Seized assets fraud: organized criminal group exposed

NABU and SAPO have obtained evidence that the massive embezzlement of ARMA-managed assets, exposed earlier this year, was implemented by a criminal group consisting of four persons. On Dec. 29, 2022, the group's organizer, the owner of several law companies, was notified of suspicion under Part 3 Art. 27, Part 5 Art. 191; Part 3 Art. 27, Part 3 Art. 28, Part 2 Art. 364 of the Criminal Code of Ukraine. Since his whereabouts were unknown, he was notified of suspicion in absentia.

A suspicion notice (Part 5 Art. 191, Part 3 Art. 28 Part 2 Art. 364 of the Criminal Code of Ukraine) was also served on one more group participant - the general director of SETAM SE (held the position from May 2016 to February 2020), currently an official of the State Service of Maritime and River Transport of Ukraine, who is also suspected in another NABU and SAPO's criminal proceeding.

Two more group participants - the chief of ARMA (2016-2019) and the head of ARMA's Asset Management Department (2018-2020) - had become suspects previously.

On December 29, the director of a private company controlled by the group's organizer was also notified of suspicion (Part 5 Article 27, Part 2 Article 364 of the Criminal Code of Ukraine).

The total number of established group participants and those involved in the commission of certain group crimes makes 11 people. Five of them were notified of suspicion in July 2022, and three more in October.

As established, in 2017-2018, the group's organizer offered the ARMA's chief to implement a corruption scheme involving the sale of seized assets. As a person who for several years had had an indirect influence on the formation and implementation of the state policy of the Ministry of Justice of Ukraine, ARMA, and Setam, the group's organizer was well acquainted with the matter. He developed a plan that provided for the establishment of control over all its stages: from the moment of handing over assets to ARMA until their sale at a reduced cost through a controlled trading platform to controlled companies.

The ARMA's chief accepted the proposal. He in particular ensured the adoption of the necessary regulatory framework to create the appearance of legality in manipulating the seized property in the interests of the group. A competition for the selection of a trading platform was held, securing victory for Setam SE, whose director agreed to cooperate. His role was to ensure the tenders sold seized assets at discounted prices to pre-determined companies.

The director of the private company provided legal assistance and ensured the participation of controlled companies in the Setam auctions to create the appearance of rivalry.

NABU and SAPO have obtained evidence of at least four episodes of such illegal activity during 2019:

• the sale of three plots of land in the Odesa region, purchased previously for the construction of Auchan shopping centers - sold 18 times cheaper than the market value;
• the sale of 2.6 thousand tons of river sand of medium and fine grain in the Kyiv region - 6 times cheaper than the market value;
• the sale of more than 4.5 thousand tons of urea - almost 5 times cheaper than the market value;
• the sale of grain, groats, and oil crops - four times cheaper than the market value.

According to preliminary estimates, the damage caused in these four episodes amounted to UAH 426 million. However, further examination showed the damage equaled UAH 485 million.

NABU and SAPO are identifying other possible participants and investigating other illegal activities of the group.

According to Article 62 of the Constitution of Ukraine, a person is considered non-guilty in the commission of a crime and cannot be subject to criminal punishment until he or she is found guilty by court.