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Protection of owners and top managers from criminal prosecution

War affects all spheres of society without exception. And when circumstances change, changes in legislation are inevitable. Over the past six months, the legislator has repeatedly made changes to the criminal process and the criminal law.

Changes are also taking place in the work of business, controlling and law enforcement agencies. As for law enforcement officers, their priorities are outlined by the heads of relevant bodies. At least I have read and seen quite voluminous interviews of the head of the Bureau of Economic Security and the Prosecutor General, which make it possible to understand the focus of the work of law enforcement and anti-corruption bodies.

Read also:  How to cancel the seizure of bank accounts in criminal proceedings?

The picture can also be seen in detail, based on the current requests of business clients regarding regular requests from law enforcement officers, questions during interrogations, temporary access to documents and searches.

What are the law enforcement officers actively investigating and looking for now, what are the actual risks for top managers?

Criminal proceedings regarding the financing of terrorism 

He plays a leading role in the investigation Bureau of Economic Security. Potential suspects are top business managers who are directly or indirectly, or not at all, connected to the Russian Federation.

BEB often announces the next seizure of assets of business connected with the Russian Federation. The announcements refer to the financing of terrorism. However, if you analyze the published arrest warrants in the register of court decisions, all such proceedings are open under Article 212 of the Criminal Code - tax evasion. At the same time, the justifications are usually not supported by evidence, at least the courts do not refer to such evidence in their decisions.

Courts, in the vast majority, satisfy the petitions of law enforcement officers, and the appellate courts uphold the decisions of the courts of the first instance. If the ultimate beneficiary is the Russian Federation, its natural or legal entities, then there are no questions regarding the correctness of the arrests.

But the main risks in such situations is to get the label of a business that finances terrorism, if this is not true and if there were no direct or indirect connections with the Russian Federation. The law enforcement officers can play on this, and we understand that such accusations are followed by the seizure of assets in actual proceedings, searches in the offices and residences of top managers, blocking of accounts, interrogations of the company's management. Such situations may also arise, for example, if the company's counterparty has ties to the Russian Federation, or if a legal entity has no ties to the Russian Federation, but has business relations with such companies.

In this case, you need to understand that the main burden of proof of non-connection with the Russian Federation or with companies that could work with them falls on the company's management. The main work of protection is together with the top managers, we will gather an evidence base that confirms the company's legal work, the absence of any ties to the Russian Federation, and the transparency of work for regulatory bodies.

As before, mostly criminal proceedings are factual, and it will be necessary to prove the absence of terrorist financing during interrogations. During the interrogation, you need to provide the collected evidence to support your position.

To protect business and top managers from such risks, it is necessary to carefully check counterparties and their connections.

Read also:  Trainings for companies. How to protect yourself during a search

Criminal proceedings against companies participating in public procurement

He plays a leading role in the investigation National Police of Ukraine, NABU and BEB. Potential suspects are 1) top business managers whose companies participate in public procurement, 2) heads of customer companies, and 3) persons responsible for procurement. This category was active until February 24, 2022, but now it has received its specificity.

On February 28, 2022, the Cabinet of Ministers adopted Resolution No. 169 "Some issues of defense and public procurement of goods, works and services under martial law", which made it possible for customers to conduct procurement procedures/simplified procurement without complying with the conditions defined by the Law of Ukraine "On Public Procurement" by concluding a direct contract with the supplier.

In addition, the Decree allows not to include purchases in the annual plan, not to publish the report on the purchase, the contract, as well as all annexes and changes to it, until the termination or cancellation of martial law. After termination or cancellation, documents and reports must be published within 70 days. The disclosure requirement does not apply to contracts that contain restricted information.

Taking this into account, law enforcement officers direct their attention to customers and suppliers, and open proceedings according to Article 191 of the Criminal Code - appropriation, waste of property or possession of it by abuse of official position. This line corresponds to the general message of the heads of law enforcement agencies about the need to fill the budget.

In actual proceedings, law enforcement officers seize assets, search the offices and residences of top managers, block accounts, interrogate company management, persons responsible for procurement, and management of procurement customers. As usual, they look for notoriously unfavorable conditions for the customer, the connection of the winner with the customer, "kickbacks", overpricing, etc.

In such a case, law enforcement officers need to prove that the procurement procedure is transparent and excludes any corruption component. For this protection has 1) to confirm that the supply of goods and services took place at market prices; 2) justify the legality of the procedure, if necessary, explain the entire procurement procedure to the investigator and show its compliance with the regulations, prescribed in the Law of Ukraine "On Public Procurement" and Resolution No. 169 "Some issues of defense and public procurement of goods, works and services under martial law" dated February 28, 2022.

If the law enforcement officers have assumptions about a corrupt procurement component, it is necessary to study the basis of such assumptions and refute them, if possible, not only with testimony, but also with documents.

Since criminal proceedings are factual, the defense's position will be proven during the interrogation. During the interrogation, you need to provide the collected evidence to support your position.

Therefore, the main risks for owners and top managers are now actual criminal proceedings regarding the financing of terrorism and regarding companies that participate in public procurement. In times of war, law enforcement officers often first take preventive measures to freeze assets and then gather evidence. Therefore, the task of the defense in such cases is to independently collect the evidence base and provide it to law enforcement officers and courts. This will help to quickly refute potential suspicions in criminal proceedings.  

Author of the article: Dmytro Nikiforov. The article was published in the edition of Lawyer and Law for September 22, 2022


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