Bakhmatyuk asks top Ukraine officials to support him against NBU

Oleg Bakhmatyuk, the key shareholder of Ukrlandfarming (UKRLAN) and egg producer Avangardco (AVINPU, AVGR LI), published on Jan. 17 an open letter to Ukraine’s president and prime minister asking them to support him in his conflict with the head of the National Bank of Ukraine (NBU), Valeria Gontareva. He claimed Gontareva is personally “disseminating false information” about the size of the debt of his two failed banks to the state budget and the size of related party loans provided by the banks. He said she was also personally attending court hearings involving Bakhmatyuk’s banks “and talking to judges and court heads, prior to and during the course of court sessions,” possibly applying pressure. He said he believes her actions were “part of a targeted information attack and legal pressure” aimed at forcing Ukrlandfarming into bankruptcy.

 

Moreover, in his letter, Bakhmatyuk also accused the NBU of declaring insolvent his bank Finansova Initsiatyva “on completely fictitious grounds” by discounting UAH 2 bln in domestic government bonds held by the bank. “To the best of our knowledge, a portion of those T-bills was resold to ICU, an investment company owned by Ms. Gontareva’s former colleagues,” he wrote.

 

Bakhmatyuk asked top officials to “personally intervene in this situation,” otherwise his company will not be capable of “settling with its foreign or domestic creditors or repay the funds borrowed from the government under refinancing loans.”

 

Recall, Bakhmatyuk’s VAB Bank was recognized insolvent in November 2014, and its bank Finansova Initsiatyva was recognized insolvent in June 2015. According to the NBU, Bakhmatyuk and his banks owe UAH 38 bln to the state and depositors, while Bakhmatyuk claims it owes just UAH 20 bln to the NBU and State Deposit Guarantee Fund.

 

Alexander Paraschiy: With the published open letter, Bakhmatyuk has raised the stakes in his fight with Gontareva as he accused her of having direct benefit from the recognition of Finansova Initsiatyva bank as insolvent. Thus far, we do not understand the reasons and need for such a strong move as nothing endangers the future of Ukrlandfarming, in our view.

 

For instance, courts and law enforcement agencies often have made decisions in favor of Bakhmatyuk in the various court proceedings surrounding his failed banks, so we don’t think Gontareva influenced much, as implied by Bakhmatyuk. As for the NBU’s attack campaign against Bakhmatyuk (which sometimes looks dirty indeed), we don’t think it’s likely to spoil his reputation, which was far from ideal to begin with.

 

Bakhmatyuk now faces the risk of new legal claims against these new accusations. For instance, the claim of the NBU’s groundless recognition of Finansova Initsiatyva as insolvent looks strange. In our view, the NBU had enough grounds to liquidate the bank just after it recognized as insolvent the related VAB Bank.

 

Interestingly, 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.

 

Namely, Bakhmatyuk is trying to blame all of Ukrlandfarming’s financial hardships on Gontareva’s attacks, having shifted away from blaming the Donbas war (which was plausible when it started but isn’t persuasive anymore). That said, we should expect some moves soon in restructuring the debt of Ukrlandfarming and Avangardco, which looks unaffordable for both companies, regardless of Gontareva’s campaign against Bakhmatyuk.