Throughout 2023-2024, the assets of Arricano Real Estate PLC (Cyprus) in Ukraine have been under systematic pressure from law enforcement agencies. During this time, we been trying to protect our assets, business and reputation within the legal framework, using all available legal instruments. The company has deliberately avoided public communication about this, understanding that any public statement by a European investor about abuses or signs of corruption in law enforcement agencies could affect Western partners' attitude towards Ukraine and their support, which is so crucial during wartime.

Unfortunately, our opponents use any methods to block the business and seize company’s assets.

Throughout this period, we believed that Ukraine, aspiring to become an EU member, is a state governed by the rule of law, we also thought that our stance for a civilized investigation would be heard. However, the situation has escalated beyond the legal framework and proportionality to the extent that we are compelled to state publicly that there is an attempt to forcibly seize Ukrainian assets of Arricano through the influence on law enforcement and judicial authorities.

Case Details 

Arricano learned about the criminal proceedings and the subsequent arrest of all its shopping and entertainment centers (SECs) in September-October 2023, and had a chance to review relevant materials only in November. Since then, the team of lawyers has been working systematically to defend our legal position and business reputation, prevent business interruption and prevent public discussion over the violations in the case.

The key assumption of the prosecution (the Main Directorate of the Security Service of Ukraine in Kyiv city and Kyiv Region and the Kyiv Region Prosecutor's Office) for the imposition of arrests is alleged transfer of profits from the operation of four SECs in Ukraine to the aggressor state. The prosecution does not provide any document to support these charges. Arricano denied such charges entirely and provided relevant evidence confirming that in the period from 24.02.2022 to 16.10.2023 (the period under investigation in the criminal proceedings) Ukrainian companies of Arricano group have not made any transfers of funds abroad.  

The turning point of investigation, when it became clear that the intent of law enforcement agencies is to destroy or seize our business, rather than investigate the case was: (1) submission of motions to freeze all account of Ukrainian companies of Arricano group in Ukraine; (2) attempts to transfer all key Ukrainian assets of Arricano to the management of third parties through the ARMA. 

For clarity, the arrest over the funds at the bank accounts results in a complete and unavoidable halt of business, and transfer into the management allows third parties, who invested nothing in the construction and development of SECs, to receive incomes from the shopping centers through time of the  investigation (which can last for years and often comes to nothing).

All above motions were based on the same unfounded charges related to transfer of profits from four Ukrainian SECs to the aggressor state (not supported by any evidence). This, however, does not stop neither the prosecution nor the court and motions to transfer two of the four SECs ( “City Mall” in Zaporizhzhia and “Sun Gallery” in Kryvyi Rih) into the management — were granted. These illegal actions directly contradict both the legislation and common sense. Arricano will continue to challenge the illegal decisions through all possible legal tools, both in Ukraine and internationally.

The law enforcement agencies are undoubtedly authorized to investigate any facts that, in their view, may contain signs of criminal offenses. However, such actions should not be carried out in violation of the Constitution and legislation, nor should they lead to the actual stop of business activities and seizure of business at the initial stage of investigation.

The several simple questions prove that the true aim is not a fair investigation of the case, but the disruption of business and seizure of assets:
•    the imposed arrests on the four SECs prevent their sale, thus fully preserve the assets if the case leads to conviction. Why then, is there an urgent need for the arrest of all accounts and the transfer of SECs into management such an early stage of investigation?
•    the prosecution's key assumption for the arrests is alleged transfer of profit from the SECs to the aggressor state. Why wouldn't a ban on transfers abroad (which are not available anyway) suffice?
•    if the case isn't brought to court or results in a judgment of acquittal, how the damages caused by the arrests of accounts and transfers into management will be compensated to the owner, mortgage holder, and tenants? The compensation will come from the state budget of Ukraine, not the persons who will temporarily "manage" these assets.

Over the years of work in the Ukraine, Arricano has invested over $600 million in the Ukrainian economy and continues to invest. Currently, the attempts to freeze our accounts and to transfer key assets into the management of third parties through the ARMA will block business operations and investments in the restoration of our shopping center in Kryvyi Rih, damaged by an enemy missile attack earlier this year, as well as investments in the construction of another shopping center in Kyiv at Lukianivka area and further improvement of the Arricano’s shopping and entertainment centers in Kyiv and Zaporizhzhia.

We are confident that the actions of the law enforcement agencies and attempts to transfer our assets to the ARMA are illegal and disproportionate. Such actions clearly damage the investment climate in Ukraine, as no foreign company will invest in a country where legislation and facts are manipulated to seize business.

We are continuing to appeal against illegal actions and decisions in courts and filed complaints to all relevant institutions in Ukraine. In the event our business is blocked, Arricano will use all available international instruments to protect its investments and obtain compensation for damages.

We would like to emphasize that the actions of Ukrainian law enforcement agencies are the only reason for this public communication. The company has attempted to reach the Ukrainian authorities in every way possible to steer the case towards a civilized course and avoid discussion in public over it.

Margus Kurm
Director of Arricano Real Estate PLC (Cyprus)