Mainpage > News > New lawsuit on asset confiscation. Yanukovych is next in line

Confiscation of private assets of those responsible for aggression and their accomplices continues

On 16 November 2022, the Ministry of Justice of Ukraine filed a lawsuit with the High Anti-Corruption Court to confiscate the assets of former President of Ukraine Viktor Yanukovych.

This is the second confiscation lawsuit filed by the Ministry of Justice since 24 May, when the relevant law allowing such confiscation came into force.

The first confiscation concerned the Ukrainian assets of Russian arms manufacturer Vladimir Yevtushenkov. Read more about this decision here.

What are the grounds for such confiscation?

It is proposed to confiscate Yanukovych's assets under the mechanism of sanctioned confiscation provided for by the Law of Ukraine ‘On Sanctions’.

This is a new tool that is an exceptional measure under the legal regime of martial law. It 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 significantly contributed to such actions, provided that the assets have been blocked by a decision of the National Security and Defence Council. For more information on the nature of such confiscation and the Ukrainian model of its application , see here.

This tool should be distinguished from confiscation by court order. Currently, a number of criminal proceedings have been opened against Yanukovych, ranging from high treason to misappropriation and embezzlement of public funds. The sanctions of these articles provide for the possibility of confiscation of property. However, due to objective reasons, including appeals by Yanukovych's defenders, such cases have been pending in courts for years, so no quick results have been achieved.

In criminal proceedings, the property of the former president may be seized and transferred to the management of the ARMA, but it does not become state property until a verdict is passed.

A new tool, sanctioned confiscation, was a way out of this situation. The prerequisite for its application was the imposition of sanctions on Yanukovych in the form of asset freezing. The relevant Presidential Decree enacting the NSDC decision was issued on 12 October, and a month later the Ministry of Justice collected the necessary evidence and filed a confiscation claim with the HACC.

But Yanukovych is a Ukrainian, right?

Ukrainian law contains restrictions on the imposition of sanctions on Ukrainian citizens and legal entities.

Ukrainians are subject to sanctions only if they are proven to have engaged in terrorist activities. According to the Law of Ukraine ‘On Combating Terrorism’, terrorist activity is defined as activities that include:

planning, organisation, preparation and execution of terrorist acts;
incitement to commit terrorist acts, violence against individuals or organisations, destruction of material objects for terrorist purposes;
organisation of illegal armed groups, criminal groups (criminal organisations), organised criminal groups to commit terrorist acts, as well as participation in such acts;
recruitment, arming, training and use of terrorists;
propaganda and dissemination of terrorist ideology;
propaganda of the Russian Nazi totalitarian regime, armed aggression of Russia as a terrorist state against Ukraine;
undergoing terrorist training;
leaving Ukraine and entering Ukraine for terrorist purposes;
financing and other assistance to terrorism.

Despite these legal restrictions, sanctions have already been imposed, for example, on the former Member of Parliament of Ukraine Taras Kozak, who is associated with Viktor Medvedchuk, whose assets were blocked.

There is a perception that sanctions cannot be imposed on its citizens, as there are other methods of influencing them, including through criminal proceedings. Nevertheless, in the circumstances of war, the fight against traitors and accomplices of the aggressor must be carried out by all possible means, including the imposition of sanctions. Therefore, it would be advisable to amend the legislation in terms of restrictions on the imposition of sanctions on Ukrainian citizens.

The invasion of Russia has shown that there are many traitors, including MPs, who have fled to Russia and cannot be ‘reached’. For example, former MP Ilya Kiva was already in Russia on 28 February, spreading propaganda of the aggressor country and continues to do so every day, brainwashing Russians. However, it should be understood that not all fugitives are engaged in open terrorist activities, so it will be difficult to impose sanctions on them under the current restrictions.

As for Yanukovych, there is no doubt about his terrorist activities. It is interesting to note that earlier NSDC Secretary Oleksiy Danilov mentioned the possibility of Viktor Yanukovych obtaining Russian citizenship.

What do they want to confiscate from Yanukovych?

So far, the HACC has only opened proceedings on a claim for the confiscation of Yanukovych's assets.

Judging by the information provided by the Ministry of Justice about the processing of several thousand pages of information in the course of preparing the claim, we can assume that the amount of such assets will be considerable. The public will only be able to find out about it from the HACCU decision or from the decision to secure the claim, as was the case with Yevtushenkov's assets.

The information on the status of the case shows that the third parties in the case are Yanukovych's mistress Lyubov Polezhay, his wife Lyudmyla Yanukovych and his son, a dentist Oleksandr Yanukovych.

In particular, Yanukovych's mistress was registered as the owner of a 416.9 sq m house and two land plots of 0.02 ha and 0.14 ha in the village of Novi Petriv, which were seized by the court as part of the criminal case against the fugitive president.

Lyudmyla Yanukovych is associated with the management of the ex-president's significant assets in Crimea, and her son Oleksandr with the ownership of the Mako holding, which includes energy, coal and construction companies.

The following legal entities are also named as third parties in the case: Dom Lesnyka LLC and Tantalit LLC. It was these companies that registered Yanukovych's property, including a residence in Mezhyhirya and Sukholuchchya and an elite house in Obolon, Kyiv.

Thus, we see that not only assets directly owned by the sanctioned person are subject to confiscation, but also hidden assets of nominal owners. This allows us to overcome the schemes of transferring assets to shell companies or offshore companies, which are so popular with high-ranking officials and oligarchs. Therefore, the identification and subsequent recovery of such ‘hidden’ assets is one of the most important tasks in the confiscation process

When to expect a decision?

The law provides for a 10-day period for consideration of the confiscation case. Another 5 days are given to appeal the decision to the HACC Appeals Chamber. Therefore, we can expect a decision on Yanukovych by the end of November.

However, unlike the case of Yevtushenkov, who did not appeal the decision and, moreover, said that he had no assets in Ukraine, Yanukovych is likely to appeal it. In this regard, the legal purity of such a process is of particular relevance.

In particular, the trial should be public, which was lacking in the Yevtushenkov case, which was heard behind closed doors. The reason for this was secret information from the intelligence and military. Undoubtedly, such data should not be made public, but the case could have been closed only in terms of this information. As a result, the public was unable to learn anything other than general information from the introductory and operative parts of the decision.

In addition, special attention should be paid to the observance of the rights and procedural guarantees of the defendant during the consideration of the case of confiscation of Yanukovych's assets. For more information on how to comply with the current international approaches to asset confiscation and minimise the risks of further successful appeals against such procedures , please see here.

What is the current situation with the confiscation of private assets in the world?

Partner countries are actively blocking the private assets of those responsible for aggression and their accomplices around the world. Currently, the total amount of blocked private assets is about USD 100 billion.

At the same time, legal mechanisms for confiscating such assets are being sought.

Ursula von der Leyen, President of the European Commission, said: "Consideration of this issue (confiscation of Russian assets) is related to justice. And we are working on a legal framework to make it possible to use the assets of Russia and partly of the oligarchs to rebuild Ukraine."

The first country other than Ukraine to implement the confiscation mechanism is Canada, but no decision on confiscation has been made yet.

The catalyst for Canada's activity in this area may be the recently adopted UN General Assembly Resolution on compensation for damages caused by Russia to Ukraine. The fact is that the basis for such confiscation in Canadian law is serious violations of peace and security, which is confirmed by the UN Resolution.

So, very soon we hope to see not only the decision of the HACC on the confiscation of Yanukovych's assets, but also the results of the work of partner countries towards such confiscations and the transfer of assets to Ukraine.

Analytical Centre ‘Institute of Legislative Ideas’