Danylyuk cites Privatbank conflict as key reason for resignation

4 October 2019

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.

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