The newspaper “Vedomosti” with the assistance of the Law firm S&K Vertical conducted the seminar on the subject “Business and the criminal risks” which took place on April 24, 2009 in Saint-Petersburg

24 April 2009

The criminal risks are the most essential and painful for the entrepreneurs in contemporary Russia. A considerable part of practice in the law enforcement and judicial bodies fall on the economic crimes.

As the history of the contemporary business shows, no one is safeguarded against the criminal prosecution. What kinds of criminal risks threaten business in present conditions? How to avoid the mistakes leading to the criminal prosecution? The representatives of the law enforcement agencies, practicing lawyers, experts and businessmen have answered these questions within the frames of the seminar “Business and criminal risks” that took place on April 24, 2009 in Saint-Petersburg under the arrangement of the newspaper “Vedomosti” and the Law firm S&K Vertical.

The seminar was opened by the Attorney at law, the Managing partner of the Law firm S&K Vertical Konstantin Krutilnikov who put his hand in the arrangement of the event and was the moderator on it. Mr. Krutilnikov greeted the participants, announced the significance and the actuality of the seminar’s subject and the necessity to solve a number of practical objectives and proposed an active discussion.

Further, the Managing partner of the Bar of Attorneys “Egorov, Pouginskiy, Afanasiev and the Partners” Ilya Nikiforov made the statement. The head of the major national law firm reported in his greeting speech on the substantial increase in the number of criminal issues of the clients in his practice and summoned not to be afraid of the criminal risks and to regulate them by claiming the legal decisions from the enforcement authorities. He also noted the practical importance of the events of such a kind.

Sergey Korolyov, the Attorney at law of the Bar of Attorneys “Egorov, Pouginskiy, Afanasiev and the Partners” opened the first session of the event by holding the speech on the subject “Criminal prosecution – a chance to reinstate justice”.

Among the main trends in the state of crisis he mentioned the security market decrease, the premeditated insolvency, the rise of necessity to investigate the complicated cases, the lack of qualification in the specific features of the commercial activity being typical for the law enforcement staff. The speaker gave his own definition to the following terms:

“unjust” criminal prosecution – the situation when the application to the law enforcement agencies pursues private commercial purposes, such as to establish control over the enterprise or to exert pressure on the managers.

“forced” criminal prosecution – the situation when the parties try to solve their commercial dispute or commercial problems content by means of law enforcement agencies.

a chance to reinstate justice – the complainant’s rights protection in the state of the lack of the efficiency or in efficiency of civil justice.

Iliya Spirin the assistant of the Criminal Law Faculty of the Law School of Saint-Petersburg State University continued the discussion with the report on the subject “Initiation of the criminal proceeding by the application of the commercial organization”. The detailed research analysis of the articles 201-204 of Russian Criminal Code as well as the analysis of the corpus delicti and the official statistical data under the indicated articles constituted pivot of his report.

The joint report of Oleg Kosatenko, the Deputy Head of the Principal Investigation Department at the Internal Affairs Principal Department of Saint-Petersburg and Leningradskaya Oblast, and Aleksey Vasilyev, the partner of the independent consulting group “Financial authorized anti-crisis managing company (FUKAU)” on the “Criminal Insolvency (the analysis of the articles 195, 196, 197 of Russian Criminal Code)” caused a number of interesting questions from the audience and led to a lively discussion on the subject of the organizations’ bankruptcy.

Aleksey Vasilyev described the audience the real situation as regards the state of bankruptcy in contemporary Russia, shared a lot of helpful hints regarding the ways to avoid the transgression of the bounds of the legal and not to implicate in a criminal bankruptcy told about proper and legal relation of the enterprises to the insolvency of the business and the bankruptcy of their debtors. The competence of the legal support and the systematical work on insolvency projects constituted the basis for the legal bankruptcy.

Oleg Kosatenko reported on the single cases concerning the submission of the criminal bankruptcy cases to the court in his practice, and gave an advice to the audience to estimate the actions in the state of bankruptcy carefully and from the legal point of view.

Vladimir Aleshin, the Attorney at law, the Chief advisor on criminal issues of the Law firm S&K Vertical, picked up the baton of the speakers after the break and held the report on the subject: “The hostile takeover: the criminal aspects”.

