20 years under Putin: a timeline

The Russian Criminal Code constitutes an obvious threat to further social and economic development in Russia, says Ekaterina Mishina, Assistant Professor on the Law Faculty of Russia’s National Research University Higher School of Economics. Prof. Mishina discusses the issues with the Institute of Modern Russia.



Institute of Modern Russia: How can one evaluate the current business climate in Russia? How well are businesspeople and their property protected by Russian law?

Prof. Mishina: Doing business in Russia now means taking really big risks. Unfortunately, the principles of justice and individual equality under the law do not apply in Russia today. Apart from the so-called natural risks of engaging in entrepreneurial activity, at the same time, businesspeople in Russia must constantly and inevitably deal with the additional risks posed by the activities of law-enforcement officials and their various agencies. In the context of the targeting of due legal protections of private property, some Russian businesspeople describe the drain of Russian capital to the West as the least of many evils. Russian businesspeople are not well-protected and do not feel safe. That is why more and more of them are opting for relocation to countries where they may benefit from legal systems that provide real protections to law-abiding entrepreneurs, their individual rights, and to their property.

The situation in Russia today may be described as almost totally lacking the property protections that should be guaranteed in criminal law. Russian legal reality may further be described in terms the pressure entrepreneurs feel because of such factors as the following:

• The redistribution of property,

• An extremely unfriendly business environment, and

• A lack of efficient interaction between businesspeople and state officials.

This model is based on the old-fashioned idea that it is possible to make economic decisions at the state level, using the law as a tool to benefit both the legal and the non-legal interests of government officials. The authors of the Conceptual Framework for the Modernization of the Criminal Code of the Russian Federation in the Economic Sphere treat this model as a sort of modification of the socialist idea that a body of criminal law can be used as a tool of economic management.

The concept emphasizes that having the ability to affect the economy is predicated on administrative discretion. This perspective in turn evokes the phenomenon of the "mixed nature" of business. Under this construct, a business can be characterized as having some legal aspects and some non-legal aspects at the same time. In other words, from the standpoint of non-criminal law, a business can be considered legal, while from the standpoint of criminal law, that same business can be considered illegal. Thus, artificial criminalization of business activity may be secured either through the adoption of repressive, Soviet-like criminal legislation, or by means of undue, arbitrary legal interpretations that disfigure the nature of the legal norms in question.

As a result of non-legal interpretation, a legal norm can be replaced by a quasi-norm that qualifies, or reclassifies, as illegal all business activities that are considered to be perfectly legal in other areas of law. Where the concept of artificial criminalization has the potential to be invoked, any legal contract or transaction stands in the shadow of the very real threat that it might be qualified as illegal. A perfect example may be found in the text of an act of the Supreme Court of the Russian Federation. The act states that a transaction, a contract, or an otherwise legitimate activity can be proclaimed criminal if a court finds a motivation for committing a crime (see section 3 of Regulation of the RF Supreme Court of Dec. 27, 2007). Such an approach inevitably results in an escalating cascade of criminal repressions targeting entrepreneurial activities.

IMR: When the new Russian Criminal Code of 1996 was drafted and adopted, the humanization of legal norms was declared to be one of the project’s main goals. Indeed, the revised Code eliminated certain notorious articles dating back to the Soviet Criminal Code that stipulated criminal penalties for homosexuality, vagrancy, currency-exchange operations, and so on. Do you think the Criminal Code of 1996 went far enough in terms of humanizing Russian criminal law?

Prof.M: The new Criminal Code is definitely much better than the old Soviet one. But the most important point to be made here is that the humanizing trend had almost no effect on those provisions of the Code that pertain to economic crimes. Moreover, it turned out to be impossible to extract the bad heredity of the Soviet Criminal Code of 1960. That Criminal Code was infamous for the severity of the sanctions that it imposed on people who were convicted of economic crimes. The repressive nature of the Soviet Criminal Code is still present in a number of provisions of the Criminal Code of 1996, especially those related to punishments and law-enforcement procedures in the sphere of economics. When excessively repressive criminal legislation is combined with an extensive interpretation of what is permissible when it comes to the targeting of business activities, the end result is the establishment of penalties against businesspeople that may be more severe than the penalties established for convicted felons. Furthermore, it is absolutely obvious that the escalating severity of punishments for economic crimes — a salient feature of Russian criminal policy both in Soviet times and in the period of transition to the market economy — is resulting in serious social and economic damage. This is despite the fact that world history makes it perfectly clear that increasing the severity of criminal penalties has never stabilized or reduced the level of crime, and never will.

IMR: What are your thoughts on how the norms of the new Russian Criminal Code are being applied?

