The SPFU will not be able to sell confiscated assets: this needs to be urgently rectified

Recently, the Verkhovna Rada has voted for the amendment, which will actually make it impossible to sell the confiscated assets that the State Property Fund receives for management. The sale of this property was supposed to be the main source of replenishment of the Fund for the Elimination of the Consequences of Armed Aggression of russia, which is used to finance reconstruction and compensation.

We are talking about the amendment to draft law 8250, introduced by the specialized committee on the day of its voting. According to it, the State Property Fund will be able to sell only those assets that belong to residents of states that carry out armed aggression against Ukraine. 

“At first glance, this formulation seems logical. But from a legal perspective, it jeopardized the entire sale of confiscated assets,” explains Andrii Shvadchak, legal advisor at TI Ukraine.

When assets are recovered into the state’s income, they cease to belong to the previous owners. Accordingly, if the SPFU has the right to sell exclusively those assets that belong to these residents, it will not be able to sell what has already ceased to belong to them.

This is just one of the problems with this wording because of which the State Property Fund will not be able to sell the confiscated assets that it receives for management. 

“This situation needs to be rectified as soon as possible. After all, the proceeds from the sale of confiscated assets should become the main source to replenish the Elimination Fund, which finances the reconstruction and confiscation of damaged property, in particular within the framework of the eRecovery project,” says Ivan Lakhtionov, Deputy Executive Director of TI Ukraine for Innovative Projects. 

Let us remind you that as of June 2023, within the framework of the sanctions mechanism, more than 130 real estate objects, corporate rights and shares in more than 40 enterprises were confiscated. TI Ukraine experts, for their part, have collected all the information about the processes of property confiscation of the Kremlin regime accomplices and their objects that have already been seized — these data will soon be available to everyone on the online platformHow to Confiscate Russian Assets in Ukraine?

This publication was prepared by Transparency International Ukraine with the financial support of Sweden.