Harassing businesses for service purposes and personal gain
Officers of law enforcement authorities – the Federal Security Service of the Russian Federation, police, and Prosecutor’s Office – have a service duty to combat corruption. But in reality, many of them combine work in the law enforcement with pursuing personal gain. Companies seized from businessmen are registered in the names of their relatives, while profitable governmental contracts – redistributed among ‘their own kin’.
There are thousands of such stories. Or even hundreds of thousands. Enforcement structures initiate criminal cases against businessmen, threaten them with serious troubles, intimidate, and seize everything: money, assets, real properties, enterprises, and business reputation.
Up to 10 years behind bars
The State Duma of the Russian Federation has approved in the second and third readings a bill increasing the criminal liability for illegal attempts to limit activities of business entities. The bill had been submitted to the Parliament by the President of Russia.
Rafael Mardanshin, the Deputy Chairman of the Committee for State Building and Legislation of the State Duma of the Russian Federation, believes that this act would become another alarming signal for dishonest representatives of law enforcement structures – warning them that illegitimate criminal prosecution of businessmen will be punished to the full extent of the law.
The draft federal law has been prepared on the basis of recommendations produced by the work group for monitoring and analysis of law enforcement practices in the business sphere. The explanatory note to the document states that there are numerous examples of criminal cases initiated not against a specific entrepreneur – but due to an alleged crime. Such cases are normally being investigated for several months and then dismissed – which often results in a partial or complete loss of a smoothly running business.
The authors of the bill recommend to introduce a penalty of 7 years behind bars for criminal prosecution of a knowingly innocent person. Should a law enforcement officer accuse a businessman of committing a grave or especially grave crime, which results in major material losses or other irrecoverable losses for him, then, according to part 2 of Article 299 of the Criminal Code of the Russian Federation, the offender shall be sentenced to up to 10 years behind bars.
A new crime component is being added to the Article: Illegal Initiation of a Criminal Case committed in order to hinder the business activity or due to a vested or other personal interest, resulting in termination of the business activity or major losses. This would also be punishable with deprivation of freedom for a term of up to 10 years.
The preliminary investigation of criminal cases initiated under Article 169 of the Criminal Code of the Russian Federation (Obstruction of Legal Business or Other Activity) – currently performed by the police – would be transferred to the Investigative Committee of the Russian Federation (ICR).
Article 299 (Knowingly Bringing an Innocent Person to Criminal Liability) has been incorporated into the Criminal Code of the Russian Federation more than 15 years ago – but the number of enforcement officers sentenced under it is very small: it is too difficult to prove that the criminal case had been knowingly initiated against an innocent person.
For example, operatives of a watchdog authority arrive to an enterprise with a legitimate audit; they are meticulous about every comma in the contracts, they summon the management for endless talks, etc. As a result, the time is running out, the work is paralyzed, the partners refuse to sign new contracts – and the business is ruined. The competitors – who had ordered this audit – are triumphant. But how can the businessman prove that the material damage had been inflicted to him on purpose?
According to Boris Titov, the Commissioner for Entrepreneurs' Rights, in 2015, law enforcement authorities had identified some 255 economic offences and initiated over 234 thousand criminal cases. But out of that amount, only 35 thousand cases have been transferred to courts. In fact, 199 thousand businessmen had been harassed by the law enforcement operatives with a sole purpose to seize their business, or a part of it, for personal gain or for their superiors.
FSB General and attempts to wrest business away
There are numerous examples of pressure put by law enforcement authorities on businessmen. For instance, Pravda URFO information portal has published a statement by Mikhail Yurevich, the ex-Governor of the Chelyabinsk Region, who claims that Igor Akhrimeev, the Head of the Federal Security Service (FSB) Directorate in the Chelyabinsk Region, is trying to seize the business from his family.
According to Mikhail Yurevich, the productive assets had been attacked first – apparently, because it is easier for watchdog and controlling authorities to put pressure on those.
