ARMA through the European Commission’s Eyes: Much Work to Be Done

In its report on the progress of Ukraine, it seems that the European Commission covered all the important anti-corruption issues. Our European partners mentioned the Asset Recovery and Management Agency (ARMA), perhaps one of the least “popular,” although no less significant, institutions. The report mentions the ARMA 8 times, and the approach to assessing the Agency’s activities was quite cautious — no big words, which now accompany all the Agency’s communication activities. 

Actually, one of the new recommendations of the European Commission directly concerns the activities of the Agency, which means that the Ukrainian authorities will have to take it into account. 

This recommendation focuses primarily on the adoption and launch of a reliable action plan to implement the Asset Recovery Strategy for 2023–2025, as well as the improvement of the legal framework and institutional capacity to carry out financial investigations, asset recovery, and asset management. 

Earlier, we at TI Ukraine noted that certain provisions of the Strategy were written in a quite general manner, and the implementation of certain tasks required a balanced approach. Therefore, we hoped that the ARMA would specify these points in the action plan to implement the Strategy. 

But after analyzing the draft action plan, it became clear that our expectations were not met because the document proved imperfect both in terms of the structure and the content. For example, it lacks indicators of the implementation of measures and a list of specific actions; the expediency of individual measures and the completeness of their presentation raise questions. This plan should be approved within four months from the date of approval of the Strategy, that is, by December 1, 2023.  

Back in September 2023, the ARMA appealed to TI Ukraine with a proposal to comment on the draft strategy plan and engage the organization’s representatives in the working bodies to monitor the implementation of this action plan. However, we noted that we were ready for such cooperation only if the competent authorities were open to improving the Action Plan and to discussions on considering the proposals of all stakeholders. There is still no response from the ARMA, so it is difficult to assess how actively the Agency continues to work in this direction.

The legal framework for asset recovery and management also needs to be improved. The Agency declares its readiness to update regulatory acts, but the real steps of the body indicate rather half-measures. 

For example, at one time, TI Ukraine provided its feedback on the draft Methodological Recommendations for the competitive selection of asset managers. We then noted that procurement norms were difficult to apply for the selection of managers because they did not spend budget funds and their services were paid from the income that asset management brought. Therefore, a special procedure should be developed, as well as amendments to the Law on the ARMA.  

However, the Agency did not listen to our key recommendations for the most part, although it did take into account some of them. It is because of such situations, even in issues where certain changes are taking place, that it is difficult to state that the ARMA does achieve a real result. 

The sale of seized assets remains opaque because the draft resolution on amendments to the procedure for the sale of seized assets is still going through bureaucratic circles. 

Other problems related to the Agency’s activities were also mentioned in the report of the European Commission. Thus, our partners mentioned public concerns about the selection and appointment process, as well as the integrity of the new ARMA head.

The work of Olena Duma has already become the subject of journalistic publications, and they mentioned in particular the strange personnel policy of the new Head. As of now, some of her advisors have taken key positions in the Agency and even become deputies. We have not been able to establish whether these officials have experience in the field of criminal justice or other relevant areas from public information, and in general, we have very little information about the updated management of the ARMA. 

The European Commission also noted that the tools for confiscation and return of assets in Ukraine are not used enough, and the experience of seizures and confiscations still needs to be gained.  

In this part, the question arises of how one can get such experience in general because, after a successful search for some asset, the ARMA is happy to report on it on its website and social networks.  

The Agency is looking for assets at the request of law enforcement agencies in order for law enforcement officers to subsequently appeal with a motion to seize to the court. This process takes some time, sufficient for the owner of the mentioned assets to recognize themselves in the ARMA publication, re-register this property, or sell it. So, we can assume that this will potentially complicate the work of law enforcement agencies. 

For example, when TI Ukraine asked the ARMA about the criminal cases in which the Agency was looking for assets with already-existing sentences, we were informed that this information was extremely secret and not subject to disclosure. Looks like double standards. 

The transparency declared by the ARMA is activated only when the Agency needs it, for example, when creating the Anti-Corruption Council under the ARMA. Such a process is not provided for by any regulatory act, and the powers of such a council were generally determined by an internal order of the ARMA Head; apparently, she is going to control anti-corruption processes in the Agency. The deputy chair of the Anti-Corruption Council is a man who was an advisor to the ARMA Head back in August 2023.  

Therefore, we are cautiously optimistic that the European Commission has noted the need for a comprehensive reform of the ARMA. This reform should cover:

• the system of transparent selection of the ARMA head,
• full planning before seizure,
• determining the priority of the seizure of assets by criminal courts,
• transparent procedures for management, sale, and valuation of assets,
• unblocking the possibility to manage corporate rights. 

Most of these problems are mentioned in our study of the capacity, management, and interaction of anti-corruption infrastructure bodies, as well as in other materials that we published based on the results of monitoring the work of the ARMA. 

Although the ARMA has enough work to do to eliminate these shortcomings, the body also wants to manage sanctioned assets. MPs, whose assistants (or former assistants) now work in the Agency, have even registered the relevant draft law. We are convinced that, given the problems in the work of the ARMA, these changes are premature. Having witnessed so many of the Agency’s issues, it is difficult to imagine how it will also manage sanctioned assets. 

In any case, the attention of the European Commission to the activities of the ARMA is a very positive sign. However, the approach to reforming this body should be balanced, without drastic ideas or half-measures. After all, hasty and unjustified steps now might result in appeals to the European Court of Human Rights and considerable reparations to the owners of the seized assets.