The government has paid out more than UAH 80 billion ($3 billion) to Ukrainian customers with insured deposits in the nation`s 80 collapsed banks since 2014. But little of that money, and as well another $5 billion in losses from uninsured deposits, has come from bank owners, managers and shareholders, who pocketed billions of dollars of Ukrainian deposits through insider loans and other embezzlement schemes, according to Kyiv Post.
The Deposit Guarantee Fund has filed more than 3,000 criminal reports to law enforcement agencies- 376 of them linked to owners and top managers of insolvent banks. However, this approach has yielded poor results. To date, there have been merely two convictions of bank owners or top management, Kyiv Post reported.
In comparison to the thousands of criminal reports, the fund has filed a total of seven civil lawsuits throughout 2014 and 2015 against the bank owners and shareholders of Tavryka, ERDE, Forum, and Mercury banks, amounting to claims of UAH 13.4 billion ($510 million).
Despite losing all seven lawsuits, the fund has come under fire for failing to further pursue the civil route against bank leadership, which has proven effective in many other countries, including Russia.
Both banking sector experts and anti-corruption authorities have criticized the organization for repeatedly forwarding criminal cases to the Prosecutor General`s office, where the investigations typically stall.
Following pressure from the International Monetary Fund, changes to legislation in 2015 gave the fund more freedom to file civil lawsuits.
However, Andriy Olenchyk, the Deposit Guarantee Fund deputy managing director, said that the amendments were minor and did not address key problems, such as alleviating the fund`s responsibility to prove the bank shareholders` guilt.
From September 2015, new fees were introduced that would see the fund charged up to 1.5% of the claimed amount for every civil lawsuit it filed.
A fund spokesperson told the Kyiv Post the money for the court charges would be taken from the liquidated bank assets, which is used to satisfy claims of creditors of the banks.
Daria Kaleniuk, executive director at the Anti-Corruption Action Centre, said civil claims were the only feasible solution for Ukraine considering there is no will to pursue criminal cases. She said it was also important to address the issues in the law, which were hindering the Deposit Guarantee Fund from pursuing further civil claims.
