ARMA was created based on its European counterparts, which had already demonstrated exemplary performance. Why did this body fail to achieve similar progress in Ukraine but became the reason for political battles?

Recently, politicians and the media have often mentioned the Asset Recovery and Management Agency (ARMA). There have been talks about the efficient work of the body, its management. Moreover, the interest of individual politicians and businesses to find ways to influence this institution is evident.

ARMA is a body created similarly to its European counterparts that deals with tracing and management of seized assets. For example, in Romania, creating a specialized institution that dealt with assets recovery issues has led to a 300% increase in seized assets’ value over the next few years. Why didn’t the ARMA achieve similar progress in Ukraine but became the reason for political battles?

There are several reasons for this.

Reason 1. Imperfect legislation.

In 2016, the Parliament passed the Law which created the National Agency of Ukraine for finding, tracing, and management of assets derived from corruption and other crimes. In fact, the ARMA started working with the first assets it received back in October 2017. These assets were seized as part of a criminal proceeding concerning former minister of revenues Oleksandr Klymenko and former President Viktor Yanukovych. It was a very significant case, but a couple of months later, a Kyiv Administrative Court judge blocked the work of the ARMA on managing these assets.

It became clear that the relevant legislation was not formalized properly; some judges are ready to tarnish their image, and the Parliament was not finding the time to resolve such issues.

Reason 2. Many corruption-causing opportunities.

In the following years, except for the story mentioned above about the seized assets of “Yanukovych’s family,” there were many other corruption scandals. For example, when ARMA employees, together with SOE “SETAM,” started selling assets at the lowest price or sell ones that are not supposed to be sold at all. Meanwhile, the ARMA failed to manage the “high-profile” assets (Mezhyhiria, Odesa airport), and its employees were involved in criminal proceedings. In turn, law enforcement officers began to transfer scrap and assets which cannot be managed in principle.

Reason 3. Dependence of the head.

In 2019, the Parliament amended the Law “On Civil Service,” which led to the National Agency’s complete dependence on the Cabinet of Ministers of Ukraine. Since then, the ARMA head must satisfy the appointment subject’s wishes and instead of fulfilling the objectives assigned to him or her by Law.

At the end of 2019, the head of the ARMA was dismissed without explanation and proper argumentation. Since then, for almost a year and a half, ARMA has not had a leader. Some MPs delayed creating a selection commission, prescribed special terms and conditions to participate in a competition, did not approach the selection process systematically, and did not treat all candidates competitively. So, it only makes sense that the Parliament has often failed to pass a law.

Reason 4. Lawmakers are not interested in creating relevant legislation for ARMA.

They have been trying to amend the legislation regulating the agency’s work for several years, and they are trying to implement these changes in two opposite directions. The first is to create an institution that should be a service body with a systematic approach to preserving seized property’s economic value. The second is to turn ARMA into a “storage room” for seized assets, which will bring losses to the state and cause no trouble to the owners.

Constant attempts to improve “leaky” legislation for the worse do not benefit the institution. Some MPs argue that the legislation on the ARMA should be formulated without the agency’s participation, that it is necessary to focus on the interests of owners and not the state and the public.

What conclusion can be drawn from all this?

The institution cannot manage seized assets successfully if its head is not protected from gratuitous dismissal. If there has been no transparent competition for the director of ARMA for more than a year. If members of the selection commission are elected based not on their professional and high moral qualities but some criteria unknown to us. If the legislation has enormous “holes,” so that it is possible to block the work of the body and profit from existing imperfections.

A significant part of these problematic issues can be resolved soon. And to do this, we need to launch a transparent competition for the head of the ARMA and consider existing legislative initiatives involving all stakeholders in the discussion. Furthermore, without these logical and seemingly apparent steps, the efficient work of the ARMA will remain nothing but a dream.

The article was co-authored by Oleksii Danyliuk, legal advisor of Transparency International Ukraine.

Translated by Daria Ivashkevych.