The search is active

In pursuit of good intentions, such as fighting corruption and bringing national legislation in line with the requirements of the European Union, a whole range of measures have been implemented in Ukraine to introduce the institute of management of property derived from crime. This process was marked by the creation of a special body - ARMA and by the beginning of its active work. However,in the projection of Ukrainian realities, even honest owners of property have found themselves in  the risks zone, their rights and legitimate interests in most cases have actually become unprotected.

Institutions of the National Agency of Ukraine for Finding, Tracing and Management of Assets derived from Corruption and Other Crimes (ARMA) have been established in over 100 jurisdictions worldwide, in all EU countries. The basis for their creation was the European Union Directive No. 2014/42 / EU of April 3, 2014, which requires the adoption of measures for the effective disposal of seized assets, as well as the creation of special institutions responsible for the management of such assets. The purpose of the institutions for tracing assets in EU countries and other jurisdictions is to find and provide law enforcement authorities with information on the existence of assets that can be arrested, both within the jurisdiction of the location of the institution concerned and in foreign jurisdictions.

Excursus into law

The norms of Articles 19, 20 and 21 of the Law of Ukraine "On the National Agency of Ukraine for Finding, Tracing and Management of Assets derived from Corruption and Other Crimes" (the Law) establish legal mechanisms for the management of assets seized within criminal proceedings  (funds, bank metals, movable and immovable property, securities, property rights and other rights), the amount or value of which equals
or exceeds the 200 minimum salary established on January 1 of the respective year, including through sale, alienation or transfer for management.

Assets are trasferred for management to legal entities according to the results of the competition and to individuals - entrepreneurs in accordance with the procedure established by the legislation on state (public) procurement. Those assets are accepted by ARMA for management on the basis of the respective decision of the investigating judge, court or with the consent of the owner of the assets with the respective application of the prosecutor.

The legal basis for the transfer of the seized property to the ARMA for management is also provided for by the provisions of Article 100 paragraphs 6, 7, of the Criminal Procedure Code (CPC) of Ukraine.

That is, the Law and the norms of the CPC of Ukraine introduced a legal institution such as the management of seized assets, which gives grounds to the National Agency, as early as at the stage of criminal proceedings, to manage (inclusive of selling / disposing of) arrested assets possessed, used and disposed of by a person, including acquirer in good faith, whose guilt has not yet been proved in accordance with the law.

In other words, if you are doing business and own assets worth in excess of 200 minimum salaries, while your business activity is under the close attention of law enforcement agencies, one day you can expect an unpleasant surprise - all "received due to exorbitantly hard work" can go to a completely strange person for management. At the same time, there will be only one answer to thousands of questions to the investigator / detective / prosecutor: "The property has been transferred on the basis of a court order and, therefore, all actions are lawful."

 The farther, the more. Not only have you been a party to the court proceedings deciding on the destiny of the asets (the court is not obliged to notify the asset owner of the consideration of the motion for seizure and transfer of assets for management), but also  you still have no possibility under the current procedural law to contest the transer of the assets  to a third person. (it is possible only to contest the seizure of assets).

The climax of the story - there is no guarantee that your property will not be appraised (also without your participation) and alienated in favor of third persons at a certain conditional value which may prove to be much lower than the market value.

Real cases

ARMA has been active in the last two years, ensuring implementation of the state policy in the field of finding and tracing of assets that may be subject to seizure in criminal proceedings and in the field of management of assets seized or confiscated in criminal proceedings. The first attempts by the bodies of pre-trial investigation and by the courts to use the institute of asset management were really "interesting" and "extraordinary". For example, the Unified State Registry of Court decisions contains the definition of investigative judges, according to which administrative buildings (Business Centers) were transferred to the National Police of Ukraine for management (although it remains completely unclear
how the National Police should, with its own resources, ensure the proper functioning of the office building as an economic object).

One of the first and most significant cases of the implementation of the Law concerned the GULLIVER retail and office complex. In that case the Pechersk District Court of Kyiv on July 14, 2017 ruled to seize three floors of non-residential premises with a total area of ​​4460 m2, and on 28 September last year the same court ruled to transfer said property to ARMA management. The owner of the property was LLC
UNISON GROUP. Interestingly, in addition to non-residential premises the management by ARMA was set over dozens of elite apartments, office space, parking spaces, cars, buildings and land, which also belonged to LLC UNISON GROUP. Subsequently, on November 17, 2017, the seized property was transferred by ARMA to the manager on a competitive basis.

Not so long ago , under the decision of the Dnipro district court of the capital (from May 29, 2018)  the exhibition center "Parkovy" in the center of Kiev, known to people as a "helicopter platform of ex-president Yanukovich", was also transferred to ARMA for management. The purpose of the transfer of property for management, as stated in the court decision, was the organization of security, responsible storage, current repairs, maintenance, keeping of the property in good condition and operational management.

On October 11 this year the meeting of the ARMA Tender Committee elected the "Road Traffic Management Center" specializing in land transport services as the manager of the “helicopter platform”.

One of the largest objects transferred to ARMA for management is the Odessa International Airport, which consists of passenger terminal complexes, non-residential buildings and structures, industrial complexes, residential real estate objects and 75% of corporate rights of LLC Odessa Airport Development on the specified property. Though, the history of this object is unique: as it is implied by the text of the respective resolution of the Solomyansky District Court in Kiev, the main motive that guided the court in deciding on the matter was the need to protect the interests of the owner of the property. At the same time, as it became known from the mass media, the decision of the Solomyansky District Court of Kyiv of November 1, 2018 partially granted the motion of the attorney representing the owner of the assets and cancelled the decision of the court on transfer of the assets for administration by ARMA.

The reason for the cancellation of the decision was the failure by the National Agency to ensure the implementation of the purpose of transferring the assets for management, namely, the preservation and increase in the value of the airport's property, as a result of the transfer of the assets for management by ARMA LLC Odessa Airport Development and the International Airport "Odessa" sustained substantial property and reputation damage.
As we see, courts actively use the mechanism of transfer of assets for management by ARMA, but the owners of the assets have no real guarantees of preservation and increase in the value of the assets, as a result of which the rights and legitimate interests of the owners, in respect whereof there are no convictions, remain absolutely unprotected.