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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.


Creation of the Agency is not likely to Result in any Actual Change in Respect of Recovery of Foreign Assets


Dmytro Shemelin , Lawyer at Ilyashev & Partners Law Firm
Source: The Yurydychna Praktyka

Recently, the representatives of the Ministry of Justice, General Prosecutor’s Office and the Centre submitted a draft anti-corruption law that provides for the establishment of the National Agency for Investigation and Disposal of Assets derived from corruption and other crimes. The new Agency should be as independent as possible.

The Agency is designed to solve the problem of professional and timely assessment of various assets, preserving their value, management during pre-trial investigation and trial, and after approval of decision on confiscation. Thus, arrested money or income from management of the recovered of assets will be transferred to the Agency’s deposit accounts in the state banks or the state budget. The draft law also provides for the creation of the Unified State Register of assets obtained by criminal means. It will permit to seize assets in the early stages of investigation and manage them until forfeiture.

We decided to ask the lawyers, how they assess the prospects of the Agency and the international experience of similar structures. Dmytro Shemelin, lawyer at Ilyashev & Partners Law Firm, in his commentary for the Yurydychna Praktyka noted the following:

“Creation of the Agency is not likely to result in any actual change in respect of recovery of foreign assets. Firstly, the problem today is not so much in search of assets of corrupt officials as in their recovery, i.e. pronouncing a reasoned sentence in a criminal case. If recovery is planned abroad, it is necessary for the European Court at the place of punishment to believe the verdict.

So far, it is much more frequently reported on arrest of accounts abroad rather than on their foreclosure. Secondly, the reasoned petition by the Ukrainian investigation, and what is more – reasoned according to the European (albeit with certain assumptions), and not according to the Ukrainian standards is necessary for seizure of assets abroad. That is, the main job, once again, must be done not by the Agency, but by the Ukrainian investigation. If the arguments of the Ukrainian investigator are not convincing for in the EU, the European Court will remove attachment very simply at the suit of the property owner, since ownership is respected there unlike in Ukraine, the State can pay considerable compensation for an unlawful arrest.

With regard to management of the seized property, indeed, this problem was solved badly. For this purpose specialized bodies are sometimes created abroad (e.g. the French AGRASC), sometimes these issues are resolved by divisions of operating agencies (US Marshals Service within the Department of Justice).

However, the key issue here is not in the creation of the specialized Agency, but that the state bears almost no responsibility for damages caused by seizure or unsuccessful “management” of the property.

It is more dangerous, because (as reported by the Ministry of Justice), the draft law proposes seizure of property by the investigator even without a suspicion (i.e. actually at the application of the victim) and seizure of property of third parties. If such changes are introduced in the criminal proceedings, it will create a huge corruption resource for investigators. On the other hand, it will immediately make many assets, which were at least in some way connected with government officials or their relatives, toxic for the investors. Considering the degree of penetration of the previous government in business, we can state that almost any valuable business asset in the state will be under the sword of Damocles in varying degree. It is not difficult to guess what effect it will have on our investment attractiveness”.

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