Parliamentary TIC proposes to liquidate ARMA due to millions of assets thefts

Yaroslav Zhelezniak, Head of the Temporary Investigation Commission (TIC) on the work of the BES, has said that the Asset Recovery and Management Agency (ARMA) should be liquidated and proposed to transfer all sales of seized assets to the Prozorro platform.

Mr. Zhelezniak wrote about this in his Telegram channel after the commission meeting.

The meeting was attended by the heads of ARMA, BES, PGO, the electronic platform SETAM, representatives of the Odesa Port Plant, Energy Customs, Ukrkhimtransamiak, Ukrzaliznytsia, Prozorro.Sale, and media representatives. 

Two case studies were used to examine ARMA's work:

⁃ The sale of the seized 42,000 tonnes of russian ammonia by TogliattiAzot / MinDobryva.

⁃ The sale of 2,200 tonnes of seized potassium to Belaruskali.

The TIC had complaints about the slowness of the process of seizure within the framework of criminal proceedings and subsequent sale (results in terms of the work of the BES, the Prosecutor's Office, and the ARMA):

In May 2022, the occupiers attacked the Odesa Port Plant (OPP). The explosions took place 50 metres from the storage facilities with 42,000 tonnes of russian ammonia.

"The TIC had a logical question: why was this ammonia still there and not sold three months into the large-scale invasion? The meeting learned that the BES had not responded to this ammonia for more than 5 months. It was only on 5 April 2022 that criminal proceedings were initiated, and only on 13 July 2022 was this ammonia transferred to ARMA for sale," Mr. Zhelezniak explained.

According to him, the "incentive" to move faster came after a meeting in the Office of the President (chaired by Rostyslav Shurma, the First Deputy Head of the Presidential Office) in June 2022.

ARMA sold the last batch of ammonia in March this year.

"That is, for more than a year, the slowness of these three bodies has exposed the residents of Odesa Oblast to serious danger," Mr. Zhelezniak said.

He noted that the proceedings had not even reached the stage of suspicion. If there are no results of the investigation, Ukraine will have to return the money to the residents of the terrorist state for the ammonia. The BES and the prosecutor's office assured that the proceedings had been ordered and are progressing, albeit slowly.

The TIC also examined the price at which potassium and ammonia had been sold.

The cost of ammonia sold at five auctions totalled 1.3 billion UAH, which was actually about 33,000 UAH per tonne. At the same time, the average price on Prozorro during this period was around 41,000 UAH per tonne (excluding VAT).

ARMA explained this difference by saying that the price had to be added to customs duties (2% duty and 20% VAT), storage at the Odesa Port Plant and transportation.

However, according to Mr. Zhelezniak, neither customs duties nor VAT have been paid, and the OPP reported that another 178 million UAH had not been paid for storage.

According to the MP, this ammonia was then sold to companies with signs of fictitiousness, which resold it at a premium and covered it with allegedly fraudulent VAT. 

"Thus, if we take the minimum cost of ammonia at that time at 49,000 UAH, the losses from such sales amount to 293 million UAH, and given that the OPP is still waiting for 178 million UAH for storage, the shortfall is about 471 million UAH," the TIC calculated.

As for potassium, the price difference between market and sales prices is even greater. It is noted that 2,200 tonnes were sold to ARMA in September 2022 through the Prydniprovia-2021 platform for 17,700 UAH excluding VAT, while in December of the same year, UkrGasVydobuvannya sold at least 41,500 UAH including VAT on Prozorro.

"Potassium losses amount to 44.6 million UAH only on this small part," Mr. Zhelezniak said.

The TIC investigated the transparency of potassium and ammonia sales.

The goods were sold through the Prydniprovia-2021 website.

"Do you think that to find out what is sold through ARMA, it would be logical to open their website, go to a special tab on asset sales and search for what exactly we are interested in? No, it wouldn't. The ARMA website does not have such a section at all, and it is impossible to find out about such auctions in this way.

Well, then, if you know that the sale is carried out through the Prydniprovia-2021 platform, you can try to open Google and find their website by the name of this platform and search there. But this site will not contain anything about ammonia or potassium. At least that's how it's been all along," the MP said.

He noted that only by going to the following links – https://agency.dtrade.biz.ua/ or https://ets.dtrade.biz.ua/ and removing the security settings, you could see these purchases. At the same time, the link can be opened only from certain browsers.

"That is, everything is done in such a way that none of the potential buyers find out about the procurement. Or only those who really need to know," Mr. Zhelezniak said.

He noted that all the materials of the PIC would be submitted to the anti-corruption authorities.