Danylyuk cites Privatbank conflict as key reason for resignation

The conflict around Privatbank became the trigger for
Oleksandr Danylyuk’s decision last week to resign as secretary of the National
Security and Defense Council, he told the lb.ua news site in an interview
published on Oct. 4. Recall, Danylyuk was finance minister at the time of the
government’s decision to nationalize Privatbank in December 2016, being among
the key officials involved, alongside former National Bank Governor Valeria
Gontareva. After the government contributed UAH 155 bln (USD 5.9 bln) into the
bank’s equity, a former key shareholder, Ihor Kolomosiky, filed scores of
lawsuits against the bank’s nationalization with demands for compensation for
his lost property.

“When I was meeting with investors and government
officials of partner countries, everybody was asking about Privatbank,” Danylyuk
told lb.ua. “I responded that there are risks (of a Kolomoisky revanche), but I
am present in (Zelensky’s) team so that these risks do not materialize.” After
these promises, Danylyuk said he could not remain on the team, lb.ua reported.

In the interview to lb.ua, Danylyuk also expressed his
view that the current head of the President’s Office, Andriy Bohdan, has a
conflict of interests. Bohdan served as the personal lawyer to Kolomoisky
between 2014 and 2019, playing a central role in the billionaire’s attempts to
sue against Privatbank’s nationalization. In an interview to BBC published on
Oct. 3, Danylyuk said Bohdan should “write not a joking, but a real resignation
letter, as I did. That would be a professional position.” Danylyuk acknowledged
tense relations with him, but they were not related to Privatbank. “We simply
have absolutely different values, different approaches and different
backgrounds,” Danylyuk said. “I simply lived half my live abroad and saw how
everything works in developed countries. That is, I want for Ukraine to be
successful and I understand what is needed for that. For a transparent
government and independent institutions to emerge.”

Alexander Paraschiy: Danylyuk’s
comments to lb.ua imply he was the key defender of the state’s position in the
dispute with Kolomoisky for Privatbank. His presence in the Zelensky team was a
form of insurance that Kolomoisky’s inevitable attempts to get compensation for
Privatbank would meet adequate resistance in the government. Therefore,
Danylyuk’s resignation is a worrying signal for the future position of the
government in Privatbank case, and Ukraine’s prospects to secure a new IMF program
as well.

Recall, the IMF stated several times that the
government should make its best efforts to recover its losses from the former
shareholders of failed banks, especially Privatbank. If Ukraine fails to show
efforts in this direction, the IMF deal could be delayed. So far, it is hard to
foresee its approach to Privatbank, but we still expect the government will be
able to convince the IMF of the sincerity of its attempts to resolve the issue
with maximum benefit to the state.