The essence of his speech came to the idea that the current legislation already contains the provisions allowing to institute criminal proceedings for committing a hostile takeover. He also criticized the definition of the term “hostile takeover”. According to his opinion, the definition of the term is incorrect and does not express the essence of the legal constructions that occur in theory and practice. The main problem of the investigation of the hostile takeover cases is the low level of vocational training among the investigative authority staff. One of the underlying reasons causing the hostile takeovers is the low level of the legal culture of business, especially in the regions.

He also pointed out that the provisions of Russian Criminal Code according to which the hostile takeovers are qualified (the articles 159, 165, 179, 330, 327) are also used by the raiders targeted at taking the enterprise over. The problem lies not in the way to qualify these or that criminal actions, but in the way to eradicate totally the legislation gaps enabling some persons to abuse the powers while investigating the criminal cases.

According to the opinion of Vladimir Aleshin, it is necessary to introduce the adversarial principle not only in the judicial stage of the criminal case, but also when initiating it by delegating the authority to initiate the criminal cases to the discretion of the court, and not to the sole discretion of the investigative officer, as it occurs now.

The speech of Evgeniy Kuzmin, the representative of the major business, the chairman of Svetoch LLC Board of directors and a well-known fighter against the hostile takeovers and raider activity was very interesting and lively. In his report called “General director: execute not pardon” the speaker gave the complete list of the risks of the General director supporting each point of the list by interesting examples from his own practice.

Tatiana Buller, the head of the legal practice at the Nord-Western regional center of The National Bank “TRUST” JSC continued the discussion. She revealed the issue of “The illegal ways of obtaining loans and crimes in banking sphere”. Speaking about the seldom cases of implementing the clause 176 of Russian Criminal Code – illegal obtaining of loans - in the practice of the bank she works in, she gave the detailed analysis of the corpus delicti under the specified rule.

The final speakers of the discussion were Dmitry Rudakov, the Attorney at law, the chief of the Anatoly Sobchak arbitrary agency “The Baltic Bar” (BKA), and Andrey Tsay, the director of the company “The registrar R.O.S.T.” office in the North-West Federal region, who held the joint report on the subject “Measures to prevent the economic crimes”.

Dmitry Rudakov informed that the main reasons why the criminal risks occur are the conflicts among the partners, the shareholders, the contracting parties, as well as the actions of the business rivals. The speaker pointed out to the low level of the legal knowledge of the businessmen, which causes numerous mistakes while striking the bargains, fixing the rights over the property, determining the shares of the partners in business, tax planning and tax optimization as well as while getting the profit actually. He offered a number of measures to prevent the economic crimes, among which the competent drawing up of the documentation and formation of the relations as well as the timely prevention of the legal problems play the leading role.

Andrey Tsay in his part of the report recounted that one of the probable measures to prevent the delinquency in business sphere (including further crimes) is the implementation of the proper approach to keeping and storage of the stockholders’ register. Answering the question “What is the register of the joint stock company for?” he pointed out to the following:

- the register is the third party (the arbitrator, the guarantor of property safety and of legislation observance);

-the register allows reducing the suspense between the parties and preventing the distrust in such situations as, for example, voting for placing the additionally issued stocks on the general stockholders meeting;

-the occurrence of the third party does not allow one of the parties to reach the targets by using “simple methods” (the easiest methods are as a rule wrong ones), help them hear each other and does not allow the conflict to develop into the critical stage.


«Resuming the results of the discussion I’m confident in the point of view that the purpose of the event has been achieved – the actual palette of the basic criminal risks of business in the contemporary conditions has been revealed, and the platform for communication and exchange of experience has been established.

I’m certain about the fact that that whatever the risks are they can be minimized by conducting legal and fair business.

Economic crimes and the corruption constitute the tremendous hazard to the state with market economy, and crimes in the sphere of the commercial activity have a negative influence on business development and competition. As it is vividly seen, the State effectively struggles against the economic crimes.

Nevertheless, among the most significant risks pointed out by the businessmen while executing the commercial activity in Russia is the fear to become a subject to illegal criminal prosecution initiated by the law enforcement agencies.

Where the boundary line between the legal requirements and implementation of “the other” interests should be drawn - is a pressing issue for business.

The common objective for the State and the business is to set up the “transparent” rules of game and to follow them”.

K. Krutilnikov

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