Two billionaire oligarchs are embroiled in a huge High Court battle that could result in them having to hand over their London properties.
Gennadiy Bogolyubov and Ihor Kolomoisky, who rose to riches in the 1990s after the demise of the Soviet Union, are being sued by their former bank Privatbank, the largest bank in Ukraine, which they owned until it was nationalised in 2016.
The bank’s new bosses launched proceedings last month to recover nearly £2 billion which they claimed had been misappropriated through a series of dishonest transactions. Shortly after, the bank won a High Court order freezing the two men’s worldwide assets.
It is thought that London properties could be included in any attempted recoveries.
Bogolyubov, who used to live in a Belgravia mansion, has invested a huge amount of cash into the London property market, although his portfolio has dwindled in recent years.
He bought One Trafalgar Square, an office block opposite Nelson’s Column, for £173 million in 2010.
The leak of offshore documents known as the Paradise Papers show he passed One Trafalgar Square and 27 Knightsbridge, near Harrods, to another Ukrainian oligarch as settlement of a legal dispute.
His firms also bought a mansion in Eaton Place and a luxury house in Belgrave Mews for a total of £20 million.
Privatbank was taken into state hands when the central bank, National Bank of Ukraine, launched a clean-up of the nation’s financial system.
Kateryna Rozhkova, deputy governor of National Bank of Ukraine, told The Mail on Sunday: “During this clean-up period we as regulator have developed this new investigations focus. Privatbank is the biggest case but there were of course others.”
Around 90% of Privatbank’s corporate lending was to “related parties” – to the people either managing the bank or connected to them
Rozhkova added that these loans had no security or collateral lodged against them in case they were not repaid. The interest and capital were only paid by taking out new loans from the bank.
Bogolyubov was sued for £20 million in 2013 by his former rabbi, Yonah Pruss, who had helped him find London properties to buy. The case was settled for an unknown sum.
It comes after Rinat Akhmetov, Ukraine’s richest man, was served with an order from a Cyprus court freezing $820 million of his assets in a long-running legal dispute with a rival over the country’s biggest fixed-line telecoms group.
Assets potentially affected by the freeze include an apartment in London’s One Hyde Park development in Knightsbridge. When it was bought, that property was the most expensive private residence in the UK.
Three out of Ukraine’s five richest oligarchs now have asset freezes of varying sizes in place against them
DealMakerz thinks both cases show how the Ukrainian government is trying to rid itself of the influence of super-rich individuals trying to shape national affairs to suit their own interests.
It will be interesting to see who else gets caught up in the country’s “deoligarchization” process.