Another authority in the Bankova's piggy bank: why the government wants to control the ARMA and how it can turn out
The National Asset Recovery and Management Agency has become famous for several corruption scandals and the low efficiency of its work.
For more than three years, the agency has not had a permanent head, but today the Cabinet of Ministers approved a new head. Even though anti-corruption activists question the legality of this decision.
The winner of the competition received a lot of questions from the public, which caused a scandal in the information space. Why ARMA is important and what is the role of its leadership – find out in the article by hromadske.
Almost zero efficiency
If assets are seized in the course of a criminal investigation, most of them end up in ARMA (Asset Recovery and Management Agency – ed.) In particular, today it is receiving assets of Russian oligarchs involved in armed aggression against Ukraine.
The court decides on the transfer. The ARMA can then sell the assets or organize a tender and transfer them to a business or the state. This is done to ensure that a particular facility continues to operate, pay taxes, and provide jobs during the period of seizure. And it can last for years. The business that takes over the management of the asset, for its part, has the opportunity to make money.
“The ARMA was created in 2016 as a government agency responsible for seized assets and maintaining public registers to avoid raiding by law enforcement or bandits. The idea was that ARMA would be able to make money for the country. A part of the profit is kept by the company that took over the management, and the other part – usually 15-20% – is paid to the state budget. This is excluding taxes,” says Hlib Kanevskyi, head of the StateWatch expert organization.
However, ARMA's work is considered inefficient. StateWatch analysts have calculated that the budget receives meager amounts from asset management. In 2022, it was UAH 34.8 million. At the same time, according to preliminary estimates, the agency received seized assets worth UAH 70 billion.
“Thus, according to simple calculations, it can be established that the effectiveness of the ARMA in ensuring revenues to the state budget of Ukraine is 0.05%,” StateWatch analysts believe.
The work of the agency has become of interest to the Parliament. In May, the Verkhovna Rada's Temporary Investigation Commission (TIC) met to review ARMA's activities.
“We have repeatedly asked how the property transferred to ARMA is managed. Or rather, unfortunately, how it is not being managed. From what we can see, there are many cases when the ARMA does not deal with the property transferred to it at all, avoiding responsibility for how the property seized by the state is stored,” said Anastasiia Radina, chair of the Committee on Anti-Corruption Policy, during the TIC meeting.
The interim acting head of the agency, Dmytro Zhoravovych, ignored the TIC meeting. And his subordinate, Oleksii Tamozhanskyi, Head of the ARMA Asset Management Unit, could not answer the questions of the deputies, for example, to name the exact amount of property transferred to the ARMA.
“Non-operating assets”
One of the problems pointed out by both parliamentarians and analysts is the lengthy transfer of assets to managers. This process can take more than six months or more.
“There are many corruption risks in this structure. ARMA can look for a manager for as long as possible so that no independent manager can get the asset. The owners can ‘motivate’ ARMA so that the body does not exercise its powers, which is often what ARMA does in principle. Accordingly, the owners and top management continue to use this property. Although according to the documents, it is already allegedly seized and under state control,” says Kanevskyi.
At the same time, the agency does not monitor assets until they are transferred to other hands. Enterprises involved in criminal proceedings may remain “mismanaged”, idle, and not even guarded. Law enforcement officers no longer bear any responsibility for this property, as it has been transferred to ARMA by court order.
One example of mismanagement is the concrete products plant Aerok LLC owned by Russian oligarch Andriy Molchanov, which owed Kyivoblgaz UAH 2.6 million for natural gas distribution services during the ARMA's management and fired some of its employees. And in March 2023, it was reported that seized assets were allegedly being stolen from the company. Fuel and aluminum powder were exported.
According to StateWatch, VinnytsiaPobutkhim PJSC, owned by Russian businessman Vladimir Plesovskikh, was transferred to the ARMA for more than eight months. All this time, the company did not work, the staff was not paid, and no taxes were paid to the budget.
The ARMA was also unable for a long time to find managers for the seized property of Oleg Deripaska, an oligarch close to Putin. One of his assets that the agency received for management was the Hlukhiv Quartzite Quarry. The tender held by ARMA was won by Blastco, a company owned by Ukrainian businessman Oleksandr Yaroslavskyi. He is a friend of Deripaska. However, the company still did not sign the agreement. The reasons for this decision are anyone's guess.
