Humanization of criminal legislation in economic sphere
Humanization of criminal legislation in economic sphere is the most important question on the Center’s agenda. Today criminal prosecution in Russia becomes the global instrument of power’s pressure on the businessmen and the way of economic management what ruins small and medium size business, gives birth to emigration moods in society and seriously worsen the investment climate.
There are three circles of problems that need to be solved to restore business-community’s credence to the state: 1. General humanization of criminal policy and modernization of criminal legislation; 2. Fundamental transformation of approaches to law enforcement practice; 3. Economic amnesty.
Criminal prosecution of business
Than what happened in the sphere of criminal prosecution of businessmen could be characterized in three words: arbitrariness, un-publicity and irresponsibility. The investigation violently chooses “the criminal” and tract the law so wide that the criminal case lacks sometimes not only corpus delicti, but also the criminal event.
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1. Inconsistence of civil and criminal legislation. Present edition of the Criminal code is not balanced with the other laws and in first hand with the Code of administrative offenses. One can be made responsible for some deeds both to administrative and criminal responsibility and for the choice of the law enforcement officer. Here very wide possibilities for corruption open.
Any businessmen could be imprisoned for almost any business transaction today. If the Civil code admits that getting profit is an aim or an enterprise creation, the Criminal code sees punishable lucrative interest in getting profit.
Sometimes happens that deeds that are considered legal by either court in civil law procedures or by the Arbitration court, than become the subject of criminal investigation. First Deputy Chairman of the Russian Federal Court (retired), professor, Honorable Jurist of Russian Federation Mr. Vladimir Radchenko makes an example when in Tatarstan a person was convicted for 9 years in prison for the deed that was proved legal by the
2. Institution of proceedings lacking the real damage and injured person. Economic crimes relate to the category of “elicit” ones, meaning that application from the injured person is needed for institution of such proceedings against the entrepreneur. The amount of damage in that case is determined by those state structures that fight with such economic crimes. The damage may be equalized to the profit possessed, or may be determined voluntarily.
The possibility to institute the criminal case lacking the injured person and real damage (it was revealed 90 492 of such crimes in 2010) leads to the big number of designed cases. The aim of such cases is the properties deprive pressure on businessmen and getting “administrative rent” by the law enforcement officers.
As the result a lot of businessmen serve sentences not making real damage neither to the society, nor to the state, nor to separate persons. Only 2 per cent of those accused on economic crimes are sentences against applications of injured persons. The rest are instituted against the reports of members of police task forces.
For example, one farmer from
3. Indistinctness of wordings. The wordings of many corpus delicti in laws a so blurred that these create possibilities for lawlessness and corruption. The bases for criminal responsibilities of business are not formulated in the law and this uncertainty gives possibility “to drag” this or that corpus delicti to any businessmen’s deeds, including non-criminal by nature.
Interpretation of uncertain corpus delicti always goes against the person attracted to criminal responsibility. This leads to so called “accusatory inclination” in law enforcement.
Mr. Vladimir Radchenko made and example: “Here is article 171, famous article on illegal entrepreneurial activity. It consist of deeds that did not make any damage to anyone for 90 per cent or even more. The only quilt of the person convicted under this article may be the fact that he conducted business without registration or with incorrectly made registration, or he produced certain products or provided certain services and obtained more then 1,5 million rubles. From the economic point of view increase of national income occurs. From the point of view of social consequences the people work for this businessmen, get jobs, the unemployment decreases. The keep themselves, keep their families. But instead of making the administrative punishment for breaking formal rules and help man to legalize his business the criminal case in instituted against him here”.
Mr. Radchenko made an example. Business of one provincial pharmacist went poor; the turnover of his pharmacy was not significant. At his initiative the pharmacist started to sell some industrial goods not having license. As soon as he sold for more then 1,5 million rubles he was brought to criminal responsibility because law enforcement practice equals the profit obtained (over 1,5 million rubles) to making damage.
The other example. Owner of a big store in Sankt-Petersburg bought the premises of the nearby small shop that went bankrupt and transferred there his liquor trade. And the question arose to make the owner responsible fro crime because his trade license has the postal address on the big store but not the new “filial”.
