Months after his bank was declared to be a Ponzi scheme, and years since his egg empire began to show cracks, businessman Oleh Bakhmatyuk has gone on the offensive.
The 42-year-old Ivano-Frankivsk native published an open letter on his company UkrLandFarming’s website on Jan. 17. In the note, available in both Ukrainian and English, Bakhmatyuk accuses National Bank of Ukraine Governor Valeriya Gontareva of organizing a “raid” attempt against his business.
Addressing President Petro Poroshenko and Prime Minister Volodymyr Groysman, Bakhmatyuk appeals for help against “attempted takeover raids, information and legal attacks, and financial and regulatory pressure from the NBU.”
Known as Ukraine’s “egg king,” Bakhmatyuk made a small fortune through his poultry-based company Avangard. The millionaire went public with his farming company, Ukrlandfarming, in 2010 on the London stock exchange.
But then Ukraine’s economic woes and an NBU crackdown on his two banks, Financial Initiative and VAB, led to the businessman’s downfall and loss of his banks to government liquidation.
Between the two banks, Bakhmatyuk received Hr 11 billion ($440 million) in refinancing loans from the NBU under his personal guarantee. He has paid neither back. Bakhmatyuk has filed court cases attempting to regain control of his banks.
Accusations
Through it all, however, Ukrlandfarming and Avangard have remained in operation – albeit with debts totaling $1.3 billion and $345 million, respectively.
And now, after a year spent on the back heel, Bakhmatyuk has unleashed a volley of accusations against members of the president’s inner circle, appealing to Poroshenko himself to effectively go after his own closely held allies.
“We are concerned lest the company’s difficult situation, caused by the losses it has sustained in the occupied territories, and further aggravated by the pressures being put on its business through NBU channels, should force it down Mriya’s path – a company currently undergoing bankruptcy proceedings,” Bakhmatyuk writes, apparently aiming for a sensitive spot in relations between government and the business community.
“The Mriya situation caused quite a ripple both economically and politically when debt to foreign creditors was simply ‘written off,’” he notes.
The former bank owner goes on to accuse the NBU governor of profiting off the collapse of VAB and Financial Initiative through fraudulent debt sales.
Bakhmatyuk names Investment Capital Ukraine, the Kyiv-based firm that Gontareva used to head and which briefly managed Poroshenko’s Roshen assets, as part of the scheme.
“To the best of our knowledge, some of those T-bills were resold to the ICU, an investment company owned by Ms. Gontareva’s former colleagues. It can be said with certainty that it is Ms. Gontareva’s partners who have benefited from the introduction of the provisional administration,” Bakhmatyuk writes, without offering any evidence of the allegation.
ICU called the accusations “a lie,” saying in a statement that there is nothing amiss in their working relationship with the NBU.
Raising stakes
The central bank did not reply to a request for comment. In the past, NBU officials have cited widespread insider lending at Bakhmatyuk’s banks – a practice endemic in Ukraine’s financial sector – as the reason for collapse.
Some analysts see Bakhmatyuk’s letter as a sign of his raising the stakes in his battle with the government.
“The open letter to top Ukrainian officials was published on the website of Ukrlandfarming in two languages, Ukrainian and English. This leads us to believe it is aimed not at top officials (with whom Balkmatyuk can regularly meet, as we can tell from the letter) but the creditors of Ukrlandfarming,” wrote Alexander Paraschiy of Concorde Capital in a research note.
Paraschiy added that the egg magnate is attempting to pin his company’s problems on the NBU.
“We should expect some moves soon in restructuring the debts of Ukrlandfarming and Avangardco, which look unaffordable for both companies, regardless of Gontareva’s campaign against Bakhmatyuk,” Paraschiy added.
