LONDON, UNITED KINGDOM--(Marketwired - Jul 4, 2017) - In a column and analysis this week, John Mills, the entrepreneur, political commentator and Chairman of JML, the consumer goods company, examined an emerging scandal in the Ukrainian banking sector.

In December 2016, the National Bank of Ukraine nationalized Ukraine's largest private bank for what we now know was a misreading of the bank's real situation. Mr. Mills writes that it remains unclear who benefitted from this wrongful expropriation. The result is that a mystery and a scandal hover over the events and decisions made by the Ukrainian authorities.

The decision wasn't based only on a misunderstanding. The nationalization of PrivatBank appears clearly to be the result of a still-unexplained refusal by the NBU to accept the financial reality of the situation.

In the column, it is stated that this extraordinary government takeover has made the banking and economic situation in Ukraine much worse rather than better, and is an almost classic case of government overreach.

The NBU's inappropriate and unnecessary nationalization has hurt the Ukrainian economy, stolen millions from PrivatBank's owners and is forcing Ukraine's taxpayers to bear a substantial additional burden.

The NBU took its action in large part because of what it said was an unacceptable level of related-party loans: 90 percent or more was the number it frequently used.

But Ernst & Young, the global "Big Four" accounting firm the NBU hired to undertake an audit of PrivatBank at the end of 2016, said the actual level of related-party loans at PrivatBank was merely 4.7 percent.

And that very low level (an astounding almost 95 percent less than what the NBU used to justify its nationalization) is itself lower than the level of related-party loans reported a year earlier in a separate audit conducted by yet another Big Four firm: PwC.

Perhaps to protect itself from what will undoubtedly be withering criticism, the NBU is now considering suspending PwC from auditing Ukrainian banks, has accused one of the most renowned and highly esteemed auditors in the world of being "unprofessional," and is at least hinting that its audits contributed to the situation.

The NBU has claimed that PrivatBank siphoned a majority of its equity to related party loans to enrich the bank's shareholders. Operating activities show that the cash flow for 2016 was 21 billion Ukrainian hryvnia to client funds, but not to the issuance of loans to related parties.

Mr. Mills writes that the NBU made an arbitrary, erroneous and harmful decision to regard PrivatBank's collateral as unacceptable even though a significant amount of the loans that were classified as "impaired" should have been acceptable under IFRS standards.