Ukraine should close Firtash’s bank, from which hundreds of millions of euros were stolen

17:18, 29.06.2022
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Ukraine should close Firtash’s bank, from which hundreds of millions of euros were stolen

Ukraine should close Firtash’s bank, from which hundreds of millions of euros were stolen

The history of many busted banks may repeat itself in Ukraine soon. Dmitry Firtash, an infamous oligarch, brought another financial institution to bankruptcy. It’s Alliance Bank and it is quite important part of the financial system.

The National Bank of Ukraine, which is supposed to maintain the stability of the domestic banking system, has for many years suspiciously turned a blind eye to multibillion-dollar fraud and embezzlement of funds, including state funds, in the Alliance Bank.

Today, the bank does not fulfil its obligations to customers. According to a source in the financial institution, the volume of outstanding payment orders of customers exceeded UAH 1 billion. Both private enterprises and government agencies cannot withdraw money from the bank. From our own sources in the NBU and the bank, we managed to find out the real financial situation of the Alliance bank – it is disastrous. The regulator’s standards are not being met, there is no money in reserves, and loans have been issued to affiliated parties, including those without any real collateral.

It is quite obvious that the Alliance is a near bankrupt bank, but at the same time the regulator is in no hurry to introduce a temporary administration there and punish those guilty of embezzlement of billions of depositors.

The history of Alliance Bank

The Alliance was founded back in 1992 in the city of Donetsk. All these 30 years of work in the market, it was known only to a narrow circle of people, had no branches and did nothing to grow the retail.

After the Revolution, in 2015, the bank was allegedly bought out by Alexander Sosis, a native of the insurance business. But he is only the nominal owner, and in fact Dmitry Firtash is behind the financial institution. The sanctioned oligarch needed a bank to service his business.

The Alliance, which had previously engaged in financial fraud, was perfectly suited for these purposes. The bank’s clients were regional gas companies, agro- and chemical enterprises of Firtash (“Tviy Gazsbyt”, “ZTMK”, “Nika-Agrotrade”, “Ye Energy”, “KhimTrade”, etc.). Under the new owner, “Alliance” engaged in the usual business – laundering and embezzlement of funds. As before – under the tacit consent of the regulator and law enforcement agencies.

Thus, the Prosecutor General’s Office believes that the Alliance helped Firtash’s structures steal more than UAH 4 billion from Naftogaz national gas company. The materials of the criminal proceedings state that through the bank in 2017-2018, the management of Firtash’s regional gas companies, with the participation of the oligarch’s nitrogen enterprises, illegally withdrew funds, which led to a significant increase in debt to the state-owned Naftogaz. However, the investigation has not yet been completed.

Another scandalous case is connected with the Globalmoney company. The Prosecutor’s Office and NABU (the national anti-corruption bureau) suspect Alliance Bank of laundering dirty money, including at the territories of Donbass and the annexed Crimea occupied by the Russian Federation. Since the Alliance acted as a settlement bank and the issuer of Globalmoney electronic money, it was suspected of involvement in the financing of pro-Russian separatists.

It was also proved by journalists that transactions of payment for the purchase of drugs are made through Globalmoney and Alliance Bank. Financial institutions accepted money from clients without identification, violating the requirements of the National Bank and contributing to the criminal activities of drug dealers.

Later, the National Police revealed a large-scale money laundering scheme and the transfer of UAH 6.5 billion to Russia during 2019-2020. It was done through the same Globalmoney and Alliance Bank.

In 2018, the NBU fined Alliance 2.6 million UAH for laundering criminal money.

In the same year, the SBU (Security Service of Ukraine) discovered that officials of large industrial and energy-generating enterprises of the Zaporizhye region were engaged in subversive activities in the interests of Russia, and the funds received from the aggressor were transferred to accounts in the Alliance bank, where they were successfully legalized.

Among the companies that were under suspicion was Firtash’s Zaporizhia Titanium-Magnesium Combine. This company was one of the main partners-clients of the Alliance, storing all its funds in this bank. As a result, the court seized these funds – more than 360 million UAH, which amounted to almost half of the bank’s total capital.

