MPs give the unreformed ARMA opportunity to intervene in Privatbank’s litigations abroad

MPs supported the draft law 3304, which creates risks of abuse by the Assets Recovery and Management Agency (ARMA) in lawsuits abroad, in the first reading by 258 votes. This may have negative impact, including on Privatbank’s foreign lawsuits regarding return of money withdrawn by former owners.

The draft law No.3304 was submitted by the Deputy Chairman of the Anti-Corruption Committee of the Verkhovna Rada Galyna Yanchenko, the Chairman of the Law Enforcement Committee Denys Monastyrskyi and other MPs of the party Servants of the People. It proposes to give the ARMA opportunity to represent the state and state companies in lawsuits abroad.

“The main danger of the project is that it is so vague, does not contain detailed procedures and algorithms, and allows the Agency to make abuses. The Agency will be able to intervene in existing lawsuits initiated by Privatbank abroad. For instance, the Agency initiates parallel lawsuit against former owners and asks to stop the process of Privatbank itself before its decision. But at the same time, in its process it simply overwhelms the work and representation of the state. Under such conditions everyone loses the chance to win”, commented Olena Shcherban, the Board Member of the Anti-Corruption Action Center.

Authors of the project do not propose either the procedure for such representation by the Agency, or conditions for determining specific persons who will represent state’s interests abroad. As the result, the procedure for determining lawyers who will conduct such process can be very secretive and biased and will depend solely on the integrity of the head.

According to the initiative of the Prosecutor General and the head of the Specialized Anti-Corruption Prosecutor’s Office, the project also proposes to create interdepartmental working groups with the participation of representatives of the ARMA, the Prosecutor General’s Office and investigative bodies. These groups will decide whether or not to submit lawsuits in foreign court. But the draft law does not regulate the work of such groups at all.

“The adoption of such decisions by working groups without clear procedures will turn into collective irresponsibility. We have already seen when the SBU demanded Privatbank to approve lawsuits against the oligarch Kolomoyskyi even without grounds. The same situation can happen with the ARMA. As the result, such working groups will become the tool for slowing down or speeding lawsuits without any responsibility, adds Olena Shcherban.

For instance, state-owned Privatbank initiated lawsuits in Cyprus, Israel, and the United States of America regarding withdrawn money by previous owners Igor Kolomoyskyi and Gennadiy Bogolyubov. After adoption of the draft law the ARMA can intervene in these processes in favor of oligarchs by appointing “right” representatives in these courts.

Moreover, the draft law doesn’t clearly state how ARMA’s powers will be differentiated from powers of prosecutors or other bodies to represent the state in courts.

By the way, ARMA itself does not inspire confidence. Thus, tape recordings were recently released, where Deputy Head of the ARMA Volodymyr Pavlenko communicates with crime figures, discusses initiation of criminal cases against activists who criticize ARMA, and so on. ARMA also finds dubious managers of seized property, who hide income from this property.

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