“Business Russia” proposes changes to the Criminal Code and Code of Criminal Procedure to reduce pressure on business

“Kommersant” got acquainted with the proposals of “Business Russia” for further decriminalization of business activities, sent to the presidential administration – they are aimed at greater differentiation between “entrepreneurial” and other crimes. The business community proposes to reconsider the approach to accounting for “entrepreneurial” composition – now it is impossible to assess the scale of excessive force pressure. It is proposed to expand the list of “business” compositions to ensure procedural guarantees for businesses in cases of violations regarding the payment of VAT and when working under government contracts. Business Russia also insists on amending the article on the organization of a criminal community – the presidential ban on applying it to entrepreneurs does not work in practice and is successfully circumvented by law enforcement officers.

As Kommersant learned, Delovaya Rossiya sent to the presidential administration proposals for changes to criminal and criminal procedural legislation designed to reduce excess pressure on business. As Ekaterina Avdeeva, head of the expert center on criminal law policy and execution of judicial acts of Business Russia, explained to Kommersant, the initiatives were prepared in pursuance of the president’s instructions following a meeting with members of the organization on May 26 (Pr-1293 of June 29). “The proposed changes to the legislation will make it possible to better protect the rights of entrepreneurs and, in the event of claims from law enforcement agencies, to save more operating enterprises, and with them, tax revenues and jobs,” says Ms. Avdeeva.

One of the key initiatives involves the de facto complete abolition of the application of Art. 220 of the Criminal Code of the Russian Federation (organization of a criminal community) to entrepreneurs – we are talking about decriminalization of the creation of a structured organized group for committing exclusively one or more serious or especially serious crimes under Art. 159–160 of the Criminal Code of the Russian Federation and chapters 22–23 of the Criminal Code of the Russian Federation. Let us recall that businesses have already been exempted from the article on organized crime in 2020: presidential note 1 to Art. 210 of the Criminal Code of the Russian Federation directly prohibited the application of the article on organized crime groups to entrepreneurs who, in the course of ordinary business activities, in the opinion of the investigation, committed a crime. In practice, the norm does not work: the article is often applied to businessmen in connection with their concluding transactions or making decisions within the framework of business activities, as noted in Business Russia.

The ban is “circumvented” in an arbitrary way: the ordinary economic activities of entrepreneurs are called organized criminal activities, which allows the article to be applied to any business entity.

Another problem is the lack of reliable statistics on the extent of excess pressure on business. Business Russia proposes to adjust the approach to accounting for “entrepreneurial” elements of crime. Thus, full-fledged statistics are available only for articles that certainly relate to business, including parts 5–7 of Art. 159 of the Criminal Code of the Russian Federation (fraud), art. 171 (illegal entrepreneurship), art. 173.1 (creation of a legal entity through third parties), Art. 183 (illegal disclosure of information constituting commercial, tax or banking secrets). No records are kept of the prosecution of entrepreneurs under ordinary criminal articles (for example, Parts 1–4 of Article 159 of the Criminal Code).

It is proposed to expand and focus the list of crimes in the business sphere, which would ensure guarantees of the rights of entrepreneurs. In particular, it is proposed to allocate a special clause in the Criminal Code of the Russian Federation for fraud in VAT refunds. Due to the fact that such crimes are now classified under the general criminal parts of Art. 159 of the Criminal Code, an entrepreneur can be taken into custody, and the deadlines for the return of seized property are not observed – this creates risks of bankruptcy, the business has no incentive to compensate the damage to the budget. A similar situation arose in the investigation of crimes related to improper or untimely execution of government contracts. “If the actions are formally identical, the action can be classified as a civil dispute or a crime (in the case of pre-formed intent to fail to perform in order to obtain a benefit),” write the authors. The distinction is made subjectively; criminal cases are initiated prematurely, which deprives entrepreneurs of procedural guarantees; they often bear criminal liability even in the absence of damage. Fraud in government contracts is also proposed to be included in a special group.

Also, when qualifying economic crimes, the authors propose to change the approach to the interpretation of extreme necessity and justified risk: business activity, in principle, is associated with additional risk. For example, according to Business Russia, temporary business activities without a license should not entail criminal liability if the cessation of work may lead to disruption of the work of life support facilities (cessation of water intake, water treatment, heating supply to housing, and so on). It is stipulated that the risk cannot be recognized as justified only in a situation if, in order to achieve a socially useful goal, actions were taken that involved a threat to the lives of many people, with the threat of an environmental disaster or a public disaster.

Among the previously discussed initiatives in the package for the administration is an increase in the thresholds for determining the amount of large and especially large damage when qualifying fraud, misappropriation and embezzlement, as well as the refusal to initiate criminal cases in the event of full payment of arrears for customs crimes, similar to tax ones (see. “Kommersant” dated February 21).

Diana Galieva