General picture of economic crimes in Russia
The exact number of economic crimes and sentences for them is difficult to cite - figures vary from one (even official) source to another.
According to a report by the Russian Interior Ministry, only 105,480 economic crimes were detected in 2020. <...> In 2019, there were 317,627 crimes under "economic" articles in Russia - and this was 37% more than the year before. <...>
Chairman of Russia's Supreme Court Vyacheslav Lebedev said that 62% of defendants received sentences, with only 9% receiving actual imprisonment. But according to statistics from the Judicial Department, in the first half of 2020 alone, 4,143 businessmen received sentences. True, not all of them were sentenced under economic articles. <...>
The problem is which crimes are considered economic. The calculation is also complicated by the fact that in recent years the penalties for certain types of offenses have changed. What used to be an administrative responsibility is now a criminal offense. <...>
It is now possible to go to jail for:
- Production, purchase, storage, transportation or sale of goods and products without marking (Article 171.1 of the Criminal Code);
- Illegal retail sale of alcoholic and alcohol-containing food products (Article 171.4 of the Criminal Code);
- production, storage, transportation or sale of goods and products, performance of works or rendering of services not meeting the safety requirements (Article 238 of the Criminal Code).
The most popular "entrepreneurial" articles
Businessmen are most often prosecuted for fraud, tax evasion, illegal entrepreneurship and money laundering.
Article 159 of the Criminal Code "Fraud".
For entrepreneurs are relevant mainly the added in 2016 part 5 and part 6: "Fraud involving intentional failure to fulfill contractual obligations in the sphere of entrepreneurial activity" with significant damage and damage on a large scale. <...> The punishment - 6-10 years in prison. <...>
Article 199 of the Criminal Code ("Tax evasion".
Most often it is used to catch those who evade paying VAT and income tax. The standard scheme: the company creates an artificial document flow, overstates expenses and understates the profit by this amount, on which the tax is paid. The criminal case will be opened if the "savings" exceed 15 million rubles over three years. <...>
Article 210 of the Criminal Code "Organization of a criminal association (criminal organization) or participation in it (it)".
The most ambiguous article. Punishment can follow even if the person himself did not commit illegal actions, but the prosecution managed to prove that his company was established as a criminal association. This crime is considered to be especially grave, so convicts under this article could face a life sentence (for those who hold the highest position in the hierarchy). <...>
Many experts believe that there is no smoke without fire and it is impossible to bring against a crystal-clear entrepreneur neither Article 210, nor others.
How criminal prosecution of entrepreneurs affects their business
For Forbes businessmen who have been prosecuted, such stories have often ended with them fleeing the country. Less often - the termination of criminal prosecution, and for some - still a real sentence.
In general, about 70% of companies do not survive a criminal case: about 30% of them cease to exist, the other 40% are severely diminished, experts say. If a company is public, shareholders start to sell off assets at the first news of problems. <...>
Alexander Dmitriev, lawyer of Tax Compliance law firm:
"Of course, criminal prosecution of entrepreneurs has a negative impact on business. So, if the tax authority sends the materials of the audit to the Investigative Committee of the Russian Federation, the law enforcement agencies start their own activities: summoning witnesses, requesting documents, collecting evidence and other information. If there are grounds, they also arrest the property of the head and suspend the work of the company. At the same time, inquiries are also sent to counterparties about the company's activities, which means reputational risks, as many organizations will not want to maintain cooperation with a company that is related to the criminal case."
You can read the full article in the Company's Secret.