LAW FIRM DIRECTORY

Criminal Law White-Collar Crimes

IGOR GLUSHKO,
PARTNER, ATTORNEY AT GOLAW, EXPLAINS

He was born in 1979, in Kamianets-Podilskyi. He received a master’s degree at the National University Odesa Law Academy. He has worked with GOLAW Law Firm since 2017. In 2018 he received the status of a partner and headed the criminal law and defense practice.

He is a recognized specialist in the defense of heads of business entities in criminal proceedings related to their official and/or commercial activities. He has considerable experience of supporting negotiation processes regarding the return of illegally withheld assets and documentation, representing the interests of companies in law-enforcement agencies and organizing the process of establishing the extent of damage caused by criminal offenses. He is an expert in the area of activities of state security agencies.

 

Tricky seizure

"The institute of seizure of the property of a legal entity aimed at protecting the rights of victims is often used to intimidate business or to avoid obligations"
IGOR GLUSHKO, PARTNER, ATTORNEY AT GOLAW, EXPLAINS

— What was 2018 like for your practice?

— The year was replete with a tough fight against unreasonable property seizures in criminal proceedings. We faced many, sometimes surprising, grounds for initiating and adopting  decisions on the seizure of property belonging to legal entities which was often contrary to common sense.

Article 2 of the current Criminal Procedure Code of Ukraine establishes the goal of criminal prosecution: to protect the rights, freedoms and legitimate interests of the participants in criminal proceedings, and sets the task for authorized persons: to act exclusively within the framework of due legal procedures and to prevent unreasonable procedural coercion.

Unfortunately, the aspirations of legislators are not always shared by those who apply these legal provisions on behalf of the state. Therefore, we have to note that the established prohibitions remain only on paper, and that the use of procedural tools takes place in "everyone is doing whatever he feels like" mode.

 

— What are the features of a legal entity's procedural status in criminal proceedings?

— A legal entity is itself not able to commit any crime. Behind all the actions of a legal entity there are always conscious or unconscious actions of individuals who, in one way or another, are associated with the legal entity and affect its activities. At the same time, individuals associated with a legal entity do not always commit unlawful acts directly related to the activities of this legal entity.

For example, the head of the company, in order to obtain the inheritance of a deceased relative forges their last will and testament. The estate desired by such a head does not contain the corporate rights of the legal entity with which the head is exclusively in labor relations. However, for the investigation, this is not a reason not to involve the legal entity in lengthy criminal and legal showdowns. And the property of the legal entity is seized under the guise of "ensuring the interests of criminal proceedings" and in an overwhelming mode of secrecy. In this case, as a rule, all property is seized, that is, together with the trading stock and monetary funds on the accounts, which actually blocks commercial activities. And, "by circumstance," it happens exactly at the time of payment of wages and statutory payments much needed by our state. At the same time, the prosecution has no interest whatsoever in the needs of the legal entity and the rights of its innocent employees. It seems that the investigation is guided by the interests of "victims" eager to grab their piece of inheritance from a relative.

 

— But seizures are made according to court orders. How do they evaluate the arguments of an investigation?

— Practice shows that for the seizure of a legal entity's property it is enough when the operating officer reports on information received by him/her from an undisclosed source, for example, on the company's involvement in terrorist financing. And even despite the fact that such information is, without any confirmation, nothing more than ordinary gossip, the courts accommodate the requests of law-enforcement authorities and contribute to the fight against a phantom crime.

In addition, in our country there is the perception that only cowards repay debts. Business owners who are up to their eyeballs in loans and do not want to part with the company's pledged property are no exception. In their rush not to return borrowed money, such owners generously form an extremely sophisticated court practice for seizing property in criminal proceedings.

 

— That is, "criminal seizure" is used as an argument, for example, against security?

— Owners do almost anything they can to avoid payment. For example, they perjure themselves in written statements. In such terms, to fulfill the goals, the lawyer (his/her position does not matter) loudly declares to law-enforcement authorities that the business owner (or head) categorically prohibits execution of the court ruling on transfer of the pledged property to the creditor. Such criminal acts can, according to the statement, cause substantial harm to the unsuspecting pledge holder. The latter shall be protected and it is necessary to urgently seize the property already seized in order to prevent the uncontrolled removal of seizure from this property by the negligent owner (or head).

As practice shows, law-enforcement officers respond very quickly to such reports of criminal incidents. Not later than on the day of appeal, the judicial seizure of pledged property is initiated, and the applicant is summoned as a victim. The courts satisfy such requests and refuse the pledge holder to lift seizure, arguing that the decision was made to protect the rights of the very pledge holder. And the fact that such seizure makes it impossible for the pledge holder to become a fully-fledged owner of the property and to use it does not cause cognitive dissonance.

— What other tricks do debtors use?

— Often, the owners change the individual characteristics of the collateral. Thus, a pledged administrative building on 34 Petliury Avenue in N city can easily become a non-pledged property on 34a Petliury Avenue. Sure enough, such allegedly new property is seized with the use of criminal proceedings (alien, old, unrelated to the activities of legal entity).

I also remember a case when, on the basis of a motion from the representative of a civil plaintiff in a case where nobody received notice of suspicion, an entire asset complex of an enterprise was seized. Unfortunately, when delivering such a ruling, the court did not bother to get acquainted with the provisions of the CPC and the Civil Procedure Code providing for the fact that there is no plaintiff without a defendant. But the worst thing was that the amount of the claim against the incognito was only UAH 100,000, while the value of the seized modern complex which operated successfully exceeded tens of millions.

 

— What do you advise should be done? How do you deal with such approaches to seizures?

— First of all, it is necessary to finally recognize that the unjustified seizure of property is a widespread pattern. I think that it is necessary to introduce tangible responsibility for those who initiate and authorize such unjustified seizures. Moreover, responsibility should be measured according to the amount of actual losses incurred due to the unjustified seizure, such as disruption to a business, fines paid to counterparties for untimely fulfillment of obligations, fines paid to the state for the late payment of taxes, as well as legal fees incurred.

Discipline will become harsher with the introduction of such responsibility. In our opinion, existing rules of procedure should not be refined, they already satisfy real needs in full. But they shall be strictly observed and, in each case, when applying for seizure or seizing property, the investigator, the prosecutor, and the court shall weigh up their actions, assessing their consistency with the provisions of Article 2 of the CPC: "Do my actions correspond to the tasks which the state has set before me?"