13.11.08

Amendments are to be introduced to the Criminal Procedural Code and the law on the police. These amendments, which limit the police's right to search an enterprise's premises or to confiscate documents from an enterprise, were introduced following statements by President Dmitriy Medvedev and passed their first reading by the State Duma in September. By the time of the second reading, (State Duma) deputies propose to strip the MVD (Ministry of Internal Affairs) of this right altogether. The police should only participate in checks together with the tax authorities, and the latter may only request the police's assistance if they have problems gaining access to an enterprise, Vladimir Medinskiy, the sponsor of the initiative, believes.

Pavel Klimovskiy, deputy head of the MVD's press center, says that the ministry is taking a flexible position: above all, it favors practicality, and excluding the police will necessitate bringing in specialists of the same caliber from other fields.

Regarding the moratorium on arrests, Klimovskiy commented that businessmen suspected of crimes occasionally admit that they are prepared to flee the country once they are released on bail.

The MVD's economic security department points out that one should not forget about the activities of organized criminal groups, which have infiltrated business structures and are now engaged in corporate raiding.

The Federal Tax Service informed us that agreements governing relations between the two agencies will obviously be adjusted.

Some kind of procedures for inspections must be introduced, Mikhail Orlov, chairman of the expert council of the State Duma's budget committee, added: as a non-participant in tax affairs, the MVD operates according to its own law, which permits it to do anything -- from searching cars to full-fledged inspections under the guise of operational investigative activities, the materials of which cannot be appealed.

And yet the solution to this problem is not a matter of legislation but of education, Orlov believes: "Sometimes a police officer might use a weapon to harass a specific individual, but you cannot ban them from carrying weapons -- they need weapons to perform their immediate functions. And the underground vodka distilleries need to be under threat of police raids."

The moratorium will apply to tax crimes under Articles 198 and 199 of the Criminal Code, as well as fraud (Article 159 of the Criminal Code), theft, and a number of other crimes, but definitely not money laundering, his (Orlov's) colleague Vladimir Gruzdev, deputy head of the legislation committee, explained. Each year around 3 million economic crimes are registered in Russia, he said, and approximately 1.2 million criminal cases end up in court.

According to Gruzdev's data, in 500,000 of these cases the accused are sentenced to terms equal to the amount of time they have already spent in pre-trial detention. Businessmen are actually acquitted in just 9,800 cases.

Urals-based businessman Sergey Buzilov offers an example of how an entrepreneur's arrest can bankrupt an enterprise. His brother Maksim Buzilov, the former owner of Stainless Steels Trading House CJSC, has been sitting in pre-trial detention for 20 months already. Buzilov acquired the company with big debts in 2003, and by 2005 it started to make a profit. The company became one of the largest suppliers of stainless rolled metal products in the Urals, with a monthly turnover of R60-70 million. Unscheduled inspections of the enterprise began in 2006, and the owner was arrested on charges of large-scale fraud. A Yekaterinburg-based security firm started removing metals from the warehouse, but the law-enforcement agencies refused to investigate the incident. The enterprise is now going through bankruptcy.

Most economic crimes do not pose a danger to society, Gruzdev believes. Mikhail Grishankov, deputy chairman of the security committee, says that US law does not provide for the arrest of businessmen, replacing it instead with bail or recognizance. His committee will be holding hearings on this topic on November 13th.

The moratorium is to be introduced temporarily -- until 2011. Two years is enough, Gruzdev believes, for the provisions of anti-corruption laws, which are supposed to reduce abuse of office in this sphere by law-enforcement officers, officials, and judges, to start having an effect.

The United Russia members' initiative to introduce a moratorium on arrests of businessmen was approved yesterday by Larisa Brycheva, head of the Presidential Staff's state legal department, who attended a discussion of anti-corruption draft laws at one of United Russia's parliamentary groups in the State Duma. According to United Russia members, she declared that it was now easier for judges to issue arrest warrants for businessmen, since they fear they will be accused of having a "vested interest" if they turn down the law-enforcement agencies' requests.

Vladislav Korochkin, vice president of OPORA Rossii (Support of Russia, an association of small and medium-sized businesses), supports the United Russia members: in his opinion, unjustified arrests of businessmen often become an element of corporate raiding. With reforms expected soon, there has been a surge in unjustified activity against businesses by members of the law-enforcement agencies; "they are trying to seize their positions before it is too late," he (Korochkin) concludes.

Anton Danilov-Danilyan, head of the expert council of Delovaya Rossiya (Business Russia, a union of "new-generation" Russian entrepreneurs), believes the amendments may subsequently be extended to large business as well: "We will start with the small ones and see how it goes."

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Source: "Vedomosti"