Why the amendments to the Penal Code and the Penal Procedural Code by the Ministry of Economic Development will not help businessmen

The first excited comments on the draft law by the Ministry of Economic Development (MED), which is aimed at “elimination of the possibility to settle economic disputes by criminal persecution”, quickly turned into disappointment in the legal community. The lawyers read the document thoroughly and started saying that it is useless and even harmful to the business community. If the client cannot make his opponent criminally responsible pursuant to an article without reporting, he will write reports as suggested by the draft. If the investigator accepts the order and starts fulfilling it, the punishment for this will be less than for another public official, who abuses his authority. And the advocates believe that the definition of crimes committed in the sphere of business activity, as it is suggested by the public officials, is insufficient.

The draft law “On changes to certain legal acts of the Russian Federation aimed at elimination of the possibility to settle economic disputes by criminal persecution” was published on the website of the MED last week. It was developed after a clear hint by the incumbent President Vladimir Putin, who, on January 30 of 2012, published an article “On our economic tasks”. In that article the then Prime Minister suggested “elimination from the criminal law of all vestiges of Soviet legal conscience, all pretexts which allow turning an economic dispute into a criminal case involving one of the participants”.

As a result, the Ministry officials elaborated a number of measures, which supposedly will turn the wish of the Head of the State real. However, the legal community was very skeptic towards the novelties. Advocate Sergey Romanov, speaking on October 3 at the Corporate Lawyers Forum “100 Steps Forward”, said that “the draft law is useless and completely inoperative”. Alexander Petrov, Advocate of the Law Firm "YUST", explains that the document “contains no novelties, which would be able to achieve the given tasks”. And advocate Petr Barenboym believes that the draft law is not a possible norm but rather a part of a process – in essence, it does not protect business, but gives to businessmen and law enforcers a motive to negotiate. Some suggestions confused the advocates, and some made them indignant.

To begin with, the definition of “economic” crimes suggested by the public officials rouses censures. The MED’s suggestion is that this issue should be resolved in annotations to Article 20 of the Penal Code of Russia, and that this category should only include such offenses as are committed by registered entrepreneurs or managers within the framework of their powers in this status. A.Petrov notes: “I’m afraid that any such definition will be as imperfect as the one given by the authors of the draft”. P.Barenboym says: “This is an attempt to describe who exactly businessmen are, but I am not sure if it is fully described here. And why are the owners, who simply own stock [are not included] – they just buy and sell stock, they are frequently not entrepreneurs. They buy/sell stock as private persons, they do business, but are not registered as individual entrepreneurs. Their interests must be protected”.

The “client” is not a victim – then we will make him a victim

One of the norms was suggested by the MED as a response to the claims of protectors of businessmen – “contract cases” are frequently initiated without the victim’s report. MED suggests that cases under articles 159 “Fraud”, 160 “Misappropriation or embezzlement”, 165 “Causing property damage by deception or by breach of faith”, 167 “Deliberate destruction or damage of property”, part 1 of Article 176 “Illegal receipt of credit” of the CCRF should be impossible to initiate without such report.

But the lawyers don’t see how insolvable problems may arise for the clients because of this norm. Advocate Alexander Petrov is of the opinion that the suggestion “will not reach the objectives set by the authors of the draft law in any case”. He explains that, in such category of “contract cases”, the “client” tends to be the victim, and “hence, there will be no problem with requests to initiate criminal proceedings filed by the “victims””.

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The lawyers are indignant: why the law enforcers should be classified as a separate category, if the existing articles make it possible to punish them, and even more severely than what the MED suggests? S.Romanov says: “When we analyze the suggestions and the current legislation, we see that all deeds, which the draft suggests should be made criminal, are currently criminal. And all they are easily encompassed by two articles – 285 [“Abuse of authority”] and 286 [“Excess of authority”]”. A.Petrov agrees and reminds that an investigator’s criminal actions may also be classified under articles 290 “Receipt of bribe” and 292 “Service forgery” of the CCRF.

A.Petrov says: “I believe that those articles are sufficient to fight those investigators, who commit crimes, and it does not make sense to add new ones to the CCRF”. He wonders: “Is an investigator, who commits a crime, any better (or worse) than any other public official, and does he thus deserve creation of new articles?” In his opinion, the problem of avoiding responsibility by those investigators, who are bribed into resolving economic disputes of businessmen by bringing their innocent competitors to criminal responsibility lies with the practice of application of laws, when the superiors of those investigators simply “overlook” such moments, and supervisory bodies, including the Prosecutor’s Office, fail to discover offences and abuses.

S.Romanov says: “In this context, the articles 286 and 285 of the CCRF are completely non-functional. [There are] isolated cases [of their application] in practice”. He stresses that most complaints to the Prosecutor’s Office and to courts against the investigators’ actions receive no attention, and all answers amount to “one simple idea: the investigator is a procedurally independent person, and basically does what he wants”. The advocate is convinced that in order to resolve this problem, “the entire staff of the MIA, the Prosecutor’s Office and the courts must be replaced”.

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The lawyers liked only one idea, which the Ministry suggested: the limitation of the period of apprehension of electronic data carriers (computers, flash cards etc.). According to the draft law, the data carriers are to be returned to their owners after the completion of urgent investigation actions, or the businessman must be allowed to copy the information on them.

However, lawyers see insurmountable barriers here, which arise in front of a businessman, who attempts to get back the apprehended equipment or to copy the information from it. The problem is that, according to the draft law, the return of the data carriers and copying of the information may be refused, if this may hinder the investigation of the crime. The advocate of the Firm wonders: “So what impedes the investigator to dismiss the request to copy the information for that motive?” He grants that such dismissal may be applied against to the head of the investigative section or even to court. But currently justice is in such state, that there are many doubts that the court will objectively consider such complaint, and not just give the runaround that the investigator is a procedurally independent person, and he independently defines the amount, the periods, the nature and the order of his actions.

A.Petrov says that the suggested amendments to part 4 of Article 81 regarding the return of the apprehended items “within 10 days of the day of their examination” “hold no water”. He wonders: “And what if the investigator does not examine the items at all? And how does one find out, when the investigator examines them?”

The text of the draft law “On changes to certain legal acts of the Russian Federation aimed at elimination of the possibility to settle economic disputes by criminal persecution” is available here.

The full version of the publication is available here.