Confiscation of assets of the russian federation: A year since the beginning of this process and its first results
The court has already considered 24 claims, the first auction will take place on 10 August 2023
The confiscation of russian federation property for the benefit of Ukraine continues. A year has passed since the first court claim, and we have already made certain progress in this process. VB PARTNERS attorney at law Liliya Kuznets told Mind what property had already been acquired by Ukraine and what decisions were still pending.
After the commencement of the full-scale invasion, calls for the confiscation of funds and property of the russian federation for the reconstruction of Ukraine are actively being heard.
For this purpose, a sanction has been introduced into the legislation of Ukraine – the seizure of assets for the state's income. This mechanism is applied to individuals who pose a threat to the national security, sovereignty, or territorial integrity of Ukraine, or who contribute to the creation of such a threat. The decision to apply the sanction is made by the HACC (High Anti-Corruption Court) upon the Ministry of Justice's claim.
The first claim for the confiscation of russian federation assets was filed last year, on August 24. The court considered 24 claims in a year, with three more under review.
Read also: 6,800 russians and 53 oligarchs: How the Security and Defence Council and the Justice Ministry confiscate russian assets during the war
Who has the sanction been applied to?
The procedure for confiscating assets of russian federation residents was adopted last year. The Ukrainian Law "On Sanctions" clearly defines the grounds for asset seizure, which generally revolve around active support of the occupying country.
Such actions include: payment of taxes in the russian federation, calls for aggression or active participation in it, including through involvement in making decisions against Ukraine.
Furthermore, a prerequisite for applying the procedure is the prior imposition of asset-freezing sanctions on these individuals.
As of today, the Higher Anti-Corruption Court has confiscated assets of:
- public and political figures of the russian federation (9 claims);
- representatives of russian business (7 claims);
- collaborators (4 claims);
- rectors of higher-educational institutions in the russian federation (3 claims);
- bloggers-propagandists from the russian federation (1 claim).
What has been confiscated?
There are two groups of assets subject to confiscation: 1) those directly owned by sanctioned individuals; 2) those in which sanctioned individuals can perform actions equivalent in content to the exercise of the right of disposal (in essence, they control them).
This broad approach allows the High Anti-Corruption Court to confiscate not only assets directly owned by sanctioned individuals but also those owned by:
- their close relatives – spouses, children (unless their own income for acquiring the assets is proven);
- legal entities controlled by them.
The following assets have already been confiscated into state ownership:
- ownership stakes in the statutory capital of 38 legal entities;
- 88.89% of shares in PINbank JSC;
- 1.44% of shares in Settlement Centre for Servicing Agreements on Financial Markets PJSC;
- 137 real estate properties (flats, houses, parking spaces, other non-residential premises);
- 16 land plots;
- 28 vehicles;
- funds in bank accounts amounting to at least $2.1 million;
- 256 pieces of heavy equipment (loaders, Kamaz trucks, cranes, trailers, etc.);
- 537 historical, cultural, and material valuables, with an estimated value of 18,778,375 euros;
- property and products transferred by Antonov State Enterprise for the implementation of the AN-140-100 aircraft testing program.
What is the fate of the confiscated assets?
After the decision on asset confiscation takes effect, the HACC forwards it to the Cabinet of Ministers of Ukraine, which determines the procedure and method of management.
By September 22, the government may designate the State Property Fund, Asset Recovery and Management Agency (ARMA), military administrations, other state authorities, and/or state-owned enterprises as the management authority. After this date, decisions made by HACC will automatically be forwarded to the State Property Fund, which will determine the method of managing the confiscated property.
It is worth noting that the vast majority of assets have already been transferred by the Cabinet of Ministers to the management of the State Property Fund. The exception is historical, cultural, and material valuables, which have been transferred to the Ministry of Culture.
In total, 15 decisions of the High Anti-Corruption Court have been executed. The State Property Fund has already scheduled the first privatisation auction, which will take place on August 10. The Fund will be selling 100% of the share capital of Invest Agro LLC, which was confiscated from the russian oligarch Shelkov.
The funds from the realisation, as per legal requirements, will be directed straight to the fund for the elimination of the consequences of armed aggression and will be utilised for the reconstruction of Ukraine.
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