Ukraine’s Central Bank Blames Oligarch for ‘Focused Attack’

(Bloomberg) -- Ukraine’s central bank openly accused billionaire Igor Kolomoisky of orchestrating an intimidation campaign through public protests and negative media coverage as he fights to win back control of the country’s biggest lender from the state.

Kolomoisky has clashed with officials over the 2016 nationalization of the country’s biggest lender, Privatbank, which he used to own, and allegations that he siphoned $5.5 billion from its coffers that the government is trying to recoup.

The battle has complicated Ukraine’s efforts to secure about $5 billion in new aid from the International Monetary Fund and is shaping the fledgling presidency of Volodymyr Zelenskiy, a former associate of the tycoon. The dispute has focused the spotlight on whether the president can meet his pledge to end oligarchs’ oversize influence on the former Soviet state’s economy and has included alleged mafia-style threats against top officials.

In the first time it has publicly pointed the finger at Ukraine’s richest man, the National Bank of Ukraine said it was the subject of a “focused attack” that included demonstrators trying to enter its Kyiv headquarters by force.

Kolomoisky’s aim is to discredit the central bank, avoid having to pay back the funds lost in the bank’s collapse and to interfere with Kyiv’s talks with the IMF, which supports the push by the government and the central bank to force the owners of bankrupt lenders to repay bailout costs.

“The NBU has been besieged by speculation and slander in the media, paid rallies in front of the NBU building, and even an attempt by hired thugs to forcibly invade it,” the central bank said in a statement Wednesday. “We believe that this pressure on the NBU comes from Igor Kolomoisky.”

Kolomoisky, whose ties with the president include his television station broadcasting the sitcom that that helped propel former comedian Zelenskiy to the nation’s top job, didn’t immediately respond to phone calls and text messages seeking comment.

‘No Businessman’

Like the tycoon, Zelenskiy denies anything untoward in their relationship and said he supported central bank head Yakiv Smoliy. He insisted the governor’s independence was enshrined in law and “no businessman” could pressure him or cause his dismissal.

“We’re in constant contact,” Zelenskiy told journalists in Vilnius, Lithuania. “No businessman can replace or fire this person. I believe the central bank governor is protected and he can work.”

The bank cited media reports that protesters outside of its gates were being paid to demonstrate. It said that employees of Kolomoisky’s Nikopol Ferroalloy Plant and other companies had joined the rallies and argued that they were being directed by a member of parliament allied to the billionaire. Smoliy said the central bank “was, is and will be independent and will conduct its policy to cut inflation.”

“The protesters and organizers of these protests want the IMF program not to happen because the IMF, in coordination with the government, the central bank and the president, is demanding that the former owners of the banks to return funds that were channeled out,” the governor told journalists in Kyiv. “But talks with the IMF are ongoing and we hope they will be completed successfully.”

Coffin Threat

The negotiations with the IMF have also suffered. A mission from the Washington-based lender left Ukraine last week without sealing the staff-level agreement originally targeted by the government for September.

This isn’t the first pressure the central bank has endured.

After leading a crackdown on illegality in the financial system and closing down almost 100 lenders, Governor Valeriya Gontareva faced harassment that included a coffin with her photograph on top of it being sent to her offices.

The tactics didn’t end when she resigned in 2017. Her family home outside Kyiv was torched this year along with a car registered to her daughter-in-law -- incidents she says are revenge for her clean-up efforts.

A Ukrainian court is set to issue a key ruling on Privatbank‘s nationalization next month.

--With assistance from Milda Seputyte and Daryna Krasnolutska.

To contact the reporters on this story: Volodymyr Verbyany in Kiev at vverbyany1@bloomberg.net;Kateryna Choursina in Kyiv at kchoursina@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Michael Winfrey, Andrew Langley

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