At the initiative of the Asset Recovery and Management Agency (ARMA), a meeting was held with representatives of LLC «Kraytex-Service», the manager of the «VinnytsiaPobutkhim» plant. The main issue was to ensure the continuous operation of the enterprise and resolve the dualism of legislation.

Following the HACCU's decision to nationalize «Vinnytsapobutkhim» and transfer it to the SPFU, there was a need to resolve legislative conflicts. The ARMA initiated draft law No. 10069, which amends Article 5-1 of the Law of Ukraine “On Sanctions”. The key goal is to enable ARMA to continue managing the seized asset even after the HACCU's decision to recover it for the state, until the SPFU identifies a new owner.

The importance of this issue is confirmed by the financial performance of the enterprise under ARMA's management. Between May 2023 and July 2024, monthly payments increased from UAH 250 thousand to almost 8 million UAH, and total budget revenues amounted to almost 80 million UAH. This allowed not only to preserve jobs in Vinnytsia region and ensure uninterrupted production, but also to significantly strengthen Ukraine's defense capabilities.

The situation changed after the HACCU's decision of July 24, 2024 to impose sanctions on Nevskaya Cosmetics JSC. After this decision, monthly payments dropped to 250 thousand UAH, which led to budget losses of almost 7.7 million UAHper month.

The Agency does not stand aside when there is such a threat to: affect the management agreement, negative consequences for the operation of the enterprise and the region, the labor collective and losses to local budgets.

ARMA immediately appealed to the Government with an initiative to appoint the agency as a temporary manager, which ensured non-covering and sustainable operation until the seized asset was sold.

We emphasize that since 2023, ARMA has been actively initiating amendments to the Law of Ukraine “On Sanctions” to regulate the problem.

This enterprise is a clear example of effective management and ensuring revenues to the state budget and the possibility of ensuring the sale of a sanctioned asset that is simultaneously seized in criminal proceedings (as proposed by the agency in draft laws 6233 and 10069) will allow:

✅ avoid downtime of the production enterprise and ensure the continuation of sustainable payments

✅ protect the labor collective from dismissals

✅ prevent duplication and inappropriate spending of funds on repeated SPFU activities - asset inspection, asset valuation, tender procedures that require a long period of time

And most importantly, after holding working meetings and official appeals to the SPFU and the pre-trial investigation body, it was established that the Fund cannot sell the sanctioned asset, the seizure of which cannot be lifted due to its recognition as material evidence in criminal proceedings.

The SPFU officially confirmed the impossibility of selling the sanctioned property due to the existence of an arrest in a criminal case in its letter to the ARMA.

To summarize, it is the National Agency that can sell the seized asset within the framework of criminal proceedings and it is the Law of Ukraine “On ARMA” that determines the possibility of returning funds (with accrued interest) after its sale, if a relevant court decision is received.

Thus, the conflict with the law on sanctions should be resolved.

The draft law No. 10069 proposed by ARMA aims to resolve this issue by ensuring that seized assets can continue to be managed after the HACC decision.

Importantly, the draft law provides for the possibility of organizing the sale of an asset through the Prozorro.Prodazhi system without interrupting the management process.

ARMA's initiative has received broad support from international partners, including the G7 and OECD countries. The draft law has also received positive opinions from line ministries and the Parliamentary Committee on Anti-Corruption Policy.

“The more government agencies have the right to sell sanctioned assets during the war, the more funds will be allocated to the budget for the defense forces. The main priority of the state of Ukraine is victory in the war, which requires daily work of all bodies as a united front to support the military,” emphasized Olena Duma during the consideration of the draft law by the relevant committee.

The same proposed norms will resolve the issue of written-off Russian funds within the framework of criminal proceedings, for which military bonds were purchased and which are already working for the defense forces. These include 2 billion UAH of PinUp, 18 million USD of Friedman and Aven, and 1.8 billion UAH of Royal Pay.

ARMA also emphasized these issues at a working meeting with the HACC Chairman and made relevant proposals. The Agency will ensure the implementation of HACC decisions, if received.

Therefore, the prompt consideration of Draft Law No. 10069 by the Verkhovna Rada of Ukraine is critical to ensure effective management of seized assets and maximize state budget revenues in wartime.