Pavlo Velykorechanin, PhD in Law, Attorney, Specialist in Public Administration and Management of Seized Assets, Deputy Head of ARMA (2023–2025)
Formally, the selection of a manager for the producer of “Morshynska” is ARMA’s first major result in a year. In reality, behind the press release stand a contract that does not exist, powers that are being challenged in court, and remuneration that no sane person would agree to work for.
We have a separate genre of state celebration: the grand opening. A ribbon, scissors, cameras, a speech about a historic moment. And then it turns out that the pipe to the source has not been connected, while no one has signed the acceptance certificates. But the photograph exists, the report has gone out, and someone else will deal with what happens next. That is roughly what the story of the manager for “Morshynska” looks like.
First, what actually happened
On September 7, ARMA held an electronic auction to select a manager for the seized corporate rights of the IDS Ukraine group. Five applications, three rounds of bidding. The winner was the asset management company “Ukrkapital,” which offered a fee of 0.01 percent. The closest competitor, the law firm “Prioritas,” offered 0.90 percent.
Here I have to be honest. Throughout the past year, I have criticized the agency’s interim management for its lack of results: one new asset management agreement in a calendar year, and even that one was never implemented. And now a result seems to have appeared, and the agency called it proof that business believes in the state. The problem is that the result here is not the auction, but money going into the budget and a business that is actually operating.
Problem One: Remuneration That No One Will Work For
Let us calculate what 0.01 percent actually means. In the first half of 2026, IDS Ukraine generated almost UAH 3.95 billion in revenue and UAH 188 million in net profit, while ARMA itself expects the management of these rights to generate more than UAH 1 billion in revenue per year. Whichever base you use for the calculation, the winner will earn tens or perhaps the first hundreds of thousands of hryvnias per year. For managing an asset worth between UAH 5 billion and UAH 8 billion.
Now let us look at the expenses. A bank guarantee of more than UAH 100 million, another approximately UAH 150 million for insuring the asset, and monthly guarantee payments to the state amounting to tens of millions. And separately: within three months after signing the acceptance and transfer certificate, the entire net profit for 2023–2025 must be spent on government bonds — which, according to ARMA’s own calculation, amounts to UAH 2.192 billion. Hundreds of millions upfront versus several tens of thousands in remuneration. No economic model works this way.
That is precisely why the agency is required to examine the bid as an abnormally low offer. And here an uncomfortable question arises: if there is virtually no legal income from the deal, why enter it at all? There are two possible answers. Either the participant does not intend to comply with the terms, in which case the contract will be terminated and the guarantee collected. Or it is counting on income that is not written into the contract.
Problem Two: Who Exactly Won
The winner belongs to the owner of “Ukrainian Capital” Bank, Serhii Bielashov, a member of the Poltava Regional Council. In 2023, the High Anti-Corruption Court imposed a preventive measure on him in a case brought by NABU and the SAPO concerning gas procurement for “Ukrzaliznytsia.” There is still no verdict, and the presumption of innocence applies equally to everyone. But the issue is not the businessman; it is the design of the tender.
Journalists who examined all five participants documented a telling picture: some companies have a material base consisting essentially of a rented printer; several do not have three years of experience managing industrial assets; and one has its own water brands, which under the relevant law bars access to the asset. At a tender where the only criterion is price, those who were comfortable with the price showed up.
Problem Three: An Asset That Cannot Be Transferred
And here the image of the disconnected pipe ceases to be merely an image. ARMA is not transferring the factories into management. Under the 2022 rulings of the Shevchenkivskyi District Court, what was transferred into management were corporate rights, trademarks, and industrial designs. Real estate, equipment, raw materials, and funds in bank accounts were not transferred. The winner receives a shell.
According to the position of the company and its lawyers, those same rulings prohibit the disposal of the shares, but do not prohibit shareholders from using them. Meanwhile, under Law No. 4503-IX, the agency manages assets whose use and disposal are both prohibited. Minority shareholders are already challenging in court ARMA’s very right to manage their shares. The company also points out that the asset valuation has expired, and without a valid valuation the contract cannot be signed.
