Recently, people have started talking more often about the Asset Recovery and Management Agency. Both journalists and politicians have a question about the effectiveness of ARMA and its management, the interest of specific politicians, and the desire of business to “take control” of this institution.
ARMA is a body with special, even unique functions, and, accordingly, requires special working conditions.
Seizure and asset forfeiture is one of the most effective means of combating financial crimes. But no matter how simple this tool may seem, it has two important aspects.
On the one hand, seizure is a way in which the state can satisfy the request of society and ensure the occurrence of consequences for the crime committed. At the same time, it’s a way to protect the inviolability of the property right of a citizen. Such bilateral function is indeed a serious challenge in the field of criminal justice.
For a long time, there was no effective mechanism for asset recovery and managing seized property in Ukraine, and the preservation of its economic value was not even brought into question.
For example, take the case “East/West Alliance Limited v. Ukraine.” The actions of the state authorities of Ukraine led to the mutilation, and in some cases the destruction of the seized assets. The European Court of Human Rights, by its decision of 2014, ordered Ukraine to pay compensation for more than 5 million euros of material and moral damages.
This approach to asset management was among the reasons for the creation of the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (ARMA) in 2016.
In 2020, Transparency International Ukraine presented a study of the ability, management, and interaction of anti-corruption infrastructure bodies. Experts analyzed the resources, independence, transparency, accountability, and integrity of institutions, and each received a rating from 1 to 5.
One of the objects of the study was ARMA. The agency scored 3 points out of 5, and the most vulnerable categories were cooperation with other institutions and ensuring the independence of the institution’s work in practice.
TI Ukraine experts have concluded that the legislation regulating the activities of ARMA requires urgent changes to address shortcomings, inconsistencies, improve the efficiency of work and strengthen the mandate of the body.
The results of an in-depth study only confirmed the theses that were repeatedly emphasized not only by Ukraine but also by international experts and AMA itself. And this is logical because it is impossible to create a body, assign important functions to it, but not provide this body with enough tools to effectively perform the functions assigned to it. And that’s exactly what’s happening with ARMA right now.
What should be done first to make ARMA work at full capacity?
- Introduce planning before transferring the seized assets to the management of the National Agency. This will allow managing the seized assets more efficiently and quickly, navigating what is happening to them during the case review process, and preparing for possible challenges.
- Introduce a clear and transparent mechanism for the sale of assets by attracting market leaders to organize trades. The National Agency should be able to sell assets even before the verdict of the court in the case. This is the practice of a significant number of foreign jurisdictions, for example, Romania, Bulgaria, and France. The main thing is that such a sale should take place in cases stipulated by law, at the market price and transparently.
- Prevent blocking the ARMA’s work. To do this, it is necessary to review the possibility of blocking work with assets seized in criminal proceedings by courts of other jurisdictions, as part of securing a claim. After all, why do you need the ARMA and seizure and asset management for further confiscation, if you can go to another court and, for example, simply cancel the decision of a criminal court of the same level in administrative proceedings?
It is worth noting that the topic of assets management, which is seized in criminal proceedings, is relevant and sometimes debatable not only in Ukraine. Within the state, the institution of managing seized assets almost always faces resistance from those who are being investigated and/or whose property is being seized before a court verdict is reached. Therefore, this situation and resistance to ARMA activities are not unique.
At the same time, the ARMA remains a unique body in terms of its functionality within the state, and the mandate of the asset management body does not overlap with the powers of other bodies. ARMA is a service body with special functions. And we can say that despite the interference, over the 5 years of its existence, the agency has become quite an effective institution, which, however, still has a lot to develop and needs help at the legislative level.
And it is sad that in addition to interference in the work of the ARMA, there is also advocacy and promotion of legislative initiatives that are designed to limit the work of the body.
Some existing legislative initiatives will simply turn the ARMA into a “storage room” for seized assets, which will bring losses to the state. Thus, all achievements in the reform of this sphere can be leveled, and the Ukrainian state and owners do not receive the benefits of the effective functioning of such an institution.