Manual regime and corrupt officials at the helm
The ARMA's competitions are also not all right, as it is now the head of the agency who solely decides who will win them, says Hlib Kanevskyi, head of the expert organization StateWatch:
“This is done manually. By controlling the ARMA, you can take over an asset from a businessman and manage it calmly,” explains the head of StateWatch.
The previous heads of the agency are suspected of corruption. The first head of the ARMA, Anton Yanchuk, was dismissed in 2019, and in 2022, the NABU and SAPO announced suspicions of abuse of power and embezzlement of UAH 426 million. According to law enforcement, the ARMA, in collusion with the state-owned enterprise SETAM, sold seized property at a reduced price.
After Yanchuk, Vitalii Syhydyn was in charge of the structure. At the end of July 2021, he and his deputy were suspected of misappropriating $400,000 that was under the management of the ARMA.
The current acting director, Dmytro Zhoravovych, is not involved in any criminal proceedings but is constantly criticized for his ineffective management.
“Doubtful Duma”
Today, a permanent head of the ARMA is being selected. Olena Duma won the competition. There were many questions about her candidacy from the public.
Transparency International Ukraine believes that her appointment could put an end to the agency's work. Therefore, they ask the Cabinet of Ministers not to approve her candidacy.
The candidate's close political ties raise concerns. In 2019, she campaigned for Volodymyr Zelenskyy during the presidential election campaign.
Given this, it can be influenced by politicians who need “right” decisions regarding assets, said Pavlo Demchuk, legal advisor at Transparency International Ukraine.
“It is also possible to leak insider information. ARMA is the body that deals with asset tracing. Law enforcement agencies such as NABU, SBU, BES, and National Police apply to the department at the stage of pre-trial investigation with a request to find an asset of a certain person. From this information, it is possible to establish who is involved in the investigation. Consequently, it can be used by a biased employee of the agency and “leak” this information to the person involved. The success of the pre-trial investigation will be jeopardized,” he says.
In 2022, ARMA provided more than 4,000 responses to law enforcement agencies to requests for asset tracing.
Anti-corruption public associations drew attention to Olena Duma's joint press conference in 2019 with Sam Kislin, a financial donor of Rudolph Giuliani, the lawyer of former US President Donald Trump.
“On the eve of the NATO summit, which is crucial for Ukraine, Tatarov's devils elected a person who publicly helped Giuliani and Derkach to smear both Ukraine and the then-candidate and now the current US president as the head of the ARMA. Yes, the same Joe Biden, on whom the decision of the summit now depends, and thus the speed of our movement to NATO, and thus the strategic survival of Ukraine,” wrote Vitalii Shabunin, Chairman of the Board of the Anti-Corruption Action Center.
In addition, Transparency International Ukraine points out that Olena Duma does not have the necessary professional experience to be the head of the agency. She has not worked in the field of criminal justice and has not been involved in any way with asset management or asset tracing.
After the above facts of Olena Duma's biography were made public, Dmytro Ostapenko, a member of the competition commission, withdrew his vote, explaining that he did not have full information about the candidate at the time of the vote.
This created grounds for the competition commission to reconsider its decision because, without Ostapenko's vote, she was supported by five people, while six were needed to win. Despite this, Prime Minister Denys Shmyhal decided to approve Duma's candidacy.
Serhii Mytkalyk, head of the NGO Anti-Corruption Headquarters, is convinced that Olena Duma is a pro-government candidate from the Office of the President, and the competition itself is now questionable from a legal standpoint.
“The results of the competition can be appealed in court, which must determine whether the decision is legal or not. The Cabinet of Ministers could have turned to the commission to find out its position and clarify the withdrawn vote. But the government did not want to do so. She worked as the deputy head of the Chernihiv Regional State Administration. And we know that people are rarely appointed to the RSA without the approval and interview with the Office of the President,” says Mytkalyk.
In his opinion, it is convenient for the authorities to leave the ARMU as an ineffective institution and make money from it.
At the same time, MP Yaroslav Zhelezniak from the Voice faction suggested that after this appointment, international partners could speed up the liquidation of the body in its current form.
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