ARMA is conducting a comprehensive review of the financial and property status of the IDS Ukraine group ahead of the repeat competition for the selection of a manager for the corporate rights of the group’s companies. The Agency’s task is to establish a reliable and up-to-date picture of the assets’ condition before their transfer to a new manager, ensure the preservation of their economic value and protect the state’s interests from possible external influence.

Amid the full-scale war and the implementation of the reform of the seized asset management system, ARMA is introducing new approaches to the selection of asset managers. These approaches provide for transparent competitive procedures, a proper assessment of the condition of assets and the engagement of professional businesses in their management.

The competition announcement has been published in the electronic Prozorro public procurement system.

For the state, it is crucial that the new manager receives an asset accompanied by the most complete and reliable information possible about its financial condition, liabilities, funds and business operations.

The quality of this selection process will determine the preservation of the enterprises’ production capacity, jobs, and market positions, as well as the economic impact of managing seized assets in the interests of the state.

A Complete Financial Picture Before the Transfer of the Asset

As part of preparations for the transfer of the assets to the manager to be selected through the competitive process, ARMA sent a comprehensive set of official requests to establish the current financial and property status of the legal entities within the IDS Ukraine group.

The review is directly related to preparations for the repeat competition. Its purpose is to prevent a situation in which a new manager receives the asset without complete information about the state of its accounts, movement of funds and other significant circumstances affecting its economic value.

In particular, ARMA contacted:

• the National Bank of Ukraine and the State Tax Service of Ukraine — regarding the existence of bank accounts held by the group’s companies, the numbers of all open accounts and the banking institutions where they are serviced;
• banks — regarding open and closed accounts, account balances, turnover, and detailed movement of funds for the period from December 2022, when the corporate rights were transferred to ARMA for management, to the present.

The requests are based, in particular, on paragraph 3 of part one of Article 62 of the Law of Ukraine “On Banks and Banking Activity”, which provides for banks to disclose to ARMA relevant information constituting bank secrecy in cases established by law.

A separate part of the review concerns the possible continued presence after 2022 of mechanisms of influence by former beneficial owners or persons associated with them.

The review covers eight legal entities within the group, including PJSC “Mirgorod Mineral Water Plant”, PJSC “Morshin Mineral Water Factory Oskar” and LLC “IDS Aqua Service”.

According to information previously published by IDS Ukraine, as of the end of 2024, the group’s companies held more than UAH 1 billion in their bank accounts.

Given the substantial size of this amount, ARMA must establish its actual availability, location and movement before the corporate rights are transferred to a new manager.

That is why the Agency is requesting banking information for the entire period during which the corporate rights have been under seizure. This will make it possible to establish a comprehensive financial picture of the asset and determine whether any transactions took place that could have affected its economic value.

The information obtained should also ensure equal and transparent conditions for potential participants in the competition, who need to understand the actual financial condition of the asset for which they are competing to become the manager.

Protecting the Asset from Possible External Influence

The corporate rights of the legal entities within the IDS Ukraine group were transferred to ARMA for management in 2022 as part of criminal proceedings concerning assets linked to sanctioned persons, including Mikhail Fridman.

ARMA takes the position that the state’s sanctions policy should provide not only for the blocking of relevant assets, but also for effectively preventing sanctioned persons from restoring their economic influence over enterprises whose corporate rights are under seizure and have been transferred to state management.

That is why, in parallel with the financial review, the Agency is determining whether, after the assets were transferred to ARMA for management, former beneficial owners or persons associated with them retained mechanisms of influence over management decisions, financial transactions and the movement of funds of the group’s companies.

ARMA will not allow unlawful interference in the competitive selection process for an asset manager or actions aimed at reducing the economic value of the seized asset.

At the same time, the Agency clearly distinguishes between information currently being reviewed and facts that may be established based on banking, tax and other information obtained.

If facts of artificially reducing the financial performance of enterprises, concealing income, unjustifiably increasing expenses, withdrawing funds, or otherwise reducing the value of assets are established, ARMA will take measures provided for by law and refer the relevant materials to the competent authorities for legal assessment.

The Competition Must Proceed Regardless of Attempts at External Influence

ARMA’s position remains unchanged: any possible attempts at external influence must not affect either the conduct of the competition or the selection of a new professional manager for IDS Ukraine.

The competitive selection must be conducted under transparent rules and the winner must receive reliable information about the financial and property status of the asset.

Based on an analysis of the information received from banking institutions, state authorities, and other recipients of the requests, ARMA will determine the need for further actions provided for by law to protect the assets, preserve their economic value and ensure the stable operation of the enterprises.

For the state, this case is of fundamental importance: it concerns not only the replacement of the manager of one of the largest seized corporate assets, but also the practical implementation of a new management model.

For reference

ARMA is a central executive body with special status that ensures the finding, tracing and management of assets derived from corruption and other crimes.

The management of seized assets is carried out with the aim of preserving and, where possible, increasing their economic value in the interests of the state.