Ukreximbank, journalysts comment on reasons behind conflict with CEO

The Oct. 4 conflict between Radio Liberty journalists and CEO
of Ukreximbank (EXIMUK), Ukraine’s third biggest bank by assets, emerged around
discussion of the bank’s USD 60 mln loan to finance the purchase of a trading
mall in Kyiv, both sides reported on Oct. 7. At their press-conference, the
bank’s acting CEO and supervisory board head explained that there was nothing
wrong in the loan, provided in April 2021. The borrowers are two companies related
to the Ukrainian citizen Serhiy Briukhovetsky, who bought the shopping mall
SkyMall for USD 80 mln. During the KYC process, the bank “revealed no
information that would indicate the existence of any criminal cases” with
Briukhovetsky companies. The bank took the mall as collateral under the loans,
as it had concluded that on-going litigations around the mall “did not
jeopardize the borrowers’ ownership rights” over the property.

The Radio Liberty issued on the same day their investigation
claiming that at least one of the companies related to Briukhovetsky is
operational in the uncontrolled territory of eastern Ukraine and has paid RUB
3.5 mln “taxes” to “Donetsk People’s Republic” this year, thus having supported
terrorist activity on Ukrainian territory. The journalist’s question about this
led to the conflict during the Oct. 4 interview with the bank’s CEO Yevhen
Metzger which ended up in the attack on the journalists.

In other news, law enforcement bodies reported that they
have submitted notices of suspicion to Metzger and the head of the PR division
of the bank, who are blamed for the attack on the journalists. On Oct. 6,
Metzger wrote a request to temporarily dismiss him from the position of CEO for
the duration of the investigation into the attack on the journalists.

On Oct. 8, Metzger commented on the journalists’
release that the bank did nothing wrong as it took an asset worth USD 107 mln
as collateral under the USD 60 mln loan, the loan has been approved by all the
bank’s authorities in due manner (including the security service of the bank)
and the loan is being serviced.

SkyMall, one of the largest Kyiv shopping malls, has
been a subject of international scandal for more than a decade. Estonian
businessman Teder Hillar, the initial investor, claims his right over the mall,
which he was deprived of in 2010. In 2016, London Court of International
Arbitration ruled that the rights over the mall should be returned to Arricano
Real Estate, the company related to the initial investor. In 2017, The High
Court in London upheld that ruling. These rulings, however, have not been
enforced in Ukraine. The mall has changed hands many times since then. In April
2021, Arricano reported its Estonian investors sent a notice of investment
dispute to Ukraine’s president and the Ministry of Justice demanding
compensation of USD 750 mln, claiming that “Ukrainian authorities had
expropriated their investments.”

Alexander Paraschiy: Formally,
the bank did nothing wrong by providing a loan to Ukrainian companies which
have sizeable collateral. However, the loan does not look typical for a
state-controlled bank whose primary goal is to finance export-import
operations. Also, for the bank’s reputation, it does not look optimal to finance
the purchase of an asset which is a subject of international scandal. Finally,
the bank’s security service might have under-performed in terms of learning all
the activities of the borrower. On top of that, the rude reaction of the bank’s
CEO to the journalists questions suggest that the bank has nothing to be proud
of in this sizable loan story.

Also, the fact that Metzger did not resign
voluntarily (just asked for temporary leave) implies he is hoping to return to
the CEO position. So he sees nothing wrong in attacking journalists, and hopes
to prove this position to the supervisory board. That tells nothing good about
the corporate culture in the bank. On the other hand, this does not affect
EXIMUK bonds.