ARMA Reform Does Not Yet Guarantee Effective Asset Management, ILI Expert Says Radio NV
Despite ongoing reforms, Asset Recovery and Management Agency (ARMA) continues to face systemic challenges that hinder the effective management of seized assets. Among the key issues are the lack of permanent leadership, staff shortages, insufficient funding, and a non-transparent reporting system. These concerns were highlighted by Svitlana Hordiienko, legal analyst at the Institute of Legislative Ideas (ILI), during a Radio NV podcast.
"The first competition to appoint the Head of ARMA ended without a successful candidate, meaning that the agency has effectively been operating without permanent leadership throughout this period. In addition, one in four positions at ARMA's central office remains vacant, while the current level of funding does not even cover the costs of asset valuation and preservation," the expert noted.
According to Svitlana Hordiienko, ARMA performs best at the asset identification stage. However, tracking what happens to those assets afterwards is extremely difficult due to shortcomings in the agency's reporting system.
"We cannot clearly trace the connection between the assets that have been identified and what ultimately happens to them. From the moment an asset is identified to the point where it generates an economic return, there is no transparent and consistent chain that would allow the public to follow its trajectory," she said.
Svitlana Hordiienko also pointed to problems with ARMA's official reporting practices. Even the agency's annual reports are compiled using different methodologies from year to year, making it impossible to compare performance indicators over time.
"There is currently no comprehensive, systematized information showing the stage each asset has reached – from identification to transfer for management or sale. To reconstruct this information, one has to analyze public registries, open-source data, media reports, and information published on the agency's official website," the ILI analyst emphasized.
Another persistent issue is the lengthy delay between a court decision and the actual transfer of seized assets to asset managers. As an example, Svitlana Hordiienko cited a case in which it took 409 days to transfer a seized property to its manager.
"This could be prevented through better preparation of assets before launching the selection process for an asset manager," she said.
At the same time, the ILI expert highlighted several successful examples of ARMA's work, including the transfer of the Glusco gas station network and the corporate rights of Sakhalinske LLC to professional management. These assets accounted for the overwhelming majority of revenues generated from the management of seized property.
"The Glusco gas station network and the corporate rights of Sakhalinske LLC generated approximately 98% of all revenues from asset management. This demonstrates that a strategic approach to managing individual assets can deliver significant economic benefits for the state," Svitlana Hordiienko stressed.
In her view, improving ARMA's effectiveness requires completing the agency's HR reform, ensuring adequate and sustainable funding, and introducing a comprehensive statistical reporting system that enables the entire lifecycle of every seized asset to be tracked.
"The public should be able to see the complete lifecycle of an asset – from its identification and seizure to its transfer for management or sale – and understand the economic value it generates for the state," Svitlana Hordiienko concluded.