Prof.M: The reality is that Russian legislative norms regulating the issues of property rights and economic activity provide no sort of protection to individuals or their property. On the contrary, such norms constitute a serious threat to individual rights and freedoms: their formulations are very ambiguous and uncertain, so there is a serious risk of dittology and arbitrary interpretation. In its present form, Russian criminal legislation is not only an impediment against, but quite obviously a threat to, Russia’s further social and economic development. Such institutionalized values as protection of property rights and fair competition (in the initial sense of these definitions) are disappearing. Moreover, the possibility that criminal punitive measures can be applied according to such ambiguous legislative acts sets the stage for abuses of power by law-enforcement agencies. I believe that all this brings up numerous threats to the national security of Russia. On the subject of Russian criminal procedure, I must emphasize that Russian law-enforcement agencies practice arbitrary interpretations of the norms of the Russian Code of Criminal Procedure — especially of those norms that relate to economic crime. This environment of arbitrary interpretation contributes to the repressive nature of criminal procedure in Russia. It also blocks the application of legal norms regulating special procedures for persons charged with economic crimes. A very recent example of unlawful interpretation of the rules of criminal procedure can be seen in the application of one of the new norms of the Russian Code of Criminal procedure. Provision 1.1 of article 108 of the Code establishes that detention shall not be applied to those charged with the types of crimes indicated in this provision, if such a crime was committed in the context of entrepreneurial activity.

IMR: Is it your assumption that arbitrary interpretation of the norms of the Russian Criminal Code and the Russian Code of Criminal Procedure, together with improper law enforcement, are the only sources of existing problems?

Prof.M: Not really. There is another very serious factor: the deformation of the legal consciousness of the Russian people. This phenomenon has been very clearly demonstrated by numerous sociological surveys. Most respondents think that Russians are not protected while doing business, and that their property is not protected either. In order to do business in Russia, one must obtain numerous official permissions, the so-called “no-objections.” Even while purporting to conduct legitimate economic activity, a law-obeying Russian businessperson must obtain an enormous number of permissions from appropriate governmental agencies. The point is that different people use different approaches to solve problems, and this diversity occasionally brings up strange situations, such as when certain people obtain permission to conduct an obviously illegitimate activity.

IMR: Do you and the colleagues who share your views see options for improving the existing criminal legislation?

Prof.M: Ideally, an economic crime should be sanctioned by an economic punishment. Many prominent Russian experts in the area of criminal law and procedure say existing legislation needs to be amended — especially when it comes to the opening of criminal cases against those accused of economic crimes. The Russian Criminal Code contains numerous articles that delineate more-severe punishments for doing business than for committing first-degree murder. Therefore, the humanization of existing criminal legislation is the sine qua non condition for improving Russia’s business environment.

The Conceptual Framework for the Modernization of the Criminal Code of the Russian Federation in the Economic Sphere was discussed last fall at parliamentary hearings in the State Duma (the lower chamber of Russia’s federal legislature). Amid debate on the matter by MPs, prominent experts in criminal law and practicing lawyers, the point was made that modern Russian criminal law is not practiced for the benefit of the individual. It was suggested that Russian criminal legislation should incorporate those provisions of Russian tax legislation which require that all doubts be interpreted in favor of the taxpayer. The incorporation of this concept into criminal law would significantly impact the cases of those businesspeople who remain liable to further prosecution under the Russian criminal code, even after their cases have been adjudicated as legitimate by a court of arbitration.

On one side of the issue stand the lawyers who are happy with the status quo as it relates to Russian criminal legislation. On the other side stand those who claim that serious changes are needed in this area. But both sides agree that law enforcement is the No. 1 issue on Russia’s agenda today. There is no higher priority, they say, than that of minimizing, to the greatest extent possible, the potential for legislative norms to be unduly applied by law enforcement against citizens and businesspeople who are involved in criminal cases.

The issue of who will be in charge of the application of these norms is of vital importance. Likewise, the mentalities of judges, prosecutors, investigators and associated personnel play similarly critical roles in the real-world context of the courtrooms where life intersects with the law on a daily basis. In a nutshell, there are two main scenarios: The sunny scenario is one that envisions judges, prosecutors and investigators serving as representatives of a generation of law-enforcement actors who understand and comply with the demands and requirements of the market economy. More likely is the darker scenario, in which the Russian legal system is operated by the usual law-enforcement bureaucrats whose minds bear the deformities of Soviet-style legal consciousness. And Soviet legal consciousness dies hard. Summing up, I must say that rather than simply continuing to follow the instructions of high-ranking officials, the priority task for Russians today is learning to apply legal norms in accordance with the letter of law.