no update on the situation and practically no media coverage related to IIB.
Earlier this year, the NBU announced a plan to conduct a “sustainability assessment” or “stress test” of twenty-five Ukrainian banks that between them account for 93 percent of the banking sector’s assets. IIB – despite their large amounts of capital – was conspicuously absent from the list of banks that would be assessed and no reason for this was provided.
If IIB had underperformed in the eyes of such assessment, or if it had been revealed to simply be a pocket bank for Poroshenko and his closest affiliates, it could have been liquidated or forced with closure – much like ninety other Ukrainian banks that have suffered a similar fate.
The NBU didn’t respond to requests for information or clarifications, nor did they respond to requests for an interview. An NBU spokesperson did say they were working to provide Kyiv Post with the requested information but needed more time.
Kyiv Post reached out to Elena Snezhko, head of strategic communications and media relations for the NBU. She said her team was working on providing an official response but nothing had been received by the time Kyiv Post went to print.
IIB was incorporated in 2008 and, despite little attention and media coverage, is not understood to have had any prior disputes with the NBU. During the two years after Petro Poroshenko’s 2014 election, Valeria Gontareva was the NBU governor – before that, she headed Investment Capital Ukraine or ICU, an investment fund with strong ties to Poroshenko and his affiliates.
At the time of writing, the nature of the relationship between the NBU and IIB remains unclear, as does the status of any legal dispute between them.
President’s transparency
Some politicians have learned the importance of being transparent with the public about their business dealings and income and Poroshenko has learned a harder lesson than most.
In 2016, lawyers said that a secretive company in the British Virgin Islands tax haven, registered to Poroshenko, raised lots of unanswered questions about the president’s finances. Observers and analysts said the scandal that followed badly eroded public trust in Poroshenko.
His BVI company, Prime Asset Partners – the existence of which was revealed by a massive leak of documents called the Panama Papers – was reported to anti-corruption investigators and suspected as an offshore scheme for evading tax which the president denies. Past claims that Poroshenko has transferred business holdings into a blind trust have also been disputed, owing to a lack of documentary evidence provided by the president.
In recent years, Poroshenko appears to have improved his efforts to declare income and dividend payments but it’s not clear how accurate such declarations are.
For 2017, his office declared income of about $580,000 (Hr 16.3 million) from interest payments. They said he received no dividend payments from his business interests, as reported by the Ukrainska Pravda newspaper. The previous year, Poroshenko declared capital holdings of 14,185 euros and 393 British pounds in deposits at IIB.
Meanwhile, IIB’s assets and financial performance remains shaded and confusing, as does their corporate strategy and commercial activities. IIB financial statements for the first three months of 2018 show a significant reduction in net profit, down to $348,000 from $960,000 in the same period last year.
What is clear, according to central bank records, is the bank’s ownership structure: 60 percent owned by Poroshenko while other minority stakes are held by his closest affiliates in politics and business – Ihor Kononenko, Oleh Hladkovsky and Oleh Zimin.
