Prosecutors in Ivano-Frankivsk Oblast attempt to seize Bukovel ski resort from Privatbank

According to court records obtained by NV Business, the Yaremche city court in Ivano-Frankivsk Oblast is currently considering three cases brought by the local prosecutor’s office, challenging PrivatBank’s ownership rights to the land in Polianytsia, where the Bukovel ski resort is located.

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The prosecutor’s office claims that in the early 2000s, the aforementioned land plots were illegally transferred from state ownership to certain individuals based on forged decisions of the Polianytsia village council.

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It is worth noting that PrivatBank, Ukraine’s largest bank, was on the brink of bankruptcy and was nationalized at the initiative of its majority shareholders, Ihor Kolomoisky and Hennady Boholyubov, who signed the relevant letter to then-Prime Minister Volodymyr Groysman on Dec. 16, 2016. The Ukrainian government, with the agreement of the IMF, became the owner of the insolvent PrivatBank at that time to avoid financial collapse, and as a result, 155 billion UAH ($4.2 billion) of taxpayers’ money was injected to save the bank. In January 2018, the results of an investigation into the bank, known as the Kroll investigation, were published, which confirmed that PrivatBank had been subjected to large-scale coordinated fraudulent actions – amounting to $5.5 billion prior to nationalization.

Case origins

In 2015, the first deputy prosecutor of the oblast filed a series of lawsuits to the Yaremche City Court in the Ivano-Frankivsk Oblast against the Polianytska Village Council and private individuals, demanding the invalidation of property rights to land plots and their return to state-ownering, claiming that forest land plots in Polianytsia, among others, were illegally transferred from state ownership to certain individuals based on forged decisions from the Polianytska Village Council in the early 2000s.

Of the specified lawsuits, three relate to land plots owned by PrivatBank (case No. 354/658/15-ts, under the jurisdiction of Judge M. Ostapyuk and Nos. 354/671/15-ts, 354/678/15-ts under the jurisdiction of Judge T. Vavriychuk).

Problems with the prosecutor’s actions

At the time of the submission of these three lawsuits, the disputed land plots had already been transferred by the initial recipients, private individuals, to third-party legal entities (LLC “Bukovel Star” and LLC “Skorzonera,” which are associated with the former owner of PrivatBank, Ihor Kolomoisky). However, for some reason, the prosecution did not properly verify this fact, which resulted in the submission of these lawsuits to the general jurisdiction court, whereas they should have been submitted to the commercial court.

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The subsequent court proceedings resulted in the disputed land plots being transferred to the ownership of PrivatBank under mortgage agreements. One agreement is between PrivatBank and Skorzonera (concerning the land plot in case No. 658, where the resort’s above-ground parking lot is located, near the cable cars), while the other agreement is between the bank and Bukovel Star (covering a land plot, parts of which are claimed in cases No. 671 and No. 678 and where the eponymous hotel complex is located).

According to the case materials, the prosecution acknowledged the shortcomings of the filed lawsuits and repeatedly requested the court to involve new defendants (Bukovel Star, Skorzonera, PrivatBank) in the case and to change the subject of the lawsuit. Initially, the demands in all cases were to “return” the land plots from individuals, but were changed to “recover” them from PrivatBank. Then, in cases Nos. 354/671/15-ts and № 354/678/15-ts, the prosecutor also changed the person (effectively the plaintiff), in favor of whom the plots are to be recovered – from the “Vorokhtyanske forestry enterprise” to the State Agency of Forest Resources of Ukraine, which was deemed the rightful owner of the plots according to the courts.

The prosecutor’s attempts to rectify the flaws in the lawsuits filed in 2015 may have been the motive behind their actions.

Court proceedings revealed that lawyers for PrivatBank argued that the prosecutor’s actions contradicted procedural law, as the prosecutor essentially presented new claims that should have been heard by a court of different specialization.

However, the Yaremche City Court rejected all of the bank’s petitions.

Risks of the prosecutor’s activity

If the disputed land plots are taken away from PrivatBank, the prosecutor’s actions will not protect the interests of the state, since the state will still suffer losses through the state-owned bank. Therefore, the prosecutor’s stated objective to safeguard the state’s interests appears to be contradictory.

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Furthermore, if land plots are taken away from PrivatBank, the bank will have the right to demand compensation for the corresponding losses. According to the court registry, within case No. 671, the bank filed a counter-claim for compensation for the improvement of the land plot for the amount of 3.5 billion UAH ($95 million) (presumably the value of the aforementioned hotel complex). Thus, the state-owned bank may suffer losses in the amount of this claim due to the consideration of cases No. 671 and No. 678.

Thus, as evidenced by the financial institution’s arguments, if the prosecutor’s claims are satisfied, the bank will incur losses and will be forced to seek compensation for its losses. These losses will be related to compensation by the State Forest Resources Agency for the value of essential improvements to the land plots.

At the same time, it appears that individuals who are allegedly responsible, according to the prosecutor himself, for the unlawful expropriation of land plots in the 2000s, will not bear any material responsibility.

It begs the question: are the prosecutor’s claims genuinely aimed at protecting the state’s interests? It is logical to assume that the prosecutor’s office should file claims against the relevant individuals, seeking compensation for the losses incurred by the state.

The answer to this question remains rhetorical for now. The next court hearings on these cases are scheduled for May 15, 16, and 29.

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Read the original article on The New Voice of Ukraine