Director of the NBU Legal Department had a conflict of interest when recommending to the DGF to withdraw the claims of Concorde Bank

Director of the Legal Department of the National Bank of Ukraine Oleksandr Zyma was in a direct conflict of interest when he recommended to the Deposit Guarantee Fund to withdraw the claims of Concord Bank against the NBU, filed before the start of its liquidation procedure. This opinion was expressed in an exclusive commentary to UNN by Oleksandr Zolotukhin, a member of the National Bar Association.

"... you have rightly pointed out the conflict of interest, because the person representing the NBU in courts, the head of the legal department, who is a representative of the party in the case, asks for the withdrawal of claims from the other party, the plaintiff, in order to, in fact, disclaim any responsibility for these cases, where there may be decisions against the NBU. And he is actually acting in a direct conflict of interest, because these are essentially cases that concern him," Zolotukhin said.

According to him, in this matter, first of all, one should refer to Article 3 of the Law on the Deposit Guarantee System.

"It clearly states that the state authorities and the NBU - that is, the NBU is separated from the state authorities - have no right to interfere with the DGF's activities in the exercise of its legally assigned functions and powers. In this case, these are their functions and powers - management of temporary property, respectively, implementation of all measures specified by law regarding the final liquidation of the bank, assets, payment of funds to people, etc.", the lawyer explained.

At the same time, he said, we should not forget about the person acting on behalf of the Fund and fulfilling Zyma's illegal instructions. Zolotukhin noted that the DGF employees should use their common sense and be guided by the law.

"Therefore, we cannot talk about sole responsibility; there is responsibility on both sides. The one who advised asked if it was possible, and the one who made the final decision was a representative of the Fund. Therefore, he can also be held liable if it is proved that it was inappropriate, it was advisable to continue this dispute and bring it to an end, since it was already in court," Zolotukhin explained.

The lawyer also does not rule out that Zyma's responsibility for the letter he sent to the DGF lies within the scope of anti-corruption legislation.

"That is, hypothetically, the NACP could draw up a protocol against him at the request of the SBI or other information on the basis of his function in an obvious conflict of interest, since he sent such letters before the interim administration was introduced and at the same time he was a member of the Fund's board, where he also has a possible indirect but indirect influence on making certain decisions," the lawyer added.

In theory, according to Zolotukhin, the National Bank could have sent a letter to the DGF  with recommendations to withdraw the claims of Concorde Bank, but not signed by Zyma. It should have been signed by another authorized person of the regulator who would not have a direct conflict of interest with the DGF.

The lawyer believes that if the NACP draws up a protocol on Zyma's conflict of interest and the court upholds it, the director of the NBU's legal department will lose his position and will not be able to hold other public positions of this level for some time.

Recall

The SBI opened criminal proceedings  on the fact of possible abuse of power or official position, which led to serious consequences, by the director of the legal department, Oleksandr Zyma. The criminal case concerns a letter  from the National Bank to the DGF signed by Zyma, who is also the chairman of the administrative board of the Deposit Guarantee Fund. In the letter, he recommended that the DGF drop four lawsuits that Concorde Bank had filed against the NBU before the decision to liquidate the bank and introduce a temporary administration was made. The DGF implemented Zyma's recommendation.

Last year, for the first time in Ukraine, not only bankrupt banks but also profitable institutions were subject to liquidation and license revocation, including Concord Bank. The process of depriving a banking institution of its license takes place without a court. Of course, owners and shareholders of banks may appeal against the decision of the regulator, the NBU, after it has made a decision to liquidate the bank, but in general, the process of withdrawing a banking institution from the market, once it has been launched, is irreversible. 

In addition, the issue of liquidation of a profitable bank has not been regulated in Ukraine. According to Olena Sosedka, co-owner of Concord Bank, at the time the regulator announced the decision to liquidate the bank, the financial institution had enough highly liquid assets to make all the necessary payments in 2-3 weeks. But the process of bank liquidation is strictly regulated by law and can generally take up to three years.