4. Endless inspections as pressure on business. Businessman from Krasnoyarsk Eduard Zaitsev told that tax inspectors’ pressure on business happens: “Officers of Department of tax crimes come to the enterprise after the submission registered in “The book of crime’s registration”. And under the guise of conducting the criminal investigation make a search – take out documents, computers, and put all that somewhere in their place… About one hundred of such drives took place for the last year. But not a single case instituted”.
As per data of transparency International any business in
But institution of cases against the businessmen does not get to the court as a rule. So out of ten criminal cases under the article 159 (“Fraud”) only 2-3 out or 10 get to the court (25%). In other cases businessmen either pay off – what is in most cases the target of law enforcement officers – or the charges go to pieces.
5. The fraud. Today on of the most “popular” articles of criminal crimes is article 159 of Russian Criminal code (“The fraud”). Under which about 40 thousand persons are tried per annum. From 2000 to 2010 the share of cases on “fraud” in total number of “economic crimes” grown from 33,6 per cent to 56,8 percent. Also those businessmen are considered “fraudsters” who failed in business and were not able to pay out the debts.
6. Participation in organized criminal group. Businessmen made responsible for criminal responsibility also as members of organized criminal groups – and as experts of Lecs-Center explain any business having the wish could be qualified as “organized criminal group” since business is heavily made alone. As a rule the general director and chief accountant are included in OCG, but there are precedents when, as per courts’ and investigation meaning all partners were members of the OCG and even their relatives. Any legal entity having office and account could be placed under the term OCG.
Chairman of non-profit partnership “Business-Solidarity” Mrs. Yana Yakovleva told: “I myself read the sentence where it is written that the accountant got a job and agreed to commit the crime together with the general director for what she completed the training courses and became the chief accountant, after what she together with the general director formed the organized group”.
7. Double responsibility for the same deed. The Criminal code still keeps the principle of artificial increase of the sentence’s severity: thus, the Criminal code include articles that state the recurring criminal responsibility for crimes provided in other articles of the Criminal code. That means that we have the possibility of double responsibility for one and the same deed.
8. Interest of law enforcement officers. The law enforcement system is interested today on criminal persecution of business: the career growth of the officers is directly connected to the number of cleared crimes and instituted criminal cases. And it’s much more difficult to find the real perpetrators then to just imaging them for the report.
Furthermore what we call standards of probacy in adjective law is almost absent today: “any documentation on any commercial organizations could be presented as evidence, sometimes the bumf not having any useful information, enclosed to the criminal cases and providing their demonstrative multy-volumeness.” (Mrs. Tamara Morshchakova, Deputy Chairman of Constitutional Court of Russian Federation, retired).
Criminal-legal economic management and its’ consequences
Criminal repressions of businessmen have the most severe consequences for the country. According to surveys 17 per cent of the businessmen have intention to leave the country, and they call legal unproductiveness the main reason for doing this. Half of the questioned businessmen do not exclude emigration for the same reasons.
First time the number of individual entrepreneurs and farmers who terminated their activity was bigger then the number of registered bodies conducting the same activity in 2010.And the year 2010 was the absolute leader in number of liquidated commercial organizations.
Among the other reasons why people do not want to conduct business in
Disrespect of property right and possibility to find oneself jailed in any moment make businessmen to export abroad part of their assets by anticipation that influences both on effectiveness on the business in
Today we can talk about the serious social damage of conducted criminal policy towards business: many people, not only the businessmen, have feeling on instability and bleakness, and these form the monstrous statistics of educated young people escaping the country.
But those young people who decide to stay in country do not want to show business self-dependence preferring to dream of the state positions that bring both official income and additional corruption rent.
Decrease of businessmen number leads to decrease of workplaces, reduces the tax income to budget and that in its’ place influences the pension and wages of state employers reduction.
Investment climate in the country decline every year and approaches according to the expert’s pictural expression “to the eternal winter”. Fro now only business that is protected by the administrative resources and is coalesced with the state representatives feel comfortable in the country.
Criminal prosecution of businessmen (in numbers)
Mr. Evgeny Yasin, Academic Supervisor of Higher School of Economics, does not tired to repeat: the state machine is based on belief that every businessmen if thief by his nature. The motto of state’s relation to businessmen could be the well-known saying: “If you are not in prison yet, that is not your merit, which is our fault”. In
According to Lecs-Center’s data presented in April 2012 to the President Dmitry Medvedev every sixth businessmen was prosecuted with criminal charges for the last decade, more than 3 million economic crimes were registered in the country (those that reached the court). Today over 100 thousand businessmen serve sentences, over 75 thousand arrests of businessmen happen per annum. Two third of companies that were headed by the businessmen “fall under the article” were closed (which is 60-70 thousand bankruptcies per annum), about two million people remained unemployed.
