Three Problems in Asset Management That the ARMA Reform Will Solve

For the past several months, we’ve been repeating the same message over and over: Ukraine urgently needs to launch a genuine reform of the Asset Recovery and Management Agency. Unfortunately, Parliament still hasn’t gotten around to addressing this critically important issue. And that’s a shame, because resolving it could significantly improve Ukraine’s current financial capabilities.

First, because launching this reform is one of the key benchmarks under the Ukraine Facility Plan. But even beyond that, adopting Draft Law No. 12374-d would tackle a range of long-standing issues, in particular, the financial losses the state continues to incur due to poor management of seized assets. And this area is precisely one of the main things the draft law is designed to fix.

In fact, ARMA was originally established precisely to prevent such losses and to preserve the economic value of seized assets during criminal proceedings. Yet this function has turned out to be the Agency’s weakest link.

Interestingly, this is confirmed by ARMA’s own data as well as by the Prosecutor General’s Office: out of 90,115 assets transferred to ARMA for management, only 36,534 have actually been handed over to managers under official management contracts. This means nearly half of the assets under the Agency’s supervision still lack designated responsible parties. Another 33,135 assets are in the “preparatory phase,” undergoing inspection, valuation, market consultations, or document verification.

These figures point to serious flaws in the current asset management system — problems that cannot be fixed with a superficial patch-up. What’s needed is a full dismantling of the three core obstacles that are holding ARMA back in this area. Let’s take a closer look at those three problems.

Problem 1: Low effectiveness of competitive selections 

In 2024, the ARMA conducted 33 competitive selections to appoint asset managers, but ultimately signed only 7 contracts. That’s a success rate of less than 22%. And this number remains consistently low despite the growth in the volume of transferred assets.

The procurement statistics for manager selection in 2024–2025, available through BI Prozorro, are even more telling. Of the 117 announced tenders, only 16 were completed successfully; 73 failed, and 27 remain active. Notably, 22 of those 27 ongoing tenders were launched in May this year, and this move increasingly resembles an attempt to create the illusion of activity following another wave of criticism from Members of Parliament and civil society.

According to ARMA’s 2024 annual report, the Agency conducted 224 competitive selections for appraisers, identified 89 winners, and launched 33 procurement procedures for asset management. But all of this effort led to just 7 signed management contracts. This clearly points to either an ineffective process or deliberate procedural obstruction.

Problem 2: Delays in transferring assets to management

Despite all these selections and preparations for tenders, some assets remain without managers for unjustifiably long periods. For example, at the end of 2022, assets of the Soniachne Zakarpattia health resort were transferred to the ARMA. A contract for their valuation was signed on May 13, 2024, but later terminated. As a result, no manager has been appointed to this asset to this day, nearly three years later. 

The ARMA, for its part, reported that its representatives inspected the property and even found certain violations. But a look at local media reports reveals some curious details about that inspection. Notably, the process was far less thorough than the Agency claims — ARMA staff simply took a few photos over the fence. And for public communication, they used photos from the previous year.

The story of the Zhovtevyi Palace on Kyiv’s Maidan is another vivid example of the problem. The ARMA set the estimated monthly profit for the asset manager at UAH 2 million. However, according to published data, the Palace generated approximately UAH 28 million in revenue over all of 2024, while mandatory expenses amounted to around UAH 27 million. On top of that, any potential manager would be required to pay UAH 24 million in guarantee contributions, just for the chance to earn UAH 1 million in annual profit.

The result is predictable: the tender to manage the Zhovtnevyi Palace has attracted no interest from businesses, and the asset has now been generating income not for the state budget, but for its owners, for the third year in a row.

Problem 3: Loss of economic value 

When assets remain without managers for years, they either deteriorate due to neglect or continue generating income for their previous owners. In both cases, the state suffers direct financial losses.

According to a report by the Accounting Chamber, “additional financial opportunities amounting to approximately UAH 6 billion were not realized” due to ARMA’s inefficiency. This isn’t just a statistic, it’s concrete evidence that the Agency is failing in the core function it was created to perform.

And that’s not all. The number of on-site inspections of asset managers remains critically low: just 10 in the past year, despite the large number of assets under management. This means that even those assets that do have appointed managers are not being properly monitored. 

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The problem with the Agency isn’t limited to flaws in specific procedures — it lies in the complete absence of clear regulations on deadlines and criteria. The ARMA can spend years “preparing” an asset for transfer to a manager without any legal time limits, and there’s no way to push this “work” forward or hold anyone accountable.

Draft Law No. 12374-d offers concrete solutions: setting strict deadlines for asset manager selection procedures and introducing transparent evaluation criteria for candidates. This isn’t an attempt to punish ARMA, it’s about building a system that prevents the repetition of systemic failures. 

Managing seized assets is not some secondary task — it is the Agency’s core function. When nearly half of all assets remain without managers and 33,135 of them have been stuck in the “preparatory phase” for years, this clearly signals a systemic collapse. 

That’s why Parliament must finally adopt Draft Law No. 12374-d to bring the ARMA back to the mission it was created to fulfil. So that seized assets retain their economic value for the state instead of being squandered through bureaucratic inefficiency, no matter what slogans its current leadership might promote.