Igor Akhrimeev, Head of the FSB Directorate for the Chelyabinsk Region
“For example, my family has a business, and they are now trying to wrest it away. It is difficult to prove this, but there are lots of indirect indicators. Everybody is afraid to talk. The atmosphere of fear is very strong in the Chelyabinsk Region. My personal opinion is that this is all because of Akhrimeev. Many people of the region had addressed myself asking: What could be done? Nothing! Because there is no structure to bring the complaint to. All [law enforcement operatives] arrive decorated and demonstrate that nothing could be done. Initially, they put pressure on you and then ask: “Don’t you want to sell the business? No?” – And the pressure is resumed. It is very difficult to prove who stands behind these actions because all the audits are being performed by third parties,” – Mikhail Yurevich has complained.
Before coming to the politics, the ex-Governor was a major entrepreneur in the Urals. Later his assets have been redistributed within his family, which is involved into many large-scale business projects implemented in the Chelyabinsk region.
Rumors about the upcoming resignation of Igor Akhrimeev are based not only on the above-mentioned statement by the ex-Governor, but also on a number of other accusations against the high-ranked enforcement officer. It was noted that the Head of the Regional FSB Directorate had, in fact, been pursuing repressions against many prominent businessmen of the Chelyabinsk region. The following local entrepreneurs have sustained various losses due to his actions: Sergey Vainshtein, Alexey Krikun, Konstantin Strukov, Oleg Kolesnikov, Oleg Grachev, Konstantin Tsybko, Nikolai Sandakov, Igor Altushkin and other businessmen.
Police major and two construction companies
A recent example of prosecution of a law enforcement officer for illegal pressure on business is a criminal case initiated in the beginning of December 2016 against Ivan Balantsov, the Head of the Department for Economic Security and Combatting the Corruption of the Inter-Municipal Department of Internal Affairs of the Ministry of Internal Affairs (MIA) of the Russian Federation in the Zarechny District of the Sverdlovsk Region.
According to Interfax-Russia, on March 10, 2016, the Police Major
had seized financial and economic documentation of two companies: EcoStroy Limited Liability Company and Novy Gorod (New City) construction company. Without any legal grounds, Balantsov had been keeping the documents up until October 3, 2016 in his office in the police headquarters of the town of Zarechny.
Ivan Balantsov, Head of the Department for Economic Security and Combatting the Corruption of the Inter-Municipal Department of Internal Affairs for the Zarechny District
Ivan Kochubei, the Director of EcoStroy Limited Liability Company, had repeatedly asked the police officer to return the papers, but Balantsov responded that the documents had allegedly been sent for an expert assessment – which, in fact, had never been ordered. Due to the seizure of the financial and economic documentation, operations of the two legal entities had been on hold for more than 6 months. As a result, both construction companies have sustained significant losses, their business reputation was compromised.
Having no other choice, in July 2016, businessman Ivan Kochubei has submitted a complaint to the Prosecutor’s Office. A criminal case has been initiated against the police officer under Article 169 of the Criminal Code of the Russian Federation (obstruction of legal business or other activity).
Valery Gorelykh, the Head of the Press Service of the Russian MIA General Administration in the Sverdlovsk Region, has noted that the policeman, whose duty was to combat such offences, had been dismissed from the MIA, and currently major Ivan Balantsov is under home arrest, while his direct superior had been brought to strict disciplinary liability.
Prosecutor harasses with audits
The prosecution authorities also follow the general trend. For instance, Mikhail Fedorovsky, the Prosecutor of the Town of Mednogorsk of the Orenburg Region, harasses businesses with endless audits. He signs several documents at once and puts the same outgoing number on those – which is a gross violation of the procedural code. Documents received from the Prosecutor’s Office of the Town of Mednogorsk are a direct proof of this wrongdoing.
The four documents signed by Senior Counselor of Justice Mikhail Fedorovsky have identical outgoing numbers; three of those are notifications of various audits. In other words, three audits performed by the Prosecutor of Mednogorsk would be mentioned in the reports as one audit. The arbitrary numbering of outgoing documents raises questions with regards to the prosecution officer: a person whose duty is to observe the compliance with the order violates the service procedures himself.
Mikhail Fedorovsky, the Prosecutor of Mednogorsk
On May 4, 2016, a document with the outgoing number 7-22-2016 had been sent to Andrei Anosov, the Director of NVK (Our Plumbing Company) Limited Liability Company. It was a notification of an upcoming audit of the compliance with the legislation regulating the transportation of passengers and luggage by light taxis with regards to the pre-trip medical check of drivers and technical inspection of vehicles.