47 per cent of businessmen who were prosecuted have over 10 years’ business activity experience, 32% - over 20 years. According to Lecs-Center’s data criminal prosecution affected over 44 Thousand businessmen per annum from 2000 to 2009. There was sharp slump of exposed economic crimes in 2010: possibly the reason here is reform of police or ban on pretrial incarceration of businessmen. However criminal prosecution of business started with new power in 2011.
Lecs-Center’s proposals on criminal legislation humanization
Lecs-Center’s experts conducted article-by-article analysis of the Criminal code and came to a conclusion that composition of 106 corpus delicti may be decriminalized and taken to the Code of administrative crimes.
Lecs-Center proposes the following steps on amending the criminal legislation in economic sphere:
- rejection of criminal responsibility for deeds not leading to real live, health and property damage;
- rejection to qualify income possessed as the result of economic activity as damage as crime indication;
- institution of criminal case only by application of the person injured who inflicted a damage by a deed;
- rejection of qualifying indicator of making crimes by a group of person per preliminary conspiracy;
- establishment of responsibility for self-legalization of income only for concrete income from concrete predicate crimes (illegal turnover of drugs, weapons, slave trade) and many others;
- the need to specify the number of notions of general nature that relate to the business activity. I.e., implement to the Criminal code the norm that all unremovable doubts and contradictions shall be interpreted in favor of the accused;
- correct all the terms, notions and principles of civil, tax, criminal and other legislations to avoid differences in interpretation of the same deeds in criminal and civil legislations;
- amnesty of businessmen: businessmen who are imprisoned or being accused for crimes cases in economic sphere shall be freed from sentences and criminal responsibility.
Main stages of work on promoting humanization of Criminal code in economic sphere
September 2010. The State Duma Committee on civil, criminal, arbitration and procedural legislation discussed the “Conceptual Framework for the modernization of criminal legislation in the economic sphere” proposed by Lecs-Center’s experts. The Duma agreed with the need of further humanization of the criminal legislation in economic sphere and with the fact that proposed Conceptual Framework is a condition of jural state and civil society of no small importance.
February 2011. The roundtable “Directions of modernization of criminal law in the economic sphere” took place at the same Duma Committee on civil, criminal, arbitration and procedural legislation. Lecs-Center experts, General Prosecutor of the
June 2011. Enlarged meeting of Lecs-Center expert group reconciled “The Analytical note on draft law "On amendments to the Civil Code of
As per Lecs-Center’s experts opinion the authors of the draft law were not ready to amend the criminal law in essence. The Analytical note says: “The main danger of the proposed draft law in that it is announced as a serious “big reform” and in fact it creates only the semblance of criminal law modernization that is furthermore postponed for 2013. Such event development could drive inside the escalated problems for the long time, the problems that not just demand immediate change of the criminal policy, but that are the main factor determining the troubles investment climate in the country”.
October 2011. Parliament hearings "On the main direction of improvement of the criminal legislation of
Drafts and collective monograph on humanization of criminal legislation in economic sphere
Documents prepared by Center’s experts and verbatim reports of events dedicated to humanization of criminal legislation in economic sphere
Some Center experts’ publications on humanization of criminal legislation in economic sphere:
- Roundtable "Ecomonic and legal aspects of subsoil use"
- Presentation of monograph "Rule of Law as the Economic Factor", February 12, 2013
- Roundtable "Criminal policy's Impact on the Economics", April 4. 2012
- Roundtable, January 31, 2012
- Symposium "Criminal Policy and Business", December 8, 2011
- International seminar, November 2011, McGill University
- Parliament hearings on October 17, 2011
- Scientific seminar of Mr. E.G. Yassin, June 29, 2011
- Meeting of the expert group, June 14, 2011
- Press conference in "RIA Novosti", June 02, 2011
- International Seminar, May 31, 2011
- Roundtable, May 25, 2011
- Roundtable, April 18, 2011
- Roundtable in State Duma, February 9, 2011
- Parliament hearings on September 16, 2010
- Book presentation in LSE, 19-20 March, 2010