Tax authorities are stalling for time: the audit of Concord Bank went beyond reasonable time limits

A tax audit of the activities of Concord Bank, which is currently in the process of liquidation, has been going on for more than a year. The process of its conduct raises serious doubts about the transparency and objectivity of the work of tax authorities, UNN writes.

On 1 August 2023, the National Bank of Ukraine (NBU) decided to revoke the license of Concord Bank, and the liquidation procedure was launched. According to the law, such processes are usually accompanied by thorough inspections by the tax authorities. However, in the case of Concorde, the audit dragged on for more than a year, which is unprecedented.

Moreover, the bank's shareholders claimed that the results of the first tax audit, which lasted three months, were falsified.

"We know that based on its results, an act was drawn up in the amount of 700 thousand hryvnias, to which, on the personal instructions of the head of the Verkhovna Rada Tax Committee, Danylo Hetmantsev, 392 million hryvnias were illegally added, and why not a billion, 3 or 10 billion?", said co-owner of the Concord Bank Olena Sosedka.

The fact that the audit results were probably falsified is also evidenced by the fact that the bank's liquidator, appointed by the Deposit Guarantee Fund, disagreed with the audit report. He filed his objections, which were considered and resulted in an additional tax audit, which is still ongoing.

Experts interviewed by UNN say that there is a concept of reasonable time limits for conducting a tax audit.

"Regarding the maximum duration of the audit, it is worth noting that clause 78.1.8 of the Tax Code of Ukraine provides that if a bank is in the process of liquidation, a tax audit may be conducted by decision of the supervisory authority without time limits until the liquidation procedure is completed. However, this does not mean that the audit can last unreasonably long, as there is a principle of reasonableness of terms", - said Dmytro Kasyanenko, attorney at law at ‘Kasyanenko & Partners’. 

It is possible that the deliberate delay in the additional audit is due to the fact that the tax authorities realize that they can be held liable for falsifying the results. At the same time, they cannot ignore the instructions of Hetmantsev, who is called by the media and experts a shadow curator of the State Tax Service.

According to the experts interviewed by UNN , tax officials may be held administratively or even criminally liable for violating the law.

"If the court establishes the fact of unjustified accrual, it can recover court costs, legal aid costs and moral damages from the tax office. The employees themselves may be subject to disciplinary action," Denys Neviadomskyi, president of the All-Ukrainian Association of Judges, told UNN.

At the same time, lawyer Oleksandr Baidyk noted that the tax authorities could be held liable under the Criminal Code of Ukraine.

"If there was a forgery of documents, it can be criminal liability, if it was just a mistake, it can be administrative. It all depends on the damage caused to the victim. If the tax authorities forged the whole thing (the audit report - ed.), it will definitely be criminal liability, if they miscalculated something, it will be administrative liability," the lawyer explained.  

Bank Concorde is no longer a functioning financial institution, and its liquidation should have been carried out in a short time. However, the duration of the tax audit not only slows down the liquidation process, but also creates an additional financial burden for the state budget, as the audit requires significant resources. 

The tax audit of Concorde Bank, which has been going on for over a year, is probably a good example of how delaying the process can be used to avoid responsibility. In this situation, it is important that the State Tax Service acts within the law, completes the audit as soon as possible and ensures that its decisions are transparent and objective. This will not only facilitate the speedy completion of the bank's liquidation, but will also strengthen trust in the tax authorities and state institutions in general.

Recall

Despite the war in Ukraine, the process of removing banks from the market has not stopped. Thus, since February 24, 2022, liquidation was initiated for 8 banks. In 2023, for the first time in Ukraine, not only bankrupt banks but also profitable institutions were subject to liquidation and license revocation, including Concord Bank. As Olena Sosedka stated, 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.

Add

Concorde's shareholders challenged in court the decision of the National Bank of Ukraine to withdraw the bank from the market. The Dnipropetrovs'k District Administrative Court declared unlawful and canceled the decision of the NBU to revoke the license and liquidate Concord Bank. However, Ukrainian legislation is written in such a way that the process of removing a banking institution from the market, once started, is irreversible.