Seven Ukrainian Rada deputies are seeking to sabotage the so-called anti-Kolomoisky banking bill by submitting a record 16,000-plus amendments before its second of three readings. The International Monetary Fund (IMF) has insisted on the passage of the law before it will release any badly needed financial aid.Analysts say that if all the amendments are debated the process could take six months and Ukraine will very likely run into liquidity problems before the bill is passed.

The amendments were all submitted by only seven deputies, all of which are known to have links to oligarch Ihor Kolomoisky who has been lobbying to have Privatbank returned to him, which was nationalised in 2016 after it became apparent he, and his co-owners, had looted the bank of $5.5bn using fraudulent loan schemes.

Privatbank, now owned by the state, last week announced a fresh case against Kolomoisky launched in a Cypriot court against Kolomoisky claiming $5.5bn in damages. In a previous case brought against Kolomoisky in a UK court , the judge found that the bank had suffered from money laundering on an “unprecedented scale” and ordered $2bn of Kolomoisky’s assets frozen.

Kolomoisky efforts to regain control of the bank have taken on an existential nature as if he loses the legal cases against him then he stands to lose most of his wealth. However, if he can regain control of the bank he can stop the legal cases progressing.

For the IMF the banking law is a red line issue and it has refused to sign off on a new crucial $5.5bn Extended Fund Facility (EFF) that Ukraine needs to avoid defaulting on its debt obligations this year. A further $4bn in emergence relief from the IMF to deal with the impact of the growing coronavirus (COVID-19) epidemic crisis in Ukraine is also linked to the EFF. And as several billion from other International Financial Institutions (IFIs) cannot be released until a new IMF deal is in place.

Rada deliberates

Ukrainian MPs have filed 16,335 amendments to a bill on banking, required by the International Monetary Fund (IMF), that includes restricting the return of failed banks to their former shareholders.

On April 7, MP Yaroslav Zhelezniak wrote in a blog that this is a record high for amendments submitted for a bill, which was approved in its first reading on March 30. MPs had one week to offer amendments for the bill’s second reading.

The law’s approval, which will make it impossible to return the nation's largest lender PrivatBank, nationalised in late 2016, to its former owners, oligarchs Ihor Kolomoisky and Gennadiy Bogolyubov, is a key precondition for the IMF to initiate its loan programme for Ukraine, estimated at about $8bn.

Earlier, the IMF welcomed the initial adoption of legislation to strengthen the bank resolution framework by the Rada and looks forward to its final approval, Reuters reported on April 4, citing Goesta Ljungman, the IMF’s representative to Ukraine.

Another highly opposed bill that was required by the IMF, the farmland market legislation, also drew an avalanche of amendments. The Rada spent 11 session days (between February 6 and March 31) reviewing 4,018 amendments in the session hall.

The IMF also looks forward to the adoption of a revised state budget for 2020 "that will help the authorities to confront the tremendous challenges caused by COVID-19", Ljungman said. He added that “the IMF encouraged the Ukrainian authorities to work with the World Bank to ensure the creation of an efficient, transparent and competitive land market".

Alexander Paraschiy at Kyiv-based brokerage Concorde Capital wrote in a note on April 7 that the number of proposed amendments to the bill exceeds the number of words in the first draft (16,075).

"Over 96% of the amendments have been filed by just seven MPs, all being aligned with Kolomoisky, according to local media," he added. "Clearly, the only goal of such an excessive number of amendments is to drag out the adoption of this bill for as long as possible."

For instance, if the parliament reviews them at the same pace as the land reform law, it will take 45 sessions (or over five months) to complete the review, the expert added in the note.

'Consequently, if IMF support is delayed by six months, the government will face critical liquidity issues. Therefore some new approach is needed to speed up the bill's approval. It's possible that round-the-clock work of the finance committee could accelerate the bill’s approval to 2-3 weeks. But this also won't be easy considering that a number of Kolomoisky-aligned MPs are members of that committee."