High Anti-Corruption Court rules to confiscate property of fugitive President Viktor Yanukovych
Source: LB.ua
From now on, the Mezhyhirya and Sukholuchya residences, as well as apartments and historical and cultural monuments, will become state property. The court made this decision on 12 December, almost a month after the Ministry of Justice filed a lawsuit.
What property did Yanukovych say goodbye to forever, and on what grounds was it confiscated, and why only now? What should Ukraine do to make the most of this tool? Read our article.
What is the fugitive president accused of, and on what grounds were his assets confiscated?
Yanukovych is involved in several criminal proceedings, and he has already been sentenced to 13 years in prison for high treason and aiding and abetting an aggressive war in January 2019 by the Obolonsky District Court of Kyiv, which the Supreme Court upheld in 2021.
Pre-trial investigations against Yanukovych are currently underway in the case of usurping power by putting pressure on the Constitutional Court of Ukraine, which in 2010 declared the 2004 constitutional reform unconstitutional. There are also investigations into the orders of law enforcement officials to disperse peaceful protests with the use of weapons and special means.
In addition, Yanukovych is involved in cases of incitement of military personnel to desert, illegal seizure of the Mezhyhirya residence, and high treason for the Kharkiv agreements.
On 9 April 2021, President Volodymyr Zelenskyy signed a decree enacting the National Security and Defence Council's decision to impose life-long sanctions on the former fugitive president.
On 12 October 2022, Volodymyr Zelenskyy enacted the NSDC decision on sanctions against Yanukovych and others. Thus, the former president's assets were blocked for 10 years. This was done in order to be able to apply the new mechanism of sanction confiscation by the HACC decision, which requires assets to be blocked after the relevant legislative changes come into force on 24 May 2022. Soon after, the Ministry of Justice filed a lawsuit with the HACC to confiscate Yanukovych's assets, which he owns directly and indirectly through his wife Lyudmyla, son Oleksandr, mistress Liubov Polezhay, and two legal entities - Dom Lesnyka LLC and Tantalit LLC.
The grounds for the confiscation were Yanukovych's participation in the organisation of the preparation of armed aggression against Ukraine, as well as in the organisation of direct armed aggression against Ukraine and assistance to armed aggression against Ukraine, occupation/annexation of the territory of Ukraine.
In addition, the Ministry of Justice pointed to the presence of signs of terrorist activity in Yanukovych's actions and referred to the sanctions imposed on him by other countries (Australia, Switzerland, the United States).
Why only now?
The logical question is: why hasn't this been done in 8 years? The fact is that there are several legal mechanisms of confiscation.
1) Confiscation by court verdict in criminal proceedings is applied when a person is convicted of criminal offences and the court imposes a sentence of confiscation of property. When sentencing Yanukovych for high treason, the court could not apply confiscation of property, as the article of the Criminal Code was supplemented with such a punishment only on 07.10.2014. Yanukovych committed high treason before that, and such a law has no retroactive effect.
2) Special confiscation is also applied in criminal proceedings, but is not a punishment. It applies to money and property that were obtained from or were the subject of a crime. In 2019, UAH 1.48 billion related to Yanukovych was confiscated using this tool.
3) Sanction confiscation is a new mechanism that applies exclusively during the period of martial law on the grounds specified in the Law of Ukraine ‘On Sanctions’. This is a special type of sanction that provides for the confiscation of assets of individuals and legal entities that have created a significant threat to the national security, sovereignty or territorial integrity of Ukraine or have significantly contributed to such actions, provided that the assets have been blocked by a decision of the NSDC. HACC assets are confiscated at the request of the Ministry of Justice in a simplified court process compared to criminal proceedings. Read more about the nature of such confiscation and the Ukrainian model of its application here.
It was the effective use of the latter tool that helped to promptly confiscate significant assets of Yanukovych and his associates. It should be noted that these assets were seized in criminal proceedings, but the law allows them to be confiscated under the sanctioned confiscation procedure.
What property was confiscated from Yanukovych?