At the same time, a lawsuit brought by the Ministry of Justice seeking the recovery of 100 percent of the corporate rights into state ownership has been pending before the HACC for two years, and the proceedings are at the final stage. If the claim is granted, the asset will go to the State Property Fund, and the contract will lose its subject matter. The third proceeding: last year, the HACC ordered NABU to investigate possible abuse of authority by ARMA officials during the previous selection of a manager. In total: there is no contract, three court cases, and an Antimonopoly Committee of Ukraine authorization for the concentration still ahead. It would seem logical to wait. But the celebration has already been scheduled.
Problem Four: The Cyberattack That Never Happened
On August 18, four days before the application deadline, the agency announced a hacker attack on its servers. ARMA’s management linked it to attempts to disrupt the tender and spoke of an “alarming synchrony” between interference with the agency’s operations, waves of information, and an increase in requests from the media and members of parliament. On September 7, the same thesis was repeated in the press release on the auction results: despite the hacker attack, the auction took place.
And on September 8, the relevant department of the Security Service of Ukraine provided a written response: it had no data either on a cyberattack against ARMA’s systems during that period or on interference with the operation of Prozorro. But the main point is something else: according to information provided by the agency itself in a letter dated September 3, the fact of a cyberattack was not confirmed, while the failure of certain services of the seized-assets registry on August 17–18 was, according to the conclusions of ARMA’s cyber-security specialists and CERT-UA, caused exclusively by hardware-related reasons.
In other words, on September 3 the agency informs the special service in writing that there was no attack, while on September 7 it tells the country that the auction took place despite an attack. Hardware failures happen to everyone; there is nothing shameful about that. But when a malfunction is turned into an external attack, with parliamentary inquiries added to the narrative, this is no longer about cybersecurity. It is about presenting parliamentary oversight as a hostile campaign.
Who Is Actually Punished by Blunt-Force Management
There is one more thing missing from the victory press releases. The seizure covers 100 percent of the corporate rights, although approximately 49 percent are connected to sanctioned persons. The remainder, according to the group itself, belongs to the Patarkatsishvili family, which holds British citizenship (34.83 percent), the Government of Georgia (7.73 percent), and minority shareholders (7.45 percent). They have no connection to Russian or Belarusian capital, and on September 7, The Guardian reported that a representative of the family was prepared to take the matter to international courts.
The correct model punishes precisely the sanctioned persons without affecting bona fide co-owners: judicial confiscation of their stake through the HACC produces the same result without collateral victims. Blunt-force management of the entire package through an auction guarantees those collateral victims, while the budget will ultimately pay the price of the dispute.
What Awaits Us Next
I will try to make a prediction. This is a forecast, not a fact, and I will be happy to be wrong.
First. The coming weeks will be spent examining the abnormally low offer. The winner will submit a justification, the commission will accept it, and we are unlikely to see a public answer to the question of how hundreds of millions in expenses will be financed.
Second. Even if the contract is signed by the end of autumn, there will be no actual management this year: an acceptance and transfer certificate, a valid valuation, and authorization from the Antimonopoly Committee of Ukraine are still ahead, and that will take months. The manager will remain a manager on paper, while the budget will see no revenues. At the same time, the HACC case will reach its final stage, and the contract may lose its subject matter before it even begins to operate. Then a year of work and four tenders will produce zero.
Third. The worse scenario is quieter than zero: the contract is declared defective only after the manager has begun making decisions within the companies’ governing bodies. Reversing those decisions will be almost impossible, and the state will pay for it.
Fourth. Every such episode raises the price of the next tender: professional managers, seeing this structure, will not come to compete for other assets. And ARMA’s portfolio contains tens of thousands of assets, including some where stopping production means not lost profit, but no heat in winter.
Returning to the ribbon. It was cut, the applause died away, and the press release spread across the news feeds. But the pipe is still not connected to the source. And if everything ends the way the previous three tenders did, it will no longer be those who held the scissors who have to sort it out.
And the flood, as we know, always comes afterward.