Despite the fact that losses from such schemes caused tens of billions of hryvnias to the Ukrainian budget and high treason is a particularly serious crime, the investigation is still underway, none of the perpetrators have been brought to justice, not even taken into custody.

At the same time, the officials of the company and the bank “resolved” the issue with the prosecutor’s office, which in turn allowed the seizure of property and accounts to be lifted. When the Cabinet of Ministers instructed to pay salaries to ZTMK employees from these funds, the Alliance could not do it – the money had already been stolen. According to this fact, the State Bureau of Investigation has separately opened criminal proceedings and is investigating the bribery of prosecutors.

By the way, according to our data, the Alliance cooperated with the Russians, in particular, with Transcapitalbank, until the very beginning of a full-scale war, as reported in the National Bank. The regulator did not object.

No collaterals, no money

The real trump card of the Alliance Bank was a fraud with non-fulfilment of bank warranties. The scheme, which would be impossible without a serious ties in the National Bank, nevertheless has flourished for many years. Its essence is simple: the bank acts as a guarantor of the contractor’s fulfilment of the conditions of the state tender, but when the contractor receives an advance payment and disappears, the Alliance also refuses to compensate for the losses incurred by state-owned companies. As a result, the money is simply stolen by the participants of the scheme, and the state is left with nothing.

In this regard, it is worth recalling the history of 2018 with the purchase of fuel for the Armed Forces of Ukraine, in which Alliance Bank was the guarantor. The fuel was supposed to be supplied by the company “Fideya” (included in the orbit of the scandalous “Trade Commodity” from Petro Poroshenko’s entourage), but it did not do it on time. When the Ministry of Defence tried to recover from the bank what it guaranteed, the Alliance refused to pay. As a result, the army was left without fuel and without money.

In the register of court decisions, Alliance Bank appears in 11.5 thousand cases

This scheme was turned over many times. Despite the huge number of criminal cases involving Alliance Bank, some government agencies continue to keep money in it and agree to Alliance bank guarantees in public tenders. Among other victims – “State Innovative Credit and Financial Institution”, demanding the return of UAH 17.3 million from Alliance Bank in connection with non-fulfilment of obligations; “Administration of Seaports of Ukraine”, which has been unsuccessfully trying to get 76 million bank guarantees from Alliance for several years.

If you look at the reports of Alliance Bank, you will not find any mention of unfulfilled obligations in them. However, sources in the NBU report that at the moment the bank has outstanding guarantees for at least UAH 3.2 billion. Of this amount, UAH 1.2 billion is the debt of United Energy LLC from the orbit of oligarch Igor Kolomoisky to Ukrenergo, and more than UAH 2 billion is the debts of Firtash regional gas companies to Naftogaz Trading and Ukrgasvydobych. Interestingly, the National Bank, in its responses to complaints from state–owned companies, demonstrates double standards – according to Kolomoisky’s guarantees, the National Bank asks Alliance to repay the debt, and according to Firtash’s guarantees, it only promises to sort out the situation.

Meanwhile, it is obvious that the state will no longer see this money: the same regional gas companies of Firtash were transferred to the management of Naftogaz, and the oligarch will not pay their debts.

The Alliance Bank is dead, let’s admit it

Today, the Alliance Bank is a financial sinkhole into which both private capital and about UAH 0.9 billion of funds from the state and the city of Kiev have irrevocably gone. The Ministry of Finance holds UAH 364 million on deposits in the Alliance, and the KSCA holds UAH 326 million.

Another UAH 178 million is the funds of the above–mentioned ZTMK, which the state took from Firtash and is now returning to state ownership. It is clear with ZTMK – this enterprise recently belonged to an oligarch, but who advised officials of the Ministry of Finance and the KSCA to keep money in a bank famous for hundreds of criminal cases, that’s another question. According to a long-standing Ukrainian tradition, in this case, everything is decided by bribes that officials receive from bankers.

