Businessmen should take care in advance to prevent deprivation of property ahead of timerecommends AVER LEХ partner Vitaliy Serdiuk
— Initiatives aimed at extending the array of tools available at the hands of the special deprivation institution provokes the most active discussion in the context of declared legislative intentions. How justified is this legislative assumption, and what risks does it bear?
— The latest policy-making tendencies are truly frightening, especially the initiatives mentioned. The passing of each of the offered draft laws, regardless of the version – that of people’s deputies (draft No. 3025) or the government (draft No. 2541а) – will lead to elimination of the institution of private property in Ukraine as such. It will neutralize the principles of good faith transactions, observance of ownership rights and guaranteeing the impossibility of illegal deprivation of property.
Thus, the draft developers propose to give the state a lawful opportunity to deprive the right to property based solely on “the reasonable assumption of a law-enforcement authority of property belonging to the chief executive officials of the previous political team.” But experience leads one to conclude that the property of “representatives of previous authorities” is unlikely to be subject to deprivation pursuant to this law. In the course of two years of active investigation this property could not even be found due both to its absence and obvious flaws in the work of the investigative authorities in forming the proper body of evidence.
I can assume that the good intentions of legislators and loud political slogans merely hide an attempt to create a “legal” scheme for depriving common citizens or ruining their business.
— What exactly is the method of its work?
— Implementation of the scheme is as follows: defining a business/property object → establishing an owner → linking an owner to the current cases against the “criminal regime” or initiating a separate proceeding regarding him in the Unified Register of Pre-Trial Investigations → preparing and submitting the relevant application to the investigative judge via the Prosecutor-General (based on the appeal of the Deputy Prosecutor-General, Minister of Internal Affairs and Justice, head of the Security Service of Ukraine) → obtaining a decision from the investigative judge (with immediate effect and being an enforcement document) → conduct “correct” assessment and quick sale of the property for an underestimated (lower) price to one’s dummy company.
The most cynical element of the scheme seems to be the absence of the mandatory presence of the owner or his representative — their “absence shall not prevent consideration of the special deprivation issue”!
It is not commonly spoken, but the special deprivation institute was already introduced to the Criminal Code (CC) of Ukraine back in 2014 and can be used on the basis of a court decision in all bribe-related crimes, not only “political ones.”
My experience of law leads me to conclude that one should begin hoping for the worst. As the military saying goes: forearmed is forewarned! Businessmen should take care in advance to prevent deprivation of lawfully acquired property.
— Which other risks can businessmen face?
— Businessmen should pay attention to another new legal institution — that of criminal responsibility of legal entities under Section 14-1 of the CC of Ukraine. Pursuant to legislative innovations, the following enterprises may become potential “offenders”: those which are declared to be suspicious under such offenses as, for instance, legitimization of income, engagement in terrorist activities, bribing an official or a provider of public services (for instance, a notary or an auditor), offering improper advantage, improper influence, etc.
They should pay special attention to the provision of Article 96-3 of the CC of Ukraine implying that the liability of an enterprise shall arise if his authorized person did not provide for corruption-countering measures, which led to the committing of offenses. Thus, in order to bring an enterprise to responsibility, with a fine according to the sanction totaling UAH 1,250,000 or liquidation, with or without deprivation, the investigative authorities shall only announce suspicion in any of the above offenses to the employee and “find a lead” between him or her and the circumstances for acquiring the illegal profit. It is not necessary to prove the employee’s guilt.
It is a very dangerous method for effecting pressure on business and settlement of corporate conflicts, particularly taking into account that the announcement of suspicion shall not be appealed against and shall be the mere assumption of an investigator.
One of the latest corporate conflicts proved that the regional Prosecutor’s Office of the city of Kyiv only had to obtain the evidence of the other party’s attorney, who allegedly heard in the lobby that the opponent arranged the bribing of the judge on the phone in order to bring to prosecute the corporate counsel and the head of his department under the offense of bribing the judges in the case... It resulted in the detention of the counsel, attempt to throw out the case, mass searches and interrogation…
— Is there a method to minimize the risks?
— Yes, there is. The proprietors and management need to take care about the introduction of a complex anti-corruption local regulation system and the policies of offense prevention under Article 96-3 of the CC of Ukraine into the company’s internal control document right now.
— Another innovation in the Criminal Procedural Code (CPC) of Ukraine raised a lot of concern in its time — the special legal procedure of “in absentia”. What did the practice of its implementation show us?
— It is another convenient method of settling corporate conflicts by facilitating the abuse of power of investigators and establishing punishment. A notorious case showed that the policy input led to the establishment of the extremely negative practice of prosecution in absentia. In fact, in order to commence the procedure the authorities had to merely qualify the actions of a person suspected under the relevant “in absentia” articles in the announcement of suspicion.
Additionally, the requirements of the CPC of Ukraine regarding the necessity of the person being put on an international wanted list (Interpol) and fleeing from investigation prior to the beginning of the procedure in absentia were ignored by the court considering the issue. It was a public trial and, I believe, a lot of investigators took note of this practice. The conclusions are obvious: by the end of a vacation or long business trip you can return to Ukraine to be immediately handcuffed.
— How effectively are such progressive establishments of the CPC of Ukraine as, for instance, the agreement establishment, actually used?
— Introduction of agreement establishment in criminal proceedings was meant to simplify and accelerate the procedure of pre-trial proceedings and court proceedings for separate categories of cases. Obviously, the implementation of this establishment had its yield: it began to be used by law-enforcement authorities for illegal, “artificial” making of a case to support the version of the prosecution. Thus, within the criminal proceedings under evasion of taxes and with the absence of the necessary case, the law-enforcement authorities resort to manipulation using pressure towards the managers of the counterparty companies. They cunningly conclude agreements on finding people guilty of false entrepreneurship.
The meaning of this “friendship” for the proceedings implies that, having approved the decision in court, they hold a serious prejudicial advantage and “conclusive evidence” of the fabulousness of all business transactions of this enterprise at hand, thus — a confirmation of willful evasion from the payment of taxes and forgery of counterparties.