Defining the Boundaries of Crime as a Way to Decriminalize Economic Activity and Improve the Business Climate

It would be more correct to say determining the boundaries of non-criminal acts than determining the boundaries of criminal acts. This is the boundary that no one sees, while the Criminal Code becomes rubber-stamped — Maksim Arzamastsev, Associate Professor of the Department of Criminal Law of the Law Faculty, St. Petersburg State University.

I am very familiar with the system of basics in law enforcement agencies. <...> What did business face? Firstly, when the USSR collapsed and Russia emerged, we felt that there were certain opportunities; many businessmen started getting involved in all kinds of activities but were cut short by criminals. I worked in the prosecutor’s office at the time and there was not a single day without a murder. <...> Then came the redistribution of property rights, in which the law enforcement agencies were also involved in this way or another. <...> What about now? The situation has changed. Business has the right to protection. <...> Doing business is now more secure. <...> We need to reduce the administrative burden on business... and criminal pressure. <...> We need to educate and inculcate non-deviant behaviour in business. <...> It is not the businessman who is being educated but the consumer — Vyacheslav Kozlov, First Deputy Head of the Directorate of Customs Investigations and Inquiries, Federal Customs Service of the Russian Federation.

Excessive criminalization is taking place. <...> Economic disputes should not turn into criminal ones. <...> Why are we talking about this again now? The situation has changed, changed in favour of greater economic freedom and... criminal policy. <...> Fear of being held criminally liable, of course, greatly affects the business climate. It’s not so much the fear of a conviction as the initiation of a criminal case, which damages business ties and reputations. <...> But we can’t leave public interests unprotected. <...> In order to solve this problem, we have to form a new paradigm which would create a balance. <...> This requires painstaking legal work. We need research work followed by practical conclusions — Vadim Zaripov, Head of Analytical Service, Pepeliaev Group.

At present, entrepreneurs... are not fully capable of acting according to the law. Criminal law as a last instance has to be very clear and give a clear understanding... how to act. <...> We have two aspects – public law... and civil law. Now, there is a problem in public law, the excessive criminalization of any offence. <...> This should not be the case. An entrepreneur should have a clear line which cannot be crossed, otherwise they will be held criminally liable — Artem Lomize, Vice President, Association of Fish Processing and Trading Companies.

This year marks ten years since the state human rights institution – Business Ombudsman – was established in the Russian Federation. The annual report by the Federal Business Ombudsman, Boris Titov, the Presidential Commissioner Presidential Commissioner for Entrepreneurs' Rights to the Russian President Vladimir Putin, is one of the forms of reporting. This year such a report was presented too. In preparation for the report, materials are gathered, information is analysed, and a survey is conducted by the Federal Guard Service regarding various entrepreneurial problems. All this information was processed and presented in the report. <...> Surveys were conducted in all 85 federal subjects of the Russian Federation. The question was “In your opinion, is business in the Russian Federation protected from unwarranted criminal prosecution?” – and 51% of those surveyed cumulatively answered “rather not” or a definite “no”. So, 51% of responders do not believe businesses in the Russian Federation are protected from criminal prosecution! <...> So, what is the fate of prosecutions for economic crimes? Colleagues, 40% of the cases are still pending, so we can't say anything about their fate yet. They are under investigation. An acquittal, dismissal, or stay of proceedings is another 40%. What does it mean to have been in business for more than 10 years in Russia? I would say... one year counts as at least three. <...> What are the consequences of criminal proceedings against businessmen? A total of 74% of those who have been criminally prosecuted said that their business was completely or partly destroyed and that they do not plan to run it any more. <...> It seems to me that this is more than enough of an illustration to talk about the problem, and better yet, to address it — Elena Artukh, Commissioner of the Sverdlovsk Region for the Protection of Entrepreneurs’ Rights.

An activity that involves a legally permitted risk” in my opinion gives us reason to talk about a certain amount of the entrepreneur's right to err in running their business. It seems to me that there is no need to criminalize those areas of business activity, relations, and the consequences where state control and oversight will suffice. Even if an entrepreneur makes a mistake, they have to be held financially liable not criminally prosecuted. <...> I think it is very important to define business entity in legal terms. We have a definition of entrepreneurial activity, but we don't have a clear and consistent list of such entities — Elena Artukh, Commissioner of the Sverdlovsk Region for the Protection of Entrepreneurs’ Rights.

Criminal prosecutions are a way of overcoming the expired statute of limitations. New shareholders and new management of one of the counterparties to a deal often take advantage of this. The deal was made, it cannot be challenged at least once the statute of limitations has expired, but the new owners of the business do not like it. A criminal complaint is filed. Another very dangerous trend is that if an arbitration court ruled in favour of an entrepreneur but not their counterparty, and it has been sealed and signed by all higher instances, then these kinds of court victories can be seen as a way of committing fraud. This is written explicitly in the procedural documents. In other words, what is absurd for a civil lawyer is the norm for some criminal law experts. The problems of transferring economic disputes into the criminal plane are intensifying. Therefore, with our own efforts we must try to change this situation in favour of business — Alexey Ryabov, Head, Expert and Legal Center of the Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.