Policy paper on the problems of managing the seized asset of the ICCA (October Palace)

The International Center for Culture and Arts (ICCA / Zhovtnevyi Palace) is a concert hall in central Kyiv with a capacity of more than 2,000 spectators. It is used for performances, festivals, concerts and other events. Its value is almost UAH 428 million. Due to manipulation involving the Federation of Trade Unions of Ukraine, this asset was seized and transferred to ARMA.

This asset illustrates the problem of the lack of regulated deadlines for announcing tenders to select a temporary manager: almost 2.5 years passed between the transfer of the asset to ARMA and the announcement on Prozorro. After the tender was announced, other problems emerged, including problems with the tender documentation. Potential participants successfully challenged discriminatory tender requirements. ARMA amended the documentation, but this still did not make it possible to select a manager.

During the tender process, participants pointed to the failure to account for seasonality in the ICCA’s revenues and to the lack of information about the asset, including costs, staffing structure and the property to be transferred into management. All this is likely to lead to the need to announce a new tender.

Problems identified as of 07.05.2025

• No publication on Prozorro of the tender to select a temporary manager for 20 months from the start of the manager search.
• Successful challenges to the tender documentation due to discriminatory conditions.
• The guarantee payment does not take into account the specific features of the asset being transferred into management.
• Insufficient information for potential managers about the asset and the tender.

The International Center for Culture and Arts (ICCA) is an architectural monument designed and built in the mid-19th century by the renowned architect Vikentiy Beretti. The ICCA is one of the main concert halls and cultural venues of Ukraine’s capital, with a capacity of more than 2,000 spectators. Concerts, performances, competitions, festivals and other events are regularly held on the ICCA stage. The ICCA is home to numerous clubs, studios and ensembles. Its library holds more than 70,000 books.

The ICCA building is included in the following registers of monuments:

• urban planning and architecture monuments of national significance
• historical monuments of local significance.

The owner of the asset is the Federation of Trade Unions of Ukraine, through the FPU Enterprise “International Center for Culture and Arts of the Trade Unions of Ukraine”. Address: 1 Instytutska Street, Kyiv. The total area is 17,597.70 sq. m.

According to the Property Valuation Report dated 01.09.2024, prepared by PE “Expert-Analityk”, the market value of the asset as of December 2024 - January 2025 is UAH 427,663,000, as confirmed by the review of the Property Valuation Report dated 18.09.2024.

On 28 June 2023, ARMA began searching for a manager for the ICCA building complex. On the same day, a tender was announced to select valuation entities to assess the ICCA building complex.

However, the tender on Prozorro was never announced during 2023-2024. This confirms the need to establish clear deadlines for conducting the procedure to select a temporary manager for seized property.

As a result, for a long time the asset was not even put forward for transfer into temporary management.

On 16 August 2024, ARMA announced preliminary consultations and market analysis to prepare tender documentation for the tender to select a manager for the seized assets. On the same day, a tender was announced to select valuation entities to determine the appraised value of the ICCA.

On 11 March 2025, an announcement was published on the Prozorro platform regarding open bidding (open bidding with special features) for the procurement of ICCA management services.

• The expected value of the procurement item is UAH 300,000. Accordingly, bidding starts from a manager’s remuneration of 30% of the income generated from managing the asset.
• The amount of expected monthly income from management must be at least UAH 2 million (guarantee payment).

The deadline for submitting tender proposals was set for 25 March 2025. The auction was scheduled to start the following day.

However, on 21 March 2025, a complaint was received from LLC “Stereo Events” regarding discriminatory requirements in the tender documentation. In particular, the complaint concerned the requirement to confirm experience specifically with facilities that have historical and cultural value or are cultural heritage sites. The complaint was upheld on 01.04.2025 and, a week later, the relevant amendments were made to the tender documentation.

The UBO of LLC “Stereo Events”, Maksym Shulzhenko, is also a co-owner and director of LLC “Stereo Plaza” and LLC “Stereo Plaza Group” (the Stereo Plaza concert hall in Kyiv). According to media reports, Maksym Shulzhenko intended to participate in the tender but ultimately withdrew due to the following risks:

• the guarantee payment set by ARMA does not account for reduced ICCA management revenues caused by seasonal decreases in attendance, for example in summer or in January
• difficulties in assessing the manager’s costs because ARMA did not provide information on what exactly is transferred into management: only the premises or also equipment and furniture
• the possibility that the asset may be returned to the owner if the seizure is cancelled.

