Transparency International Ukraine, together with Ukrainska Pravda, within the European Union funded project Civil Society for Ukraine’s Post-War Recovery and EU-Readiness, presented a special platform How to Confiscate Russian Assets in Ukraine?
The platform provides all the information about the processes of property confiscation of the accomplices of the Kremlin regime and the objects that have already been seized from them: real estate, assets, corporate rights, cars, etc. It also contains recommendations that will help keep the money and assets of the invaders in the Ukrainian budget.
At the presentation on July 11, TI Ukraine experts and leading specialists on the confiscation of enemy assets discussed the biggest issues our country has faced in more than a year after the launch of the mechanisms to seize Russian property. Let us share the most important statements that were voiced at the event.
Confiscation of Russian assets is a powerful weapon that can speed up the end of the war. This is the opinion of Alberto Fernández-Díez, the Head of the Trade and Economic Section of the EU Delegation to Ukraine.
“The main objectives of the EU sanctions are to stop russia’s military machine, reduce the Kremlin’s revenues, and limit the development of the Russian economy so that it can no longer finance this war,” he said.
As of July 11, Ukraine had already confiscated 997 assets of the Russians — 138 real estate objects, 537 valuables and works of art, 277 transport units, and 42 cases of corporate rights.
Most of them were seized through the application of the sanctions mechanism through HACC rulings. Another case was under the mechanism of forcible seizure of property; as far as criminal proceedings are concerned, we are aware of only one case of confiscation of property related to russia from public sources. However, TI Ukraine will continue to collect information and update the platform not to miss any confiscated assets.
Our experts determine that the sanctions mechanism is the riskiest in terms of potential appeal to international instances due to the possible non-compliance with international law, in particular, the protection of property rights. A few days after our presentation, the Verkhovna Rada adopted an important draft law 8392, aimed at aligning this process with international practice.
Inna Bohatykh, Director of the Sanctions Policy Department of the Ministry of Justice, believes that sanctions can become a preventive mechanism and a deterrent to wars in general. After all, business and the economy have an important influence on political processes within the country.
“Sanctions are a silent weapon. I hope that these weapons will become more effective than the real ones, and people around the world will not be dying,” the speaker said.
The most famous Russians and Kremlin supporters who have been sanctioned are Vladimir Yevtushenkov, Oleg Deripaska, Viktor Yanukovych, and others. However, many of the persons on the list are various officials and entrepreneurs with property in the occupied territories of Ukraine, in particular, Crimea.
As Inna Bohatykh assured, legally, Ukraine can already enforce the decision to confiscate property in the uncontrolled territories at the level of re-registration of ownership. However, in practice, we will gain access to these assets only after the deoccupation of these territories. It is also important that such decisions create some psychological pressure on russia.
Currently, the most effective mechanism for confiscating Russian assets is the sanctions one. It was about it that we talked to HACC judge Vitalii Kryklyvyi, who noted the problem of how to properly inform all parties to the case that it was being considered by the court. After all, the persons involved in such cases may be, for example, in the occupied territories, where the Ukrainian court cannot physically send a notice.
The HACC, like the participants in the case itself, is significantly limited in its ability to fully prepare and conduct the trying of “confiscation cases” in a rather short time frame provided by law. However, in the above-mentioned changes to the sanctions legislation, the Verkhovna Rada partially corrected this shortcoming. There are other useful changes in the law, in particular, the plans to create a State Sanctions Register.
If we discuss another way to seize property — confiscation within the framework of criminal proceedings, then so far, we have not been able to collect comprehensive information on the (pro-)Russian assets confiscated under this process due to its closeness and lack of systematization. However, TI Ukraine considers it important and expedient to criminalize the circumvention of sanctions, which was done, for example, in the United States, thanks to which Ukraine received the assets of Russian oligarch Konstantin Malofeev.
The absence of punishment for circumventing sanctions in Ukraine gives the Russians the opportunity to hide property through fictitious transactions with foreigners and thus avoid responsibility. However, the representative of the Prosecutor General’s Office Ivan Kibalchych assures: “When we seek international legal assistance, we apply the principle of double criminalization. That is, what is a crime under our law should be a crime under the laws of another country — and vice versa.” Therefore, in addition to Ukraine, our partners also need to criminalize the circumvention of sanctions — for example, the EU countries.
The main task of confiscation is not just to seize property from the Russians. It is critical for us to keep these assets in the state and effectively transfer them for reliable management.
Using the mechanism of forcible seizure of property, the subsidiaries of the Russian banks Sberbank and VEB.rf have already been recovered into the state’s income. Deputy Minister of Economy Oleksii Sobolev is sure that Ukraine needs a mechanism for the rapid recovery of confiscated banks to private ownership.
“Confiscations of banks are inconvenient because they become state-owned. There are few potential buyers. At the same time, the state share in the banking sector is already massive, so it prevents the development of the private banking sector,” said Oleksii Sobolev.
During the discussion, a question arose about possible payments of liabilities to Russian parent banks because Ukraine nationalized their Ukrainian subsidiaries. Inna Bohatykh assured that this was impossible: “I am certain that in Ukraine, there will be no obligations to pay compensation to russia because these banks belonged to the aggressor state, and the fact of aggression has already been recognized throughout the civilized world.”
Finally, one thing is clear: Ukraine should continue working on improving the mechanisms for confiscation of Russian property. Who, but for us, is to become leaders in this matter? Then other states will be able to take an example and seize the property of the Russians in their countries. The occupier must pay for all crimes committed in Ukraine.
The project Civil Society for Ukraine’s Post-War Recovery and EU-Readiness is being implemented by an association of well-known Ukrainian CSOs and think tanks:
The Agency for Legislative Initiatives is a think tank with many years of expertise in democratization, parliamentarism, political education, and good governance.
Transparency International Ukraine – is an accredited chapter of the global movement Transparency International, with a comprehensive approach to development and implementation of changes for reduction of the corruption levels in Ukraine.
Civil Network OPORA is a non-governmental all-Ukrainian organization of public control and support in the field of elections, parliamentarism, education, joint ownership, energy efficiency, local self-government, as well as the comprehensive implementation of the principle of open data.
Tomorrow’s Lawyer is a non-governmental organization with practical experience in the field of legal and judicial development, reforming the justice sector.
The Centre for Economic Strategy is a non-governmental research body on economic policy issues.
NGO European Pravda is an independent Ukrainian media that specializes in covering news on European issues and European integration of Ukraine.
More information about the project: https://parlament.org.ua/2022/09/19/ali-eu-readiness-consortium/
For more information, please contact Daria Stepanova, Head of the Communications Department of Transparency International Ukraine, +38 063 726 2658, [email protected]