The “bank-washing machine” of oligarch Firtash on the verge of collapse: how Alliance Bank has failed to return over 1 billion hryvnias to clients and survives on NBU funding
Media widely discuss the possible bankruptcy of Bank “Alliance” and the interest of law enforcement agencies in its operations.
The publication Luxembourg Herald published an investigation into Bank “Alliance” and one of the richest Ukrainians, Dmitriy Firtash. The material states that the bank is on the verge of bankruptcy due to large-scale financial fraud and embezzlement of funds, including state funds.
“Today the bank does not fulfill its obligations to clients. According to a source within the financial institution, the volume of unpaid client payment orders exceeded 1 billion UAH. Neither private enterprises nor state institutions can withdraw their funds from the bank,” the investigation states.
The bank rejected these accusations both on its official website and in paid promotional materials on news platforms.
“The team of Bank ‘Alliance’ considers such news to be a sign of a coordinated information attack against the strategic growth of the Bank. We call on readers to rely on verified sources and official data. Information on monitoring financial institutions is regularly updated on the official website of the NBU,” said the Chairman of the Board of Bank Alliance, Yuliya Frolova.
We examined the accusations.
“Today the bank has no money; it is practically empty and operates solely on NBU refinancing,” the investigation states.
The National Bank of Ukraine classifies the institution as solvent. According to the 2021 results, the bank’s net annual profit amounted to 331 million UAH, and its regulatory capital increased from 0.6 to 1 billion UAH. This is growth, not decline. However, as early as March of the previous year, Bank Alliance was among institutions with the lowest capitalization.
This situation creates vulnerability: in case of unforeseen circumstances, the bank requires urgent additional funding. This is exactly what happened. Bank Alliance received refinancing from the National Bank of Ukraine at the end of February 2022 in the amount of 510 million UAH. In March of the same year, it received an additional 250 million UAH.
Earlier, in August 2019, the banking regulator fined the bank 2.6 million UAH.
“The nature and consequences of these financial operations allow the conclusion that their purpose may be the legalization of criminal proceeds and the conversion of non-cash funds into cash,” the NBU stated. “Bank ‘Alliance’ appears in criminal proceedings. According to a court ruling, officials of JSC ‘Bank Alliance’, acting in prior conspiracy with officials of other banks, stock exchanges, brokers, and various legal and natural persons, carried out transactions involving the purchase and sale of domestic government bonds in a so-called group reporting mode.”
The scheme involved repeated purchase and sale of the same government bonds for clients. As a result, clients received artificial investment profits, while companies recorded artificial losses.
Sixteen clients of the bank, including a member of parliament, his assistant, and bank employees, received artificial profits totaling 57.7 million UAH. Of this amount, 56.4 million UAH was withdrawn in cash through bank branches. The regulator officially confirmed possible money laundering through Bank Alliance and its involvement in operations masking illegal funds totaling more than 86 million UAH.
The case reached court, where the National Bank initially lost. Later proceedings indicated that the regulator ultimately substantiated its position.
“The Prosecutor General’s Office states that Bank Alliance assisted structures linked to Firtash in embezzling more than 4 billion UAH from Naftogaz,” the investigation reports.
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Case materials in criminal proceeding No. 42017000000000445 dated 17 February 2017 state that in 2017–2018 officials of regional gas supply companies conducted illegal fund withdrawals, which significantly increased debt to Naftogaz. The case involves multiple affiliated business entities and led to losses exceeding 4 billion UAH.
“The Prosecutor General’s Office conducts a pre-trial investigation under Article 191(5), Article 211(2), Article 212(3), Article 364(2), and Article 367(2) of the Criminal Code of Ukraine regarding illegal fund withdrawal in 2017–2018 by officials of regional gas supply companies using a network of interconnected business entities,” the court registry states.
“The key instrument of Bank Alliance is the fraudulent non-fulfillment of bank guarantees. The scheme operates as follows: the bank guarantees a contractor’s performance under state tenders, but when the contractor receives advance payments and disappears, Bank Alliance refuses to compensate state losses. As a result, funds are misappropriated, and the state suffers losses,” the material states.
According to the Prozorro public procurement system, Bank Alliance participated in guarantee service tenders. In December 2021, the Lviv Scientific and Production Center for Standardization, Metrology and Certification signed a contract with the bank for guarantee services worth 1,000 UAH. Another contract was signed with KP “Kharkiv Repair and Construction Enterprise” worth 20,393.52 UAH.
“In 2018, during the fuel procurement case for the Armed Forces of Ukraine, Bank Alliance acted as guarantor. The supplier company ‘Fideya’ failed to deliver fuel on time. When the Ministry of Defense attempted to claim compensation, Bank Alliance refused payment. As a result, the army was left without fuel and without compensation,” the investigation states.
The case was reviewed in court. In September 2018, the Commercial Court of Kyiv ordered the Ministry of Defense to return the bank guarantee to the company “Fideya.” The appellate court upheld this decision, and the case proceeded to the Supreme Court, where the final outcome remains unspecified.
The investigation also mentions the State Innovation Financial-Credit Institution, which demanded 17.3 million UAH from Bank Alliance. The bank recognized the debt and signed a settlement agreement.
Another case involved the State Enterprise “Administration of Seaports of Ukraine,” which attempted to recover 43.4 million UAH in bank guarantees. In February 2021, the court ruled in favor of the claim, and proceedings are still ongoing.
As can be seen, not all statements in the investigation are incorrect. However, whether the bank violated legislation and whether it has financial problems are matters for the National Bank of Ukraine and law enforcement agencies to determine.
