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Supreme Court Clarifies Definition of Entrepreneurial Activities

Source: (author), 11/06/10

· Legal Defence

The Supreme Court has provided a clarification of a key clause in Article 108 of the Code of Criminal Procedure, which prohibits the detention of individuals who have committed economic crimes in the course of enterpreneurial activities.

As reported in, citing Kommersant, courts have until now interpreted the term “enterpreneurial activities” in various ways, often turning down requests by the accused to have detention replaced by other forms of pre-trial restriction.

The Supreme Court has ruled that, in taking such a decision, judges must be guided by the Civil Code's definition of enterpreneurship. Chairman of the Supreme Court Vyacheslav Lebedev stated that, since only two months have passed following the adoption of the “presidential” amendments, experience of their application is limited. During this period Russian courts received 37 requests to detain individuals accused or suspected of “economic” crimes.

Of these requests 16 were granted and 21 rejected. In five cases detention orders have been overturned by higher courts. Twenty-nine of 44 prosecution requests to prolong detention have been granted. Seven of these detention orders were subsequently overturned by appeal courts. However, according to Lebedev, it is largely the prosecution itself that is to blame for the failure to apply the amendments to Article 108 of the Code of Criminal Procedure. He said that in 80 percent of cases where the prosecution requested the detention of individuals accused (for example) of fraud, investigators simply did not refer to the new amendments to the Code of Criminal Procedure and failed to point out that the offences related to enterpreneurial activities.

“If an enterpreneur who has registered a business for the purpose of making profits has committed one of the offences set out by the Criminal Code, the new rules of selecting the form of pre-trial restriction apply”, Lebedev stated. At the same time, he refused to comment on the application of the amendments to Article 108 of the Code of Criminal Procedure to specific criminal cases, in particular to the case of the former head of YUKOS Mikhail Khodorkovsky and the former CEO of the MENATEP Group Platon Lebedev, citing “legal ethics”. However, he observed that in applying the amended law one should be “guided by the meaning of the law and not by revolutionary hatred of the rich by the poor.”

On 14 May Moscow’s Khamovniky District Court approved the request of the Prosecutor General to prolong the period of detention for Khodorkovsky and Lebedev, both charged under articles 160 and 174 of the Criminal Code, which do not specify detention. Khodorkovsky responded by going on hunger strike, and as a result both Vyacheslav Lebedev and President Medvedev learned how the new provisions of the Code of Criminal Procedure are being applied in practice. Nevertheless, on 22 May Moscow City Court upheld the decision of Khamovniky District Court, stating in particular that the alleged offences “do not constitute enterpreneurial activity in the meaning foreseen by the legislators in Article 108 of the Code of Criminal Procedure”.

News emerged on Thursday 10 June of the arrest of another enterpreneur accused of fraud. Moscow’s Tver District Court authorized the detention of businessman Yury Fink, whom the same court had freed on 13 April, on condition of travel restrictions, as a result of the amendments to the Code of Criminal Procedure that had been introduced on President Medvedev's initiative. On 22 May Fink recorded a video appeal to the President in which he described the raid on his company that had been carried out with the assistance of the security forces. “I am appealing to the President in the hope that this lawlessness will be brought to an end and that a full and proper investigation will be instigated”, he said in his appeal.