The High Anti-Corruption Court partially upheld the claim of the Ministry of Justice and confiscated the following assets of the fugitive president
- the Mezhyhirya and Sukholuchia residences;
- an apartment of 239 square metres on Obolonska embankment in Kyiv;
- underground parking spaces;
- a ship of the Brig brand;
- 100% stake in the share capital of Tantalit LLC and Dom Lesnyka LLC;
- funds in bank accounts: UAH 31 million and USD 84 thousand (on the accounts of Oschadbank);
- a 2011 Toyota Sienna car;
- more than half a thousand historical, cultural and material valuables. The estimated value of these items is over €18 million 778 thousand.
It's no secret that Yanukovych is a very devout man, so 11 Gospels of different years of publication (from 1704 to the early 21st century) and dozens of icons were confiscated from him.
It also turned out that he was a connoisseur of strange sculptures, such as the Monkey Dancing on a Drum and the Monkey Beating a Drum. And of course, there was a sculpture of Yanukovych himself.
What was the process like?
The HACC trial lasted almost a month instead of the statutory 10 days, and the decision states that the case should be considered in a simplified proceeding, which lasts no more than sixty days from the date of opening the proceedings. Such an argument is reasonable, since the 10-day limitation of the confiscation proceedings is a disadvantage of the law rather than an advantage. This period may be objectively insufficient for proper consideration, examination of all evidence, possible expert examinations, and hearing the positions and evidence of the parties. Also, too short timeframes established by law for the confiscation process may later become the basis for appealing court decisions, in particular to the ECHR, in terms of violation of the right to a fair trial guaranteed by Article 6 of the ECHR.
The case was considered in an open session, although the Ministry of Justice requested a closed hearing. The court denied the request. The court hearing was also broadcast on the HACC's YouTube channel.
Despite proper notification, neither Yanukovych nor his representatives participated in the case. Third parties also did not attend the court hearing, although Oleksandr Pryimak, a representative of Tantalit LLC, which owns less than 1% of the authorised capital, appeared in court, but left during a technical break and did not return.
It should also be noted that the court did not satisfy some of the demands of the Ministry of Justice, in particular, regarding confiscation:
- a 303.8 sq m house owned by Lyudmyla Yanukovych
- an apartment of 148 sq. m. owned by L.L. Polezhay and M.E. Polezhay (daughter of Yanukovych's mistress)
-several land plots, buildings, a house and a vehicle owned by Oleksandr Yanukovych.
In all of these cases, the plaintiff did not provide evidence that Viktor Yanukovych could directly or indirectly perform actions identical in content to the right to dispose of assets owned by these entities on the basis of private property rights. In the case of his wife, the house was obtained as a right of inheritance, and in the case of his son and mistress, the plaintiff did not provide evidence that these persons could not have purchased the assets at their own expense. Therefore, the court properly justified the impossibility of recovering these assets.
Who else has been affected by the sanctions confiscation and how to use this tool most effectively?
Over the past month, we have seen significant activity of the Ministry of Justice in filing relevant lawsuits.
The HACCU has already confiscated the assets of Russian arms manufacturer Vladimir Yevtushenkov. Also, confiscation decisions were made against two rectors of higher education institutions in Crimea and Belgorod, who supported the occupiers in every way possible. Read an overview of the decisions here.
The assets of Russian State Duma deputies Boris Paikin and Roman Lyabykhov may also soon be confiscated. The Ministry of Justice filed the relevant lawsuits on 12 and 13 December.
Bringing all of the aggressor's accomplices to justice, even financially, is important and necessary, but the Yanukovych case is indicative, as large sums of money can be quickly transferred to the budget, and a significant number of valuable properties will finally become state property.
It is on such cases that the Ministry of Justice should focus in the first place. Given the large number of ‘candidates for confiscation’, when preparing new lawsuits, the Ministry of Justice should prioritise filing claims against those closest to the Russian political regime or whose assets are more valuable.
Targeting the assets of those close to Putin's regime and responsible for waging an aggressive war, as well as the aggressor's ‘wallets’, i.e. Russian oligarchs who have acquired their wealth through corruption and connections with the authorities, will have the greatest effect. And the loss of valuable assets will help change the behaviour of such individuals and transfer the necessary funds for reconstruction.
To do this, Ukraine should not only confiscate assets on its territory, but also actively work on the possibility of confiscating foreign assets.