ARMA Reboot: What the Seized Asset Management Reform Will Change

As early as this week, parliament may finally adopt the law to launch the full-scale reform of the Asset Recovery and Management Agency (ARMA). The relevant draft law has already sparked considerable debate, but we are convinced that it has more positive aspects than drawbacks.

Last week, the head of the Anti-Corruption Committee, Anastasiia Radina, and the head of ARMA, Olena Duma, had a heated dispute—this is not the first time this has occurred. This is due to the MP’s growing concerns about ARMA’s effectiveness, particularly regarding asset management. However, the head of the Agency is unable to provide direct answers. 

This discussion didn’t arise out of nowhere. The capacity of Ukrainian anti-corruption institutions remains a focus for both national experts and international partners, with the reform of ARMA being one of the key commitments in European integration documents. This is because the Agency has needed a significant reboot for quite some time. Despite ARMA operating for over 8 years, serious questions remain about its effectiveness, as highlighted by the head of the Anti-Corruption Committee, whose members should drive the reform forward.

The intensity of the discussion has also increased as the relevant law is set to be adopted soon, with limited time left to fulfill our Ukraine Facility commitments. The parliament is now preparing for the second reading of Draft Law No. 12374-d, aimed at reforming the ARMA. 

Why is this reform important for all stakeholders? What changes can we expect after the adoption of this long-awaited law?

Why is the ARMA reform relevant?

The issue is that the Agency was established to recover and manage assets; however, it fails in both areas. These are not just empty words.

In early 2025, the Accounting Chamber reported that 80% of rulings on transferring assets to ARMA had not been implemented. This means that assets worth significant amounts of money are not being handed over to ARMA for management and are likely continuing to generate profits for their owners, who are involved in criminal cases.

Equally important is the fact that the lack of proper asset management creates additional financial burdens for the state. If the seized property is damaged, destroyed, or stolen, the state will be required to compensate the owners for their losses if the seizure is lifted. 

In addition, according to the Accounting Chamber’s calculations, from 2022 to mid-2024, the state has already lost at least UAH 850 million in asset management, though the actual figure could be much higher.

An independent external audit of ARMA’s activities has never been conducted, despite being required for other bodies within the anti-corruption system. Moreover, the competition for the position of the head of the Agency is largely politicized and, unfortunately, does not prioritize the evaluation of candidates’ professionalism and integrity. 

We can already see the results, particularly in the frankly manipulative responses from the head of ARMA. 

What is wrong with the current approach to managing seized property?

The current system of managing seized assets has several significant drawbacks:

1. Inefficient competition for hiring managers. According to the Prozorro system, ARMA announced 36 competitions last year, but only 13 of them were completed successfully. As a result, only 10 management contracts were concluded.
2. Non-transparent and lengthy manager selection process. The manager selection process can take up to 524 days to begin, and most contests lack competition, with very few candidates applying.

3. Chaos in accounting for seized assets. Although access to the register of seized assets is open, it is difficult to find the information needed for public monitoring, such as the current status of assets, the terms of asset management contracts, and the results of performance checks.

Data manipulation

In the public discussion mentioned earlier, Anastasiia Radina, the head of the Anti-Corruption Committee, provided numerous examples of how ARMA information has been distorted. Despite the approval of the draft law by the Committee on European Integration, ARMA stated that the document “does not meet European obligations,” arguing that the Committee had considered “ARMA’s recommendations.”

An even more egregious case was the manipulation of the Agency’s financial indicators. In January 2025, at a committee meeting, ARMA reported income from asset management of “a little more than 2 billion hryvnias.” However, two weeks later, this figure suddenly increased to 12 billion, without any explanation of where the additional 10 billion came from. This is particularly concerning, as official reports indicated that ARMA’s income from asset management in 2024 amounted to UAH 1.2 billion.

In response to public criticism, the head of ARMA resorted to another manipulation, attempting to justify the discrepancies in the figures. This included counting seized assets as income, rather than just income from their management, even though these are entirely different indicators from a legal perspective. Notably, the documents referenced by Anastasiia Radina clearly distinguish these concepts. Moreover, in her post dated December 31, 2024, Olena Duma herself stated that the income amounted to UAH 2.14 billion, further confirming the manipulative nature of claims about UAH 12.3 billion.

The greatest outrage among the head of the Anti-Corruption Committee and other MPs is caused by ARMA’s attempt to conceal the real state of affairs under the label “internal use only”. Such actions demonstrate the Agency’s systematic approach to data manipulation to create the illusion of its effective work.

What will Draft Law No. 12374-d change?

The draft law, finalized by the Anti-Corruption Committee for the second reading, proposes several fundamental changes to ARMA’s work. 

1. New management model

Assets will be classified as simple (cash, single movable or immovable property, and assets that can be transferred for use without special measures) and complex (unified property complexes, assets requiring the organization of economic activities, licensed activities, corporate rights, etc.).

MPs propose different mechanisms for selecting managers depending on the type of asset.

• For simple assets: a two-stage selection process—first, pre-qualification of participants, and then an auction via Prozorro, where the winner is the one who offers the lowest price.

• For complex assets: a separate selection procedure through a special commission, which will include representatives not only from the ARMA but also from the business ombudsman, the National Securities and Stock Market Commission, the Ministry of Economy, and the Ministry of Justice, serving as a safeguard against abuse.

• The “last resort manager” mechanism is being introduced for assets that have not found a manager through standard procedures.
  

2. Transparency and control

The draft law strengthens ARMA’s reporting requirements. From now on, the Agency will submit quarterly reports on asset management in addition to annual ones. 

The public part of the Unified Register of Seized Assets will be significantly expanded to include detailed information on asset management, income, and maintenance expenses. Control over management effectiveness will be stricter, with documentary inspections conducted monthly and field inspections quarterly.

3. Safeguards against abuse

The new law removes several loopholes for abuse. In particular, corporate rights managers of Russian or Belarusian companies will no longer be required to coordinate their actions with the asset owner. 

The problem of conflicts of interest will also be addressed by introducing a rule that prevents competitors from becoming managers of their respective businesses. The document also clearly defines the grounds for terminating a management contract, including conflicts of interest between the manager and the owner, as well as attempts to alienate assets.

4. Planning and evaluation

The asset management procedure will become more structured, as an asset identification stage will be introduced before its transfer to ARMA. This will make it possible to determine in advance whether effective management is feasible and ensure the preservation of the property’s economic value. 

The ARMA will develop an indicative management plan for each asset, including a detailed analysis of risks, potential returns, and expected outcomes. The law establishes clear deadlines for each stage of the process, from asset acceptance to manager selection, reducing bureaucratic delays.

Why is it important to pass this draft law?

Overall, the ARMA reform is part of Ukraine’s commitments under the Ukraine Facility Plan, which must be implemented by the end of March 2025.

In addition to fulfilling international obligations, the adoption of the law will also lead to practical consequences, such as reducing budget losses, ensuring fairness for businesses, increasing transparency in the process, and promoting the effective use and preservation of seized assets.

In general, Draft Law No. 12374-d is intended to fundamentally improve the management system of seized assets in Ukraine, making it more transparent, efficient, and beneficial for both the state and businesses. The timely adoption of this law will not only help Ukraine fulfill its international obligations but also greatly strengthen the management system of seized assets.

However, as we can see, the Agency’s own reaction to these amendments is mixed. This is unfortunate, as despite the head of ARMA’s claims that the institution has already begun to reform under her leadership, the actual indicators suggest otherwise.