The presidential administration has drafted a bill that would prevent executives from being arrested for the majority of economic crimes, and while the business community is welcoming the changes, it says the reforms don't go far enough.
Senior lawmakers from United Russia are expected to submit the bill to the State Duma, although it is possible that President Dmitry Medvedev will introduce it, a source close to the presidential administration and a United Russia official told Vedomosti.
"For certain kinds of economic crimes, it's certainly not necessary to coop people up in prison immediately while the preliminary investigation is ongoing," Medvedev said in a televised interview in December.
The changes to the Criminal Procedural Code would ban arrests for charges under 33 articles of the Criminal Code labeled as offenses in the economic sphere, a list of which is available on Vedomosti's web site (in Russian).
Arrests will still be possible for financial crimes listed elsewhere in the Criminal Code, including fraud; six articles related to money laundering by an organized group; malicious evasion of repayment of a debt; illegal receipt of money by athletes or coaches; malicious nondisclosure of information required by the law on stocks and bonds; smuggling committed by an organized group or using violence against a customs officer; and the illegal export of materials or technologies that could be used to make weapons or military equipment.
The moratorium on arrests would not apply if the suspect does not have residency in Russia; is unidentified; has previously violated terms of pretrial restrictions; or hid from investigators or the court.
Andrei Makarov, deputy chairman of the Duma's Budget Committee, said lawmakers had developed their own bill and would submit it soon, although they would recall their legislation if the president submits his own version.
In 2008, Deputy Vladimir Gruzdev became the first to propose a moratorium on arrests of businesspeople, but the proposal ran into difficulties over how to make an exception for one group of individuals.
In December 2009, after Medvedev ordered the Prosecutor General's Office and its Investigative Committee to get to the bottom of lawyer Sergei Magnitsky's death in pretrial custody, the Duma passed a bill changing the Criminal and Criminal Procedural codes to decriminalize tax offenses. Lawmakers then banned suspected tax offenders from being placed in pretrial detention.
The Kremlin's legal department was opposed to a mass overhaul of the Criminal Code, so the bill instead alters the Criminal Procedural Code, which deals with pretrial restrictions, said the official close to the presidential administration.
The changes work both toward Medvedev's initiative against not "nightmaring business" and his recent calls to improve the investment climate, the source said. During a Feb. 2 meeting in the Kremlin on the investment climate, Economic Development Minister Elvira Nabiullina said foreign investors wanted additional guarantees of their personal safety and an effective legal system.
Medvedev's press secretary, Natalya Timakova, said the president has raised the issue regularly and was monitoring the situation, but she did not know when a bill might be submitted.
If the bill is introduced, the Duma would make passing it a priority, Gruzdev said.
Changes to laws improving conditions for the accused would also apply to people already in pretrial detention for those crimes, and investigators would have to release them on bail, said lawyer Andrei Knyazev.
A source in the central office of the Interior Ministry said it would be positive to ease the burden on pretrial detention facilities by releasing individuals accused of minor crimes. But the changes will apply to relatively few cases, since no more than 1,000 people per year are ordered arrested on the charges listed in the bill.
Arrests for money laundering almost always involve a group, meaning that those suspects would not be covered, the Interior Ministry source said.
Many essentially economic crimes are treated as theft by fraud, or Article 159 of the Criminal Code, which is also not on the list. Investigative Committee chief Alexander Bastrykin recently raised that problem, saying the article was outdated and needed to be revamped, a source in the prosecutor's office said.
Lawyer Mikhail Orlov, chairman of the Duma Budget Committee's advisory board, said he did not see the logic in excluding crimes committed by groups, since the process for collecting evidence in a money-laundering investigation is the same regardless of whether an individual or group is suspected.
If fraud is excluded, the changes will be less effective, Orlov said, noting that fraud is a broad charge that is often tacked onto other charges. On the other hand, he said, fraud is often closely related to other crimes such as robbery, where pretrial detention is entirely justified.
The bill suggests that since the authorities do not know how to change the system, they are at least trying to change the law, said Yana Yakovleva, chairwoman of the Business-Solidarity partnership. "In a normal legal environment, it would be clear that an entrepreneur isn't the one you want to be throwing in jail — he's not a killer," she said.
The new measures will be easy to evade, since all businesspeople have at the very least an accountant, a partner or a financial director, which already constitutes an organized group, Yakovleva said.
Tax evasion (Articles 199 and 198) and money laundering (Article 174.1) were among the charges in both the first and second trials against former Yukos co-owners Mikhail Khodorkovsky and Platon Lebedev, but the biggest charge against them was fraud. If the changes were already in effect, billionaire Mikhail Gutseriyev would not have been arrested in absentia on charges of tax evasion (Article 199) and illegal entrepreneurship (Article 171).
In the first half of 2009, people went to trial for fraud four times more often than for all economic crimes combined. Courts heard 20,323 fraud cases against 23,170 people; 16,418 were convicted, while just 156 were vindicated.
A total of 5,775 cases were heard in the period for all of the economic crimes, involving 6,981 people, 5,005 of whom were convicted.
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