Ukraine's Privatbank files US$3b lawsuit against PwC subsidiaries

Ukraine's Privatbank files US$3b lawsuit against PwC subsidiaries

A man leaves a branch of Privatbank in Kiev, Ukraine, Dec 14, 2016. (File photo: Reuters/Valentyn Ogirenko)
KIEV: Ukraine's largest bank, PrivatBank, said on Monday (Apr 2) it had filed a US$3 billion lawsuit against the Ukrainian and Cypriot subsidiaries of international accounting firm PwC for alleged breaches during audits of the lender in 2013 to 2015.It is the latest in a series of lawsuits initiated since PrivatBank was nationalised in 2016 after risky lending practices left the lender with a capital shortfall of over US$5.5 billion, according to the central bank.Kiev has already withdrawn PwC's right to audit Ukrainian banks as punishment for its alleged failure to flag evidence of wrongdoing at PrivatBank. PwC has said the ban is unjustified.The bank said it had filed formal 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," it said 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 said.
PwC's Ukrainian and Cypriot subsidiaries did not immediately respond to requests for comment.According to the central bank, over 95 per cent of corporate loans extended by the lender had gone to companies linked to the former owners and their affiliates.The bank's former shareholders Ihor Kolomoisky and Gennadiy Bogolyubov have contested the nationalisation and say the central bank misrepresented the health of PrivatBank's finances.In December, a London court ordered a worldwide freeze on the assets of Kolomoisky and Bogolyubov while it considers the case.
PrivatBank's nationalization was the culmination of a swingeing clean-up of Ukraine's financial system, backed by the International Monetary Fund. Dozens of lenders have closed since a pro-Western government took office in 2014.
Source: Reuters/zl
 Source : http://www.channelnewsasia.com/news/business/ukraine-s-privatbank-files-us-3b-lawsuit-against-pwc-10096436