On June 10, 2016, Andrei Anosov, the Director of NVK Limited Liability Company, has received a summons to the Prosecutor’s Office with the same number: 7-22-2016.
On September 14 and 19, 2016, the businessman has received two more notifications of upcoming prosecutor’s audits with the same number – which has become his true nightmare.
Alcohol business and career of the Head of the MIA General Administration
Sometimes, enforcement officers harass businesses not for profit, but for career advancements. For instance, Sergey Solodovnikov, the Head of the Russian MIA General Administration in the Samara Region, has declared a real war against businessmen selling alcohol.
Announcements about newly-identified violations of the trade legislation are being posted on the official web site of the Russian MIA General Administration for the Samara Region almost on the daily basis. Sometimes, the police perform raids in stores and bars, involving representatives of the public and press.
Businessmen selling alcohol in Tolyatti and in the Samara region in general are very unhappy with the actions of the local police. Producers and dealers of draught beer complain on the police abuse. But they fear the enforcement structures and express their complaints to the media only on condition of anonymity.
For example, TLTgorod informational portal has published an opinion of entrepreneurs involved into the beer business with regards to the actions of the police. The businessmen, who were unwilling to disclose their names, stated that under the guise of a noble cause – struggle against the demon alcohol – the management of the General Administration in the Samara Region is systematically and steadily pressurizing the businesses, in fact, blocking the work of outlets.
“The actions of the police harassing the local beer business should be checked for compliance with the law. In the past, checks had been performed following complaints from citizens. Now the police omit this step and check the businesses indiscriminately – either with or without a reason. And this happens in Tolyatti much more frequently than in Samara. But how legitimate are such checks? What would the Prosecutor’s Office say in this regard?” – a Tolyatti businessman resented.
According to the entrepreneurs, the police officers have virtually turned against them. For instance, if minor violations related to the price tags or way-bills are found in a store, all the merchandise is being seized.
The businessmen believe that the reasons behind such tough actions of the police are career aspirations of Sergey Solodovnikov, the Head of the Russian MIA General Administration in the Samara Region. They have heard that the general hopes to be promoted to a high position in the Federal Ministry and tries to create an impressive service record for himself, including successful struggle against alcoholization of the population.
Sergey Solodovnikov, the Head of the Russian MIA General Administration in the Samara Region
The representatives of the beer business believe, however, that blocking under various pretexts the work of legal outlets selling high-quality alcohol causes more harm than good. Because the people would have to buy low-quality spirits from dubious sellers.
Billionaires also cry
This year, the Russian Forbes has produced a list of richest domestic businessmen who had been prosecuted criminally. The methodology used by the Forbes analysts allowed to match two important parameters: the wealth and the level of deprivation of freedom.
Leaving alone the defendants in the YUKOS case due to the number of years that have passed since then, the richest person pressurized by law enforcement authorities is Vladimir Yevtushenkov, the owner of Sistema Joint Stock Financial Corporation. When a criminal case was initiated against him, Forbes had estimated his fortune at $9 billion. Gleb Fetisov, a former owner of Moi Bank, is the leader by the second parameter: he had spent 1.5 year in a pretrial detention facility – unlike Yevtushenkov, who had only spent 3 months under home arrest.
Billionaire Dmitry Kamenshik is also on this list. He was suspected of security relaxation in Domodedovo International Airport resulting in a terrorist attack that had killed dozens of people.
The criminal prosecution has become a popular way to resolve economic disputes between the business and the authorities – and between different businesses as well: instead of going to the Court of Arbitration, influential entrepreneurs use enforcement structures against their opponents.
Would enforcement authorities stop harassing businesses after the introduction of tougher penalties for such offences?
Police officers took Kristina Morozova to a police station to check her identity, where she ended up getting a closed craniocerebral injury, minor cerebral contusion, fissure fracture of her cheekbone, fracture of her left sphenoid bone, and large leg bruise.
Viktor Trutnev, ex-Head of the Moscow Criminal Investigation Department, has finished his career ‘in style’ – he went to jail. The Moscow Garrison Military Court has recently detained the retired general for the duration of the investigation. The former police commander is accused of mediation in bribery and bribe extortion. Trutnev was turned in by his former accomplices – FSB officers trying to extort 3 million rubles ($52.3 thousand) from the Director of Snegirev Research Technological Institute in exchange for covering up violations identified at the enterprise.