Ukraine hopes to auction confiscated Russian assets in 2023

Ukraine hopes to start selling off confiscated Russian assets this year via privatization auctions to help fund reconstruction efforts, the head of the State Property Fund said.

As part of its economic response to Russia's invasion, Kyiv has imposed sanctions on Russia and opened court cases to confiscate assets held by the Russian state in Ukraine and businessmen close to the Kremlin.

"Russian business in some industries was a significant market player, some say that they had a huge market share. But no one has estimated the exact value of these assets," the property fund's chief, Rustem Umerov, told Reuters.

"Our goal is to take it all into state ownership, prepare it and sell it. We want these enterprises to work for the state of Ukraine, for the Ukrainian citizens."

Identifying all Russian assets in Ukraine is a long and complicated process, with various government and law enforcement institutions involved. This year the fund wants to sell off up to 102 assets, mainly real estate and cars.

"They can only be transferred to the state property fund when a court decision has been taken on seized and nationalized assets. Now it is necessary to transfer them so that the state can sell the right of ownership to a new owner without any court-case complications," Umerov said.

"We are working on it now. We call it preparation for privatization. I asked my colleagues to do that in the second quarter, and at the end of the second, start of the third quarter, we will already be ready to sell these assets."

Seizing Russian assets has proved slow and complicated

President Volodymyr Zelensky has issued decrees to impose sanctions on hundreds of Russian citizens, including oligarchs whose assets rank among the largest in Ukraine, for alleged links to Russia's invasion in February last year.

These decrees empower Ukraine to file lawsuits to confiscate property owned by Russians under sanctions. But the process requires the approval of various government bodies and frequently faces opposition from asset owners trying to find legal loopholes to keep their assets.

"The fight goes on when the re-registration starts. When they start fighting us in courts, they register so many legal entities so that we get confused," Umerov said.

"But we are not confused. We know and we focus on the single legal entity. If this legal entity has assets in Ukraine, we confiscate it (and the funds go) to the state's income."Once the fund has received the confiscated assets, it works to ensure legal issues are cleared, that operations are resumed and that ensure taxes and wages are paid, Umerov said.

He said one example of the fund's work was the Demurinsky Mining and Processing plant, the world's largest producer of titanium for the aerospace industry, which was confiscated from a Russian businessman in February.

Production at the company, which employs 284 people, has been partially restored and the fund hopes to sell it this year, he said.