The State Duma declared a nationwide economic amnesty. The ongoing change in attitude towards business in Russia is a signal to all government officials that “it is necessary to protect business people, who are the future of the Russian economy.” At the same time, it is a signal to investors, that they should look more seriously to engaging in business in Russia.
On July 2, 2013, the State Duma declared a nationwide economic amnesty. According to the Ministry of Justice, 13 persons have been amnestied since July 4, when the act of amnesty entered into force, eight of them released from pre-trial detention centers and five from places of confinement. Presidential Commissioner for Entrepreneurial Rights Boris Titov said in this regard that it was premature to speak of the results expected by the yearend. The public must not count on a large number of amnesties at once, he said, because the procedure for obtaining damage repayment certificates from the Federal Bailiff Service takes a long time.
A multi-article amnesty bill was presented in spring of this year, only to be trimmed to size and heavily edited. The All-Russia Center for Public Opinion Studies (VTSIOM) launched a survey after the intended act of forgiveness was announced. The results were as follows: 36% of those polled were against the amnesty. “As the discussion gained momentum, the number of opponents only grew,” said Mr. Titov.
The situation being what it is, the government could do nothing but try and find the right balance of interests. According to the Business Ombudsman, the presidential staff was looking for an option which would not evoke a negative response from the bulk of the population, while also facilitating improvements in the business climate as much as possible and reversing negative attitudes to jurisdiction that failed to protect private ownership.
The final version of the economic amnesty, to quote Mr. Titov, was “a form of optimal compromise.” He insists that the nationwide economic amnesty is a systemic solution and that no individual, be it Khodorkovsky or Navalny, was a factor in the decision-making.
The amnesty has not been announced for innocent victims alone. It is a humane act of forgiveness with regards to various sorts of people, including offenders. In Mr. Titov’s view, “it’s much fairer to release even culprits, lest innocents remain in prison.”
Notably, according to Mr. Titov, the economic amnesty act includes only two parts of Article 159 “Fraud” of the Criminal Code – 159.1 “Fraud in Lending” and 159.4 “Fraud in Entrepreneurial Activities” – rather than Article 159 as a whole. These two parts, incidentally, came into effect on January 1, 2013, and, naturally, few have been sentenced under them.
At the same time, a commutation process has been devised for those who were sentenced under Article 159 in general and yet believed that they were merely carrying out business. To obtain a commutation, those sentenced should apply to a court of law for hearings to be held. The court may also order to amnesty a person directly in the courtroom. The Russian Business Ombudsman notes with regret that the commutation practice is so far highly ambiguous, with refusals resulting from totally incomprehensible court rulings. In some cases, a court would turn down a commutation plea in accordance with Article 150.4 even if the indictment passed under Article 159 states that a person is sentenced to imprisonment in connection with business activities.
Economic crimes ought to entail economic punishment. Boris Titov says, “People should pay for what they did with rubles, not with prison terms and forfeiture of rights and freedoms.” Humanizing the legislation on economic crimes is what the current effort is all about.
Four packages have been realized as part of the reform of legislation on economic crimes, with new counts – 159.1 and 159.4 – added to Article 159. The terms of punishment were also reduced. Mr. Titov hopes that the way these articles are enforced will change as well, particularly after a statement was issued to the effect that it was high time the law enforcers stopped bringing pressure to bear on business people.
He describes the above steps as “cosmetic” and insufficiently effective. Of course, the authorities are working to improve the business climate and there are shifts in tariff policy, shifts that work changes in the Russian economic environment as a whole, making it profitable for business. But cosmetic methods alone are not enough for achieving business security on a national scale. “It’s the amnesty that has provided the critical solution,” says Mr. Titov.
The economic amnesty amounts to an avowal that the state has committed mistakes in respect of business people, failing to provide sufficient protection for business.
Russia cannot hope for a decent future unless it promotes business enterprise, said Mr. Titov. The ongoing change in attitude towards business in Russia is a signal to all government officials that “it is necessary to protect business people, who are the future of the Russian economy.” At the same time, it is a signal to investors, both Russian and foreign, that they should look more seriously to engaging in business in Russia.
Boris Titov is Presidential Commissioner for Entrepreneurs' Rights.
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