Ukraine PrivatBank Files Lawsuit Against PwC Subsidiaries

PrivatBank has announced that it filed a lawsuit amounting to 3 billion against the Ukranian and Cypriot subsidiaries of PwC, an international accounting firm.

The lawsuit alleges that PwC committed some breaches during the audits conducted in the years 2013 and 2015.

PrivatBank was nationalized in 2016 and has since then pursued a string of lawsuits. This follows risky lending practices, which led to the bank having a capital shortfall amounting to $5.5 billion, according to the data.

Kiev has already removed PwC’s ability to audit banks in Ukraine. It served as a punishment for the flag proof of violations at PrivatBank. PwC, meanwhile, said the ban was not founded on valid reasons.

According to the bank, it has already started filing for the legal proceedings at a Cypriot court against PwC Ukraine and PwC Cyprus last Friday.

“PrivatBank asserts it has suffered as a result of serious and extensive breaches by PwC of its duties and responsibilities primarily in auditing financial statements of PrivatBank,” said the bank in a statement.

“This claim against PwC represents the next significant step being taken by PrivatBank to seek to recover substantial compensation for the huge losses it has suffered, the burden of which thus far has fallen in large part on the state of Ukraine,” it explained.

Meanwhile, PwC Ukrainian and Cypriot subsidiaries did not issue comments.

Petr Krumphanzl, which is PrivatBank’s chairman, said that PwC “failed absolutely to identify the ongoing operation of the huge fraud within the bank over many years which resulted in virtually the entire corporate loan book of the bank being non-performing and without any or any adequate security.”

“It will now be for the Cyprus court to determine the claims being brought by PrivatBank against PwC in due course,” he added.

The bank explained that more than 95 percent of corporate loans given by the lender had gone to companies that were connected to previous owners and their affiliates.

PrivatBank’s former shareholders Ihor Kolomoisky and Gennadiy Bogolyubov have contested the nationalization. They said that the central bank did not accurately represent the health of PrivatBank’s health.

Last December, a court based in London ordered worldwide freeze on Kolomoisky’s and Bogolyubov’s assets as it considers the case.

PrivatBank’s nationalization was the culmination of an ongoing cleanup of Ukraine’s financial system. This was backed by the International Monetary Fund, with dozens of lenders closing since a pro-Western government took office in 2014.

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