NABU detains former Gontareva deputy in Bakhmatyuk bank case

The National Anti-Corruption Bureau of Ukraine (NABU)
detained on Nov. 11 seven suspects in a criminal case of misappropriation of
funds in a UAH 1.2 bln stabilization loan that the National Bank (NBU) provided
to VAB Bank in 2014, the bureau reported the same day. Current and former
officials of the NBU and VAB Bank were detained, the NABU reported, providing
no other details on the issue.

Just before the NABU statement, local media reported
that the bureau detained Alexander Pisaruk, CEO at Raiffeisen Bank Aval (BAVL
UK), who served as NBU deputy governor between September 2014 and December
2015. Before joining the NBU, Pisaruk worked as regional head for ING Bank in
Central and Eastern Europe. After leaving the NBU, he worked for 3.5 years in
Washington as senior financial sector expert at the IMF.

Commenting on Pisaruk’s detention, former NBU Governor
Valeria Gontareva said the same evening that “terror is intensifying.” “He and
I were cleaning all these Augean stables,” she said, referring to their efforts
to rescue Ukraine’s banking system in 2014-2015.

In the morning of Nov. 12, Oleg Bakhmatyuk, former
major shareholder of VAB Bank, owner of Ukrlandfarming and major shareholder of
Avangardco (AVGR LI), confirmed that some of his employees were detained. He
condemned the NABU’s actions. In an open letter to President Zelensky,
Bakhmatyuk asked him to instruct law enforcement bodies to “return to the law
and elementary logic.” 

It seems like Pisaruk’s detention is related to the
NBU’s provision of a UAH 1.2 bln stabilizing loan to VAB Bank in October 2014.
The bank was recognized insolvent a month later. As reported by the
epravda.com.ua news site, NBU officials are suspected of lending to VAB Bank in
violation of banking rules. In particular, NABU suspects VAB Bank did not
provide the necessary list of documents when applying for the loan. Also, VAB
Bank officials are accused of misappropriating money received from the NBU as
the funds were allegedly used to repay related party loans/deposits and were
withdrawn from the bank in cash.

Alexander Paraschiy: Whatever
wrongdoings are alleged, Pisaruk is not the best prosecution target for the
Zelensky administration. Pisaruk has a strong reputation in Ukraine’s banking
sector, having worked for the IMF and Ukraine’s biggest international bank
afterwards. Most likely, the IMF won’t welcome NABU’s move.

A different story is Bakhmatyuk, whose reputation
in Ukraine is not as solid. NABU’s latest move against him further proves our
view that the debts of Bakhmatyuk’s companies, including the Eurobonds of
Avangardco (AVINPU) and Ukrlandfarming (UKRLAN), have little value.