Preventing Misuse of Public Authority in the Corporate Sector
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Page | 2 PRECOP-RF Protection of the Rights of Entrepreneurs in the Russian Federation from Corrupt Practices Technical Paper: Comparative analysis on preventing misuse of public authority in the corporate sector Prepared by Valts Kalnins, Mjriana Visentin and Vsevolod Sazonov, Council of Europe experts ECCU-PRECOP-TP-1/2014 Page | 3 The PRECOP RF is funded through the Partnership for Modernisation, a jointly launched initiative by the EU and Russian authorities. One of the priority areas of this initiative is the effective functioning of the judiciary and strengthening of the fight against corruption. For further information please contact: Disclaimer: This technical report has been commissioned Economic Crime & Cooperation Unit (ECCU) by the PRECOP RF project team and was Action against Crime Department prepared by a team of experts. The views Directorate General of Human Rights and Rule of expressed herein are those of the experts and Law-DG I, Council of Europe can in no way be taken to reflect the official opinion of the European Union and/or of the Tel: +33-3-9021-4550 Council of Europe. Fax: +33-3-9021-5650 e-mail: [email protected] www.coe.int/corruption www.coe.int/precop Page | 4 Abbreviations AML/CFT Anti-Money Laundering/ Combating the Financing of Terrorism BGH The Federal Court of Justice (Germany) [Bundesgerichtshof] CCL Corporate Criminal Liability CE Corporate Entity CC Criminal Code (also the Competition Commission of the United Kingdom in Box 17) CCL Corporate Criminal Liability CCP Code of Criminal Procedure CEO Chief Executive Officer CoE Council of Europe CPA Code of Administrative Proceedings CPIA Criminal Procedure Investigation Act CPS Crown Prosecution Service EAT Employment Appeal Tribunal (United Kingdom) EBRD European Bank for Reconstruction and Development ECtHR European Court of Human Rights FAS Federal Arbitration Courts (Russian Federation) or the Federal Antimonopoly Service (Russian Federation) FATF Financial Action Task Force FSS Federal Security Service (Russian Federation) G8 Group of eight (leading industrialised countries) GAV Custody [Garde à vue] GEIU Grey Economy Information Unit (Finland) GmbH Limited Liability Company – Germany [Gesellschaft mit beschränkter Haftung] GmbHG Law on Limited Liability Companies – Germany [Gesetz betreffend die Gesellschaften mit beschränkter Haftung] HM RC Her Majesty’s Revenue & Customs IPRED Intellectual Property Rights Enforcement Directive LLC Limited Liability Company OECD Organisation for Economic Cooperation and Development OFT Office of Fair Trading (United Kingdom) OIA Operational Investigative Activity OIM Operational Investigative Measures SRO Self-Regulatory Organisation (of insolvency practitioners) StGB German - Criminal Code [Strafgesetzbuch] STS Decision of the Supreme Court of Spain [Sentencia del Tribunal Supremo] TFEU Treaty on the Functioning of the European Union TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights UN United Nations UNCAC United Nations Convention against Corruption UNCITRAL United Nations Commission on International Trade Law UNODC United Nations Office on Drugs and Crime ZPO Code of Civil Procedure – Germany [Zivilprocessordnung] Page | 5 Table of Content 1 EXECUTIVE SUMMARY ......................................................................................................................... 8 2 INTRODUCTION ..................................................................................................................................... 11 3 CRIMINAL PROCEDURE ...................................................................................................................... 13 3.1 MISUSE IN CRIMINAL INVESTIGATIONS ................................................................................................ 13 3.1.1 The Russian Federation .................................................................................................................. 14 3.1.2 International standards ................................................................................................................... 18 3.1.3 Remedies against misuse in Council of Europe member states ...................................................... 19 3.1.4 Conclusions..................................................................................................................................... 39 3.2 SEARCH, ARREST OF PROPERTY, IDENTIFICATION, FREEZING, MANAGEMENT AND CONFISCATION OF THE PROCEEDS OF CRIME .......................................................................................................................................... 40 3.2.1 The Russian Federation .................................................................................................................. 40 3.2.2 International standards and good practices: identification, freezing, management and confiscation of the proceeds of crime ............................................................................................................................... 42 3.2.3 Conclusions..................................................................................................................................... 56 3.3 PRECLUSIVE EFFECT OF JUDICIAL DECISIONS IN THE CRIMINAL FIELD, INCRIMINATING STATEMENTS BY CO-ACCUSED ..................................................................................................................................................... 57 3.3.1 The Russian Federation .................................................................................................................. 57 3.3.2 International standards: ECHR ...................................................................................................... 58 3.3.3 Council of Europe member states ................................................................................................... 60 3.3.4 Conclusions..................................................................................................................................... 65 3.4 CORPORATE LIABILITY FOR CRIMINAL OFFENCES ................................................................................ 65 3.4.1 The Russian Federation .................................................................................................................. 66 3.4.2 International standards ................................................................................................................... 66 3.4.3 Council of Europe member states ................................................................................................... 67 3.4.4 Conclusions..................................................................................................................................... 72 3.5 LIABILITY FOR CORRUPTION IN THE PRIVATE SECTOR .......................................................................... 73 3.5.1 The Russian Federation .................................................................................................................. 73 3.5.2 International standards ................................................................................................................... 74 3.5.3 Council of Europe member states ................................................................................................... 75 3.5.4 Conclusions..................................................................................................................................... 79 3.6 OVERUSE AND MISUSE OF THE CRIMINAL LAW IN THE REGULATION OF BUSINESS ACTIVITY ................ 79 3.6.1 Fraud regulation ............................................................................................................................. 81 3.6.2 Misuse of the criminal law in tax disputes ...................................................................................... 93 3.6.3 Conclusions..................................................................................................................................... 97 4 CIVIL PROCEDURE ................................................................................................................................ 99 4.1 PROCEDURAL ABUSE ............................................................................................................................ 99 4.1.1 The Russian Federation .................................................................................................................. 99 4.1.2 Council of Europe member states: Procedural abuses, procedural crimes and vexatious litigants 100 4.1.3 Conclusions................................................................................................................................... 107 4.2 INTERLOCUTORY INJUNCTIONS .......................................................................................................... 107 4.2.1 The Russian Federation ................................................................................................................ 108 4.2.2 International standards ................................................................................................................. 108 4.2.3 Other international standards and the Council of Europe member states .................................... 108 4.2.4 Conclusions................................................................................................................................... 112 4.3 PRECLUSIVE EFFECT OF JUDICIAL DECISIONS IN CIVIL AND COMMERCIAL CASES ............................... 113 4.3.1 The Russian Federation ...............................................................................................................