Hogan Lovells secures landslide win for client PrivatBank in multi-billion dollar English litigation against Kolomoisky and Bogolyubov

In a judgment handed down on 30 July, the High Court in London found the two men to have misappropriated almost US $2 billion from the Bank via a “a highly complex loan recycling scheme which operated for the ultimate benefit of the Individual Defendants [i.e. Kolomoisky and Bogolyubov ]”, which “operated through artificial and sham transactions which had no intrinsic commercial purposes”, the true purpose of which was to “enable the transfer of US$ outside Ukraine…through a highly complex loan recycling scheme which operated for [their] ultimate benefit”. 

The Judge also found that the Defendants’ case was “all built on dishonest foundations”, that Kolomoisky “seems to have regarded himself as above the law” and that it was “dishonest for Bogolyubov” to use misleading documents to seek to distance himself from the fraud.

The Judge criticised Kolomoisky and Bogolyubov for refusing to be cross-examined at trial, concluding that “both recognised that by giving evidence in person they would expose themselves to questioning about their role in the Misappropriation to which they would have had no credible exculpatory answer and they therefore chose to decline to do so”.  They were also criticised for their failure to call key members of the Bank’s management as witnesses, with the Judge finding that was likely because their evidence would have made clear that it was Kolomoisky and Bogolyubov who orchestrated the fraud.  The Judge found that the documentary record was similarly flawed, holding that “Mr. Kolomoisky took deliberate decisions to procure the destruction of data which was capable of being relevant to the current proceedings” and remarked upon “the practice adopted by Mr Bogolyubov of destroying documentation which would have been relevant to these proceedings”.

The full amount of the former owners’ liability to the Bank is still to be determined, but given the court granted the Bank’s claims in full, they are likely to be held liable for more than US $1.7 billion even before the addition of more than a more than ten years’ worth of interest. The full amount payable to the Bank, including interest and costs, will be determined at a further hearing later in the year and is likely to be well in excess of US $2 billion.

Richard Lewis, who led the case for Hogan Lovells, said: “We are delighted that the court saw through the defendants’ attempts to justify their conduct and granted the Bank’s claims in full over the course of an extremely thorough and detailed judgment, which found that they put forward dishonest evidence, deliberately destroyed and suppressed documents and sought unsuccessfully to shift the blame onto others”.

Rebecca Wales, another partner at Hogan Lovells involved from the outset, added: “This case has far-reaching implications for how courts approach large-scale cross-border fraud. The judgment reinforces the ability of English courts to hold powerful individuals to account, even in cases involving complex international structures and conduct spanning multiple jurisdictions. It also sets an important precedent for financial institutions and state-owned entities pursuing restitution through civil litigation. We hope it will serve as a clear deterrent to those who believe such fraud can go unchecked”.

The Hogan Lovells team advising PrivatBank included partners Richard Lewis, Rebecca Wales, Oli Humphrey and Jenna Ralfe, supported by a core team of associates, including Dan Armstrong, Dan Gritten, James Wise, Will Robinson, Alex Dowle, Claire Dumbill, Katherine Reed and John Morse.

The full judgment is available here.