What Will You Fail to Find in Seized Assets Register?

In late August, the ARMA head announced that the Unified State Register of Assets Seized in Criminal Proceedings had finally been opened.  

This is an interim achievement in terms of transparency of the work of the ARMA, lasting more than a year. It took place with the use of both public communication and registration of draft laws providing for the dismissal of  ARMA head in case of non-publication of the Register. 

However, is the open Register so useful for monitoring the work of the Agency and its activities? 

Spoiler alert: the information that is open in the Register is not enough to effectively monitor the activities of the ARMA. 

Worst of all, the errors that we found on the portal are not systematic, that is, they relate to some individual assets, while other items of the Register are displayed correctly, or have completely different bugs. This significantly complicates the work with the Register. 

Let me prove it to you with an example. In April 2023, the court transferred the shares of Ukrnaftoburinnia to the ARMA, one of the largest gas production companies in Ukraine, which is associated with businessmen Ihor Kolomoiskyi, Pavlo Fuks, and Vitalii Khomutynnik. 

According to the Agency’s response to our inquiry, this property has already been transferred to the manager — PJSC Ukrnafta — under acts dated July 7, 2023, based on the order of the Cabinet of Ministers. However, this information is not available in the relevant record of the Register. Neither is there an indication that, for example, these objects belong to critical infrastructure and therefore access to information about them is limited. 

Let me remind you that we assess the public part of the Register because law enforcement agencies, prosecutors, and ARMA employees have more information.

In general, high-quality monitoring of the management of these assets requires that the register contain at least the following information:

• the starting date of property management activities and the announcement of a competition for the manager;
• essential terms of the management contract: the amount of remuneration, guarantee payment;
• the results of measures to monitor the effectiveness of asset management. 

It is through comparing these indicators that you can determine how quickly the Agency organized the competition, as well as find out the terms of the management contract.

Due to the volume of the Register, it is difficult to review all assets, as well as the completeness of information about them. But, for example, we could not find the seized assets of Krupchak and shares of PJSC Donetskoblgaz in the Register, although they should have been there.  

According to the specialized law, the Register cannot contain information that makes it possible to identify the location of assets, their owner or user, the identity of the suspect or accused, and data that are not subject to disclosure in accordance with the conditions of international cooperation. 

The validity of such restrictions is questionable because:

1. information about the owners of real estate can be obtained in the public domain through the relevant registers, as well as information about the encumbrance of movable property;
2. location of assets is important for an interested business that has a desire to manage it (considering restrictions on critical infrastructure facilities).

It would also be convenient for potential managers to immediately switch from the Register to the ARMA’s announcement of competitions for asset managers or auctions for the sale of assets. 

Actually, the Register of Seized Assets was created to provide a strategic national approach to asset recovery.  

From a single Register, various institutions will obtain data that will allow forming reliable, consistent, and coordinated national statistics on the real situation with the recovery and management of assets in Ukraine. 

In addition, the Register is aimed at:

1. systematization of information on the application of asset seizure;
2. providing the prosecutor’s office, pre-trial investigation bodies, and the ARMA with up-to-date information on seized assets;
3. transparency of the ARMA’s asset management activities.

In the context of the full-scale invasion, the number of assets that began to be managed by the ARMA has increased significantly. After all, the practice of law enforcement agencies of seizing assets with a Russian or Belarusian trace within the framework of criminal proceedings and transferring property to the ARMA has become widespread so that the owner of the property does not obtain income from the management of these assets until the court decides their fate. 

Of course, this has also increased the requirements for high-quality public monitoring of the Agency’s activities in the field of asset sale and management. 

Therefore, legislative initiatives aimed at opening the Register of Seized Assets remain relevant. They need to be finalized, considering the experience of using this Register in monitoring the activities of the ARMA. We are also waiting for a public report on the operation of this service to find out what the response to the comments mentioned here will be.