The complaint filed by the FPU Enterprise “International Center for Culture and Arts of the Trade Unions of Ukraine” regarding the non-compliance of the tender documentation with the requirements of the Law of Ukraine “On the Protection of Cultural Heritage” was left without consideration on 14.04.2025.

Therefore, only one participant took part in the tender - LLC “Virus Music”, with a tender proposal of 1 kopiyka.

Such abnormally low tender proposals raise questions and certain concerns. It is unclear what motivates a party to manage, free of charge, an attractive asset worth almost UAH 428 million in the very center of Kyiv.

The UBO of LLC “Virus Music”, Oksana Feliksova, is the wife of Dmytro Feliksov, co-founder of Concert.ua, Origin Stage and the Readeat bookstore. In his address to the tender committee, Feliksov stated that he had initiated participation in the tender, developed the concept for the ICCA’s development, and was the person “who assumes personal responsibility for its implementation”.

On 16.04.2025, ARMA rejected the tender proposal of LLC “Virus Music”:

• the procurement participant did not provide justification for the abnormally low price of the tender proposal
• the “Scope of service provision” field in Annex 2 to the tender documentation was not completed.

Dmytro Feliksov explained that completing this field was impossible because “basic data was missing: financial indicators, cost structure and staffing structure. We repeatedly asked ARMA to provide this information. We asked for a meeting to ask questions directly. The responses were formal. The meeting never took place”.

We believe that, to ensure that tenders produce results and management is effective, information about the asset must be as comprehensive as possible - a potential manager must know everything about the asset it plans to manage before the tender.

On 21.04.2025, LLC “Virus Music” appealed ARMA’s decision to reject its tender proposal. On 05.05.2025, the operative part of the decision was published, according to which the complaint was dismissed.

As of 07.05.2025, the full text of decision No. 7040-r/pk-pz dated 02.05.2025 dismissing the complaint is expected, followed by the announcement of a new tender on Prozorro.

The Main Investigation Department of the State Bureau of Investigation, under the procedural supervision of the Office of the Prosecutor General, is conducting a pre-trial investigation in criminal proceeding No. 62019100000001170 dated 20.08.2019 on elements of criminal offences under Part 1 of Article 15, Part 5 of Article 191, Part 2 of Article 364, Part 2 of Article 367 and Part 5 of Article 191 of the Criminal Code of Ukraine.

By the ruling of the investigating judge of the Lychakivskyi District Court of Lviv dated 30.08.2022 in case No. 463/6275/22, seizure was imposed in the form of a prohibition on alienation, disposal and use of immovable property owned by the Federation of Trade Unions of Ukraine and recognized as physical evidence in criminal proceeding No. 62019100000001170, including the ICCA.

The pre-trial investigation established that the improper performance of official duties by the Head of the State Property Fund of Ukraine and the systematic disregard of the requirements of Article 2 and paragraph 5 of Part 1 of Article 4 of the Law of Ukraine “On the State Property Fund of Ukraine”, specifically the absence of proper control over the organization and conduct of privatization of state property, alienation of state property, transfer of state property for lease and use, and return to state ownership of state property that had been privatized, alienated or removed from state ownership in violation of the law, led to the alienation of real estate assets that were managed by the Federation of Trade Unions of Ukraine, PrJSC “Ukrprofozdorovnytsia” and PrJSC “Ukrproftur” and are state-owned.

During investigative actions, the pre-trial investigation body obtained information about real estate assets held by the Federation of Trade Unions of Ukraine that are planned to be alienated in the near future. In particular, the ICCA is reportedly planned for sale.

The evidence collected during the pre-trial investigation indicates that the ICCA is the object of unlawful encroachment by officials of law enforcement agencies and employees of the Federation of Trade Unions of Ukraine.

By the ruling of the investigating judge of the Pecherskyi District Court of Kyiv dated 14.10.2022 in case No. 757/28080/22-k (criminal proceeding No. 62019100000001170 dated 20.08.2019), the ICCA was transferred to ARMA for management measures to ensure its preservation and the preservation of its economic value.

On 25.11.2022, the State Bureau of Investigation reported that former officials of the Kyiv City State Administration had been notified of suspicion over the illegal transfer of title to state property, including the ICCA.