In a Word

Illegal Immigration

Jan 26, 2012:

Vladimir Putin has suggested sending to jail those who hire illegal immigrants or lodge them in flophouses. The Prime Minister also wants to ban entry to Russia for five to ten years to those who were deported from the country for violating immigration laws.

‘It is proposed to close the entry to Russia for a period of five to ten years or, perhaps, for a longer period to those who were caught in repeated breach of immigration laws or deported by a court’s order’, the RIA Novosti news agency quoted Putin as saying.

The Prime Minister has asked the Federal Migration Service to develop criteria to test the knowledge of Russian language and make a list of 100 books that every immigrant must read.

Too Many Judges

Jan 26, 2012:

Anton Ivanov, the Chairman of the Supreme Commercial Court, plans to cut the number of judges, so that he would be able to increase wages to the rest. First, however, the caseload must be reduced. ‘We need to face the truth’, he said, ‘there will be no additional injections into the court system and we need to develop in another direction, to reduce the number of cases and, consequently, to reduce the number of judges.’

He mentioned four ways to move on: a mandatory pre-trial appeal of decisions of administrative bodies, encouraging mediation and out-of-court settlements, giving more power to the court clerks and further computerization.

Tapping Judges

Jan 26, 2012:

The Chairman of the Supreme Commercial Court Anton Ivanov has suggested that commercial courts have an own security unit. It would collect intelligence about judges, identify conflicts of interest and fight corruption within the judiciary. He wouldn't even object to telephone tapping, said Anton Ivanov. ‘If there was such a service,’ said the head of Russian commercial courts, ‘a judge would think twice before agreeing to meet with a lawyer [outside the court premises]’.

He also suggested that every contact of a party to a case with a judge must be registered. Anton Ivanov admitted that attempts to exert pressure on judges take place, especially from the law enforcement agencies.

Russia Joins the OECD Anti-Bribery Convention

Jan 26, 2012:

Russia is joining the OECD Anti-Bribery Convention. The law to this effect has been approved by the Upper Chamber of the Russian Parliament.

According to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, a member state must ensure, obviously, that it is a crime to give or offer bribes to foreign officials. Those who pay kickbacks, therefore, can be prosecuted back at home as well as in the country where the bribe taker lives.

Since making grease payments to foreigners has been a criminal offence in Russia from May 2011, the country already complies with the convention.

Interim Measures in Arbitration

Jan 26, 2012:

The State Duma has approved in the first reading the draft law amending the Federal Law ‘On International Commercial Arbitration’. The law is to bring interim measures into the sphere of international arbitration.

The importance of these measures cannot be underrated since they seek to prevent the dissipation of assets and to preserve evidence during dispute settlements.

We wrote about the draft law here.

Tax Deferment Agreements

Jan 25, 2012:

The State Duma has passed in the first reading the draft law extending the tax rights of the regional authorities. They will be able to decide on the terms of tax deferment agreements.

As the law stands, businesses can enter special arrangements and pay corporate tax in instalments - that is to receive an ‘investment tax credit’. The agreement is made with the regional offices of the Federal Tax Service or the Ministry of Finance. A tax credit can be given for up to five years at 0.5 to 0.75 the Central Bank’s base rate.

Few qualify for the privilege. These are suppliers to the Armed Forces, companies 'making special contributions to the development of the region', ‘innovative companies’ and those who invest in the creation of objects with a high degree of energy efficiency.

Despite the fact that the law on deferred tax payments has been in existence for years, it does not actually work. The reason, probably, is that the exact criteria are somewhat ambiguous and taxmen, fearing accusations of favouritism and corruption, do not grant tax credits at all.

This may change with the adoption of this law. Regions will be able to add their own criteria for the investment tax credit and decide which companies can qualify. At the moment they have this right in respect of local taxes.

The draft law gives wide powers to regional authorities, including the right to grant the investment tax credit for any period of time, even indefinitely, and at any rate, even interest free.

Violations During the Parliamentary Elections

Jan 25, 2012:

Russian courts received over 2,000 applications regarding violations during the parliamentary campaign and the election day, the Central Election Commission Deputy Chairman Stanislav Vavilov said. ‘As of January 20, investigators have opened 31 criminal cases. The courts have received 2,072 applications,’ said Vavilov.

Widespread claims of election rigging have triggered numerous rallies in more than 80 cities across Russia. The Moscow gathering attracted tens of thousand people making it the largest such event since the 1990s. Participants called for new elections and the firing of Central Election Commission head Vladimir Churov.

Arm's Length Transactions

Jan 25, 2012:

The Ministry of Finance has issued a clarification on taxation of transactions with related parties. The ministry, in particular, has indicated that any revenues that could have been obtained by one of the parties to such transaction, but hasn’t been obtained, should be taken into consideration for income tax purposes. This applies, for example, to interest-free loans or guarantees.

Public Procurement

Jan 25, 2012:

The Ministry of Economic Development intends to change the law ‘On the Federal Contract System’ so that companies which sell goods or services to the governments, state or municipal agencies will be required to disclose their beneficiaries.

For contracts over certain amount, 'suppliers will be required to disclose information on its beneficiaries,’ said Deputy Minister Mikhail Oseevsky. He stressed that the ministry is going to pursue this development.

Sergey Magnitsky

Jan 25, 2012:

A probe into the case of two jail officers possibly involved in the death of Hermitage Capital lawyer Sergey Magnitsky has been completed. The prison doctor Larisa Litvinova and her chief Dmitry Kratov have been charged with causing death by negligence and malpractice.

According to investigators, the doctor ignored Magnitsky’s repeated complaints about his health, refused to conduct diagnostics and failed to prescribe the necessary treatment. Kratov failed to ensure proper supervision of medical personnel and also ignored the patient’s complaints. As a result, Sergey Magnitsky died of acute heart failure.

The investigators also stared a separate investigation to determine whether the conditions in which Magnitsky was kept in detention can be considered torture.

The investigators are going to further explore the materials collected by the Presidential Council for Civil Society and Human Rights. In December 2011, the Council announced that ‘there is evidence of misconduct against Magnitsky’.

In particular, the names of police officers Oleg Silchenko and Alexei Kuznetsov investigating the case against Magnitsky were mentioned. Then, the Investigation Department of the Russian Interior Ministry had to acknowledge that the lawyer was held in handcuffs and had multiple injuries. The investigators, however, did not confirm the beatings with batons.

Sergey Magnitsky was arrested in November 2008 and died in a pretrial detention centre. The 37-year-old had accused tax and police officials of carrying out a tax scam that netted them $230 million.