Today there is no money in the bank, it is practically empty and lives exclusively at the expense of the NBU refinance. “Alliance” does not fulfil the liquidity standard for reserving money, violates the standard of the currency position (78.3% with a maximum allowable 5%).

The structures of Firtash and Grigorishin withdrew UAH 2.5 billion from the bank during the three months of the war. At Alliance, the loan portfolio currently amounts to UAH 5.5 billion, about half of this volume is bad loans.

According to a source in the NBU, about UAH 2 billion were issued to Dmitry Firtash’s companies, many without collateral. In fact, this money was simply stolen. The bank also spends a refinance on the purchase of currency on the Interbank market and then withdraws it in the interests of Firtash structures abroad.

At the same time, Alliance draws acceptable figures in its reports. They say that there are 480 million UAH in the cash desks of the branches, and 1.05 billion UAH on the accounts. In particular, 12 million euros allegedly lie in the Italian Banca popolare di sondrio.

All this is fiction, our sources say. According to generally accepted standards, there should be about UAH 200 million in equivalent in the Alliance’s cash registers. Bankers do not allow money to lie idle in the vault, especially if these funds can be deposited overnight in the NBU at 23%. That is, in fact, there is no declared money, they exist only on paper.

An identical story was described in detail in 2015 by the then Director of Banking Supervision of the NBU Ekaterina Rozhkova. Union Standard Bank assured the regulator that it had UAH 108 million in the Kiev vault, but when the NBU came to the bank with a check, the fraud was revealed very quickly, and Union Standard was liquidated.

In our case, according to a source in the NBU, the nominal owner of the bank, Alexander Sosis, left Ukraine, taking with him $ 8 million in cash – almost everything that was in the central vault of the bank.

There may not be any 12 million euros in an Italian bank either. It looks very much like this is a fictitious balance, which is probably a guarantee of a loan that will never be repaid, and the Italians will simply write off this money. A typical scheme, according to which previously dishonest Ukrainian banks worked in cooperation with the infamous Austrian Meinl Bank.

If Alliance Bank’s finances were in order, it would not apply for NBU refinancing at 27% per annum. These are impossible conditions in a situation where there are no investment instruments covering this high loan interest. As of June 1, Alliance Bank had UAH 4.1 billion in obligations to the NBU. And the bank has to pay more than a billion percent to this amount. These are unaffordable amounts for such a small bank. And why does he need a new refinance under such unfavourable conditions if he has money? Obviously, there is still no money.

Knowing all these facts, the National Bank, however, does not take any action to stop this lawlessness. If the bank bursts (and in fact it has already burst, it just hasn’t been announced yet), the Deposit Guarantee Fund of individuals will have to pay 1.6 billion UAH to depositors.

Apparently, someone really needs the “Alliance” if he is allowed to exist in this state of affairs. And no one is confused by the fact that the state in this bank can simultaneously lose about 1 billion on deposits of state structures, 3.2 billion UAH on unfulfilled guarantees and 1.6 billion UAH on repayment of losses of depositors-individuals. In total, about 6 billion.

As we have learned, journalists of one of the leading TV channels of Ukraine are preparing a detailed investigation on this topic.

Conclusion

Ukraine is living in conditions of war, and corrupt banks and officials continue to rob the state. The National Bank is simply obliged to guarantee the stable operation of the banking system. And there should be no place for such outspoken envelope centres under the sign of a bank. The Alliance Bank should be liquidated, and all those involved in this criminal scheme should be brought to justice.

To prevent and detect such fraudulent schemes in Ukrainian banks, the NBU should check the vaults of all financial institutions and make sure that their reports correspond to the real state of finances. It would be worth finding out if any of the shareholders ran away with the contents of the cash register. Also, it would not be superfluous to check the status of accounts of Ukrainian financial institutions in little-known foreign banks. In 2014, with the help of simple schemes, bankers brought $ 2.5 billion abroad. Today, in the conditions of a full-scale war, the repetition of such a scenario will have disastrous consequences.

Теги статьи: National BankNBUSosis AlexanderFirtash DmitryAlliance BankФирташ Дмитрий
Автор статьи: Павел Немченко
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