Roundtable «Criminal Policy's Impact on the Economics»
Roundtable “«Criminal Policy's Impact on the Economics» took place in the framework of XIII April international academic conference on problems of economic development and society on April 4, 2012. Center’s experts, invited lawyers and economists discussed the growing pressure of Russian law enforcement agencies on business, strengthening of repressive function of the legislation in economic sphere.
Elena Novikova (Lecs-Center) and Andrey Yakovlev (HSE) conducted the roundtable. Evgeny Yasin, Victor Zhuykov, Vadim Volkov, Tamara Morshchakova, Ella Paneyakh, Vladimir Radchenko, Mikhail Subbotin, Andrey Fedotov, Igor Novikov took part in the discussion.
Center’s experts announced the numbers that prove the repressive character of the criminal policy in economic sphere. Every sixth businessmen underwent the criminal prosecution for the last decade, it were registered over 3 Million economic crimes in the country (those that reached the court). Today about One Hundred Thousand businessmen serve sentence, up to 130 Thousand files of economic direction are suited per annum; about 75 Thousand arrests of businessmen take place. Two third of companies with their heads “fall under the article” were closed (which his 60-70 Thousand ruins per annum), about 2 Million people became unemployed.
Along with that 47 per cent of businessmen who underwent prosecution have over 10 years’ experience of business activity, and 32 per cent – over 20 years. According to 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. According to Lyubov Konstantiniva (Transparency International) any economic entity is subject for 30 to 40 types of supervision today.
Wide spread of businessmen criminal prosecution is not a secret for public and the number of those who want to open their business decreased, as per data of Global Entrepreneurship Monitor for up to 3.6 per cent of population (average even in middle developed counties is 24.7 per cent).
In Russian every businessmen knows that one can come for him any moment, independently from the fact how clean he conducts him business. As Evgeny Yasin, Academin Supervisor of HSE stated, 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”. Assistant of the Russian President Arkady Dvorkovich, who attended the conference, confirmed, that state has now confidence to business. “That is why we cannot go for decisions that could mean the investment climate improvement. But there is no confidence is the state either, many of its’ initiatives meat apathy from the society, or aggression”. As Dvorkovich said, chances for businessmen to undergo criminal prosecution are 50-50. That is they will either file a case, or not. There is not assumption of innocence of businessmen from the point of view of Russian power.
Mutual disregard of power and business leads to the most sad consequences: lower economic growth, drop of social optimist (Russia has the leading place on number of suicides and murders), freezing of the investment climate, export of capital. Common business activity is twisted; emigration moods among business become stronger. As Vladimir Radchenko, Center’s expert and former First Deputy Chairman of Russian Higher Court, said “you cannot say that the business activity twist goes only to criminal prosecution, but, definitely it plays a very serious role”.
Those who stay for now are trying to safer their lives and business paying so called “administrative rent” and exporting part of assets from Russia. As experts of “Startegy-2020” calculated,, corruption together with the bureaucracy lead to additional mark-up of 15 per cent for food, 35-30 for real estate. Export of capital is $115 Billion US Dollars for the last 15 years.
As Leonid Grigoriev, professor of HSE and Center’s expert, told to the audience, if the situation will develop the same, intellectual and financial elite will soon leave the country and will manage their capitals from abroad with the help of lawyers and security guards.
Criminal and legal way of economic management is arose today in Russia, and that is dangerous, V. Radchenko said. Law enforcement system is interested in criminal prosecution of business, and this system uses their authorities not for society’s protection from criminality, but for corruption and property redistribution. But also the wordings of corpus delicti in laws are so vague today that this creates possibilities for outrage and corruption. It happens that businessmen is sentenced for acts that the Arbitration court already recognized as legal and lawful.
The theme of economic amnesty that is needed to be conducted immediately was discussed at the roundtable too. As Center’s General Director Mikhail Subbotin stated, for 20 years of reforms when the market rules were only forming tens of thousands of businessmen were imprisoned – both right and guilty – but did not conduct any amnesty, and “this system with economic hostages wants to act. But business works poor in the atmosphere of fear”. E. Yasin agreed, that businessmen in Russia are subject to court prosecution 10 times more often than representatives of other professions.
10 Thousand people who are imprisoned now and 120 Thousand people with not cancelled records of conviction who already served their sentences or were sentenced to the punishment not connected to imprisonment could come under the amnesty for economic crimes, as per experts’ data.
The mechanism of businessmen prosecution was also touched as the roundtable. Toay on of the most “popular” articles of economic crimes is article 159 of Russian Criminal code (Fraud) under which about 40 Thousand people are passing judgments. Share of cases on “fraud’ in total number of “economic crimes” grown from 33,6 per cent to 56,8 per cent from 2000 to 2010. Also articles of chapter 22 of Russian Criminal code (“Crimes in the sphere of economic activity”) is used rarely: share of “unlawful entrepreneurship” (art. 171) and “evasion to pay taxes” (art. 198) is lowered, from 6,2 per cent and 11,4 per cent to 1 per cent and 3,4 per cent as per calculation of the Institute of law enforcement problems, Sankt-Petersburg.
Today’s law enforcement equals the profit possessed to the damage and allow to file the criminal case in the lack of injured, but only with the initiative of the law enforcement officers, which of course does not promote the business’ prosperity.
Businessmen often undergo prosecution as members of organized criminal groups (OCG) – and any business could having desire be qualified as “organized criminal group”, as far as business is not easy to be done by one person only. As a rule general direcot and head accountant are included into the OCG, but there are precedents when, as per opinion of court and investigation, all partners and even relatives of a businessman were part of the OCG. Any legal entity having an office could be brought under the definition of OCG.
Experts agreed that humanization of legislation in economic sphere is not possible without changing the law enforcement practice and thus the reforms of court and law enforcement systems are needed.
- Program of XIII April international academic conference on problems of economic development and society. NRU Higher School of Economics with participation of the World Bank and International Monetary Fund. April 3-5, 2012 (in .pdf format). (в формате .pdf)
- Vedomosti. Chances of Russian business to be jailed is 50-50..
- Polit.ru Criminally legal economic management aroused in Russia: business works in the atmosphere of fear. April 10, 2012.
- Gazeta.ru “Vedomosti”: every sixth businessmen underwent criminal prosecution for the law decade.”April 06, 2012.
- Novoe delo. “Experts: every sixth businessmen was in prison”. April 09, 2012.
- Tvrain channel. “Every sixth businessmen was in prison”. April 06, 2012.
- Commersant-Dengi. “From owner to prisoner.” April 09, 2012.
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