Raising the threshold value of damage under a number of articles of the Criminal Code will not solve all the problems of entrepreneurs

The Ministry of Justice has put forward several proposals to liberalize the economic articles of the Criminal Code (CC). The changes will contribute to “improving the business climate in the face of sanctions pressure” and will allow “minimizing the risks of unjustified criminal prosecution” of entrepreneurs, the explanatory note says.

We are talking about the exclusion of criminal liability for entrepreneurship without registration (Article 171 of the Criminal Code). Another proposal is to remove three economic articles from the Criminal Code: Art. 170 (registration of illegal real estate transactions), art. 170.2 (introducing false information into the boundary plan) and art. 185.1 (malicious non-disclosure under securities rules). Partner of the Criminal Defense Firm Artem Polovinkin calls the issue of decriminalization of these compounds controversial. He explains this by the fact that the articles relate to the responsibility of officials, cadastral engineers, issuers of securities, and the criminal acts for which liability is established by these articles in practice, “are often used just for theft and raider seizures of property of businesses and individuals.” This is why their exclusion from the Criminal Code is dangerous, Polovinkin points out.

Other innovations include a 1.5-fold increase in the maximum amount of damage for bringing to responsibility under the article of the Criminal Code on fraud in connection with failure to fulfill contractual obligations in the field of entrepreneurship (parts 5, 6 and 7 of article 159 of the Criminal Code): the amount of significant damage will increase from 10,000 to 25,000 rubles, large – from 3 million to 4.5 million rubles, and especially large – from 12 million to 18 million rubles.

The most popular composition used in economic affairs is part 4 of Art. 159 of the Criminal Code of the Russian Federation – the bill of the Ministry of Justice, however, does not apply, Vadim Zaripov, head of the analytical service of the law firm Pepeliaev Group, notes: “Investigators and judges are guided by the principle that theft is not entrepreneurship, and therefore they qualify actions under Part 4 of Art. 159 of the Criminal Code”. The threshold amount of damage increases only in business fraud (parts 5–7 of article 159 of the Criminal Code), which is not often found in law enforcement practice, Artem Chekotkov, a lawyer for the Knyazev and Partners collegium, confirms.

According to Zaripov, the main drawback of the amendments is their “quantitative” approach: “We need qualitatively different, more subtle approaches that provide for a distinction between actions where there are signs of fraud and where they are not.” The situation may change for the better when “criminal repression ceases to dominate the regulation of civil law relations,” said Vadim Klyuvgant, partner at the Pen & Paper Bar Association.

The ministry’s approach is somewhat formal, notes Zaripov: following the results of the SPIEF, the president instructed to decriminalize some of the actions of entrepreneurs. Chekotkov agrees that the draft law “on the whole corresponds to the emerging trend towards the liberalization of criminal legislation in the context of Western sanctions.” He recalls that the first step was the March amendments to the Code of Criminal Procedure, which changed the procedure for initiating criminal cases on tax offenses, and the draft law developed in June to reduce the maximum terms of imprisonment for qualified parts of tax crimes.