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Russian oligarch's firm files $1 billion claim against Ukraine over bank nationalization

by Martin Fornusek January 5, 2024 4:47 PM 2 min read
A Sense Bank branch in Kyiv, Ukraine, on Jan. 16, 2023. (Okondrat/Wikipedia)
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ABH Holdings S.A. (ABHH) banking group, whose main shareholder is sanctioned Russian oligarch Mikhail Fridman, filed an arbitration request and a claim of over $1 billion against Ukraine over the nationalization of Sense Bank, the company said in its press release on Jan. 4.

Ukraine seized Sense Bank, a Ukrainian branch of Fridman's Alfa-Bank, in the summer of 2023 as its owner had been placed under sanctions. The oligarch is wanted in Ukraine for financially supporting the Russian war machine during the full-scale war.

ABHH, a Luxmebourg-based entity that operates Alfa-Bank, brought its claim to the International Centre for Settlement of Investment Disputes (ICSID) based in Washington, D.C., on Dec. 29.

"The legal basis for the claim is the Treaty between the Belgo-Luxembourg Economic Union and the Government of Ukraine on the Reciprocal Promotion and Protection of Investments," the press release read.

The firm called the complaint "an acid test of the rule of law in the West," adding that it seeks "full compensation for the unlawful expropriation."

The Ukrainian state bought 100% of Sense Bank's shares for a symbolic 1 Hr ($0.03) on July 22 last year and appointed new management.

"The government decided on the state's participation in the withdrawal of SENS BANK JSC from the market in order to ensure the stability of the financial system of Ukraine and protect the interests of depositors and other creditors of the bank," the Finance Ministry said in justification of the decision.

On May 29, Ukraine's parliament adopted a bill allowing to nationalize banks owned by sanctioned individuals.

According to the Security Service of Ukraine (SBU), Fridman has poured around 2 billion rubles ($22 million) into Russian military plants since the start of the full-scale invasion.

The oligarch is under both international and Ukrainian sanctions, and Kyiv has blocked the assets of several of Fridman's companies.

ABHH called Ukraine's justifications for the nationalization of inventions and "black PR." While pointing to damages caused to Sense Bank's owners and beneficiaries, the press release does not mention Fridman by name.

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