Volodymyr Pavlenko, Deputy Head of the National Agency of Ukraine for finding, tracing and management of assets derived from corruption and other crimes (ARMA)

 

For several years now, an authority responsible for tracing and management of illegally acquired assets – ARMA is functioning in Ukraine. The main task of the institution is to ensure that assets derived from corruption or other illegal means work for the benefit of the state and society - at least as long as the investigation and trial on their owners continues.

The key mechanism for implementing this idea is a public-private partnership, as ARMA being a state body transfers the seized assets into management to private companies. And the income received by them from the commercial use of assets goes partly to the manager, partly - is transferred to the State budget.

Today, ARMA has thousands of assets worth billions of hryvnias, and this is an array of opportunities for domestic business. However, in order for opportunities to be converted into management agreements, companies in the market need motivation. What does it involve?

First of all, we give to the economic entities mostly ready-made, working business, which needn’t be started “from scratch”. Real estate (from apartments and cottages to shopping malls and offices), transport (from passenger cars to train carriages and ships), property complexes (from recreation centers and elevators to factories and CHP plants), shares, corporate rights - these are all active assets that do not require millions of investments and years of competition for a niche in the market for obtaining profit.

The main capital that a business needs in this case is a realistic business plan, experience in managing / owning similar objects, sufficient material and technical base and a positive business reputation.

Another important advantage of managing seized property is that the costs of maintaining and improving the asset, such as repairing an apartment or replacing production equipment, are reimbursed from the profit of property management upon agreement with ARMA. Therefore, the asset for the manager is self-sustaining, one needn’t pay from his own pocket under conditions of effective management.

Undoubtedly, the main economic incentive for a potential manager is the profit from management. The amount of remuneration in each case is determined by the terms of the management agreement and may vary depending on the specifics of the asset. In practice, the manager usually keeps 20-50% of net income and the rest goes to the State budget. This is the net benefit of the manager, which he receives as such for his organizational efforts. In return, the company must fulfill the basic conditions: manage effectively, maintain and, if possible, increase the economic value of the asset.

ARMA is constantly striving to improve the conditions for cooperation with business. We have changed the rules of competitive selection of managers, reducing the number of mandatory requirements for participants in the competition; developed legislative proposals designed to minimize the likelihood of legal sabotage by asset owners and thus make asset management a less risky business for managers. Our plans are to introduce a grace period for management (with reduced or no payments to the State budget) for complex and low-profit assets, so that the manager could get the business back on track.

It should be emphasized that now ARMA is fully open to dialogue and cooperation with the business environment. The wider the circle of business representatives will know about the opportunities and conditions of seized assets management, the more they will benefit the society. To convey relevant information, we use all available channels, first of all, our official website and telegram channel, where anyone can get acquainted with the lots put up for the competition, terms for the managers selection and the list of required documents.

At the same time, we urge applicants for asset management to carefully study the requirements and prepare high-quality packages of documents for participation in competitions, as currently a significant part of competitions is re-announced precisely because of irrelevant proposals of participants.

Literally, every week we post new assets in search of a manager. Of course, managing seized property is not an easy task and is sometimes risky. However, we are convinced that with the right approach, the management of seized assets will be profitable for both the manager and the State budget. This is the result on which all efforts of ARMA are aimed today.