The State Duma adopted amendments to the Code of Criminal Procedure, allowing to distinguish between the concepts of business and ordinary crimes
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The amendments to the Criminal Procedure Code (CPC) adopted by the State Duma in the second reading should help investigators and judges distinguish between ordinary and business crimes. The author of the changes was the Supreme Court – it is expected that they will help protect businesses from abuses by law enforcement officers during the investigation and ensure the selection of more lenient preventive measures, allowing for business activities during the proceedings. Experts agree that the problem needs to be resolved legislatively, but note that in practice much depends on the subjective decisions of security forces and judges.
On October 12, the State Duma approved in the second reading amendments to Art. 5 of the Criminal Procedure Code, which makes it possible to distinguish between the concepts of business and ordinary crimes. The Supreme Court took the initiative to clarify this issue. Currently, there are special rules for criminal proceedings for those suspected or accused of economic crimes, but the very concept of crimes committed in connection with business or other economic activities is absent from the Code of Criminal Procedure. Because of this, it is difficult for investigators of the Investigative Committee, the Ministry of Internal Affairs and the FSB, as well as the courts, to distinguish between economic and other crimes, as stated in the explanatory note to the project.
The amendments can be considered a continuation of the policy of decriminalizing economic crimes and reducing the risks of unfounded criminal prosecution – we recall that after the start of the military operation, the authorities decided to partially offset the inconvenience caused by the sanctions with greater freedom to conduct business.
The adopted bill defines two types of crimes related to business activities. In the first case, we are talking about individual entrepreneurs: it is said that such crimes are committed by a business in the course of independent activities aimed at systematically generating profit, as well as when managing property for the business. In the second case, we are talking about the work of a member of the management body of the company or the company itself – when the crime is related to the managerial powers of the manager or to the independent activities of the company aimed at making a profit from the use of property, the sale of goods, the performance of work, the provision of services or other economic activities.
It is expected that these formulations will protect businesses from abuses during investigative actions, including from the seizure of documents for recognition as physical evidence. As a result, the business will be able to continue operating during the preliminary investigation and trial. The changes can increase the level of procedural guarantees for suspects and accused, reduce the number of cases of imprisonment of entrepreneurs on economic charges in favor of more lenient preventive measures (bail, prohibition of certain actions).
Due to the refusal to recognize crimes in the sphere of entrepreneurial activity as entrepreneurial, statistics are distorted – they are not taken into account. Therefore, notes Ekaterina Avdeeva, head of the expert center on criminal law policy and execution of judicial acts of Business Russia, it is even impossible to assess the scale of the problem. Meanwhile, the number of criminal cases under economic and fraud charges in the Russian Federation continues to grow. We are talking about Art. 159–159.6 (fraud and its varieties), 160 (misappropriation or embezzlement), 165 (causing property damage by deception or breach of trust), as well as Chapter 22 of the Criminal Code “Crimes in the field of economic activity.” In the first half of 2023, the investigative authorities had 352 thousand cases under these articles of the Criminal Code, and this is 15% more than in the first half of 2022.
Managing partner of the Criminal Defense Firm Alexey Novikov believes that the amendments are long overdue. Although some clarifications can be extracted from court decisions even now, they indicate a fragmented approach to the issue. Commissioner for the Protection of the Rights of Entrepreneurs Boris Titov, however, is skeptical about the changes, noting that the Supreme Court proposes to use the concept of entrepreneurial activity given in Art. 2 of the Civil Code. “Just take and copy two lines from there. This will not entail any change in the logic of the actions of law enforcement officers who refuse to recognize entrepreneurs as entrepreneurs. If the investigator considers the suspect to be a fraudster (and he obviously does, otherwise he would not have initiated a criminal case), then, as before, nothing prevents him from writing that fraudulent intent has nothing to do with “systematic profit making.” And when it comes to a contract with the state, this is almost guaranteed,” argues Boris Titov. Thus, the investigation and the courts often refuse to apply the provisions of Part 1.1 of Art. 108 of the Criminal Procedure Code, if we are talking about the “theft” of budget funds, although the Constitutional Court clearly said that to determine the “entrepreneurial nature” it does not matter who the customer is.
What experts say about amendments to the Code of Criminal Procedure
The head of the expert center on criminal legal policy and execution of judicial acts of Business Russia, Ekaterina Avdeeva, explains that law enforcement officers ignoring the fact of committing a crime specifically in the sphere of business activities leads to the non-application of those specified in Art. 81.1 of the Code of Criminal Procedure of the deadlines for the return of seized property or for its inclusion in the case materials as material evidence, for the selection of a preventive measure in the form of detention, ignoring the provisions of Part 1.1 of Art. 108 Code of Criminal Procedure of the Russian Federation. She notes that the draft reveals the concept of entrepreneurial activity for the application of procedural guarantees provided for in Art. 20, 811, 108 and 164 of the Code of Criminal Procedure, as well as for articles of the Special Part of the Code that relate to the business sphere with a reservation.
In general, experts support the trend toward humanizing criminal legislation, but note that individual innovations will not improve the situation. Business Ombudsman Boris Titov believes that nothing will change radically until the imperative begins to prevail for economic articles, in combination with the suspect’s status as a member of the governing body of an organization or an individual entrepreneur – the bail is applied first. “It doesn’t work out with bail, we can think about more serious preventive measures. We generally lack indisputable criteria under which detention is not applied. And, perhaps, not only for economic structures, but also in general,” says Boris Titov.
NOVATOR legal Group partner Oleg Dyachkov believes that the explanation of entrepreneurial activity proposed by the Supreme Court is not enough. He notes that, according to established judicial practice, if a contract is concluded with a customer represented by a municipal or state body, its execution does not relate to entrepreneurial activity. “However, in most cases, the victim when committing an economic crime is the state or municipal body. In this regard, there is an urgent need to determine what organizational and legal form the parties to a transaction in entrepreneurial activity should have. This will put everything in its place without infringing on the rights of entrepreneurs,” says Oleg Dyachkov.
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