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President of Russia Dmitry Medvedev: Colleagues,

We are meeting in a somewhat unusual format today. We have here members of the business community on the one hand, and the senior officials of law enforcement agencies and the relevant control directorates of the Presidential Executive Office on the other.

Why have I brought you all together? I did this because I want to discuss with you today the issues of reducing the administrative burden on businesses, streamlining government functions in businesses oversight and supervision, and adjusting the laws and law enforcement practices in prosecution for economic crimes, and I decided it would be best for us to examine these matters together.

These are not new issues but are things we have already been dealing with for a while now. We cannot boast of great success yet, but it must be said that the laws have nonetheless changed in the right direction, though there is still much to be done.

In my Presidential Address [to the Federal Assembly] I spoke of the need for a reasonable criminal law policy. What do I mean by this? I mean a criminal law policy that both punishes and educates. We have already taken some steps in this direction. Last December, for example, we approved laws making it possible to pass sentences other than imprisonment on people convicted of minor offences.

In the case of tax crimes, there has been a six-fold increase in the amount of money that has to have been lost for the offence to qualify as a serious or a major tax crime. This has been done so that what qualifies as tax crimes more adequately reflect the real situation in economic life today. But even when we are dealing with acts that do qualify as tax crimes, under the new rules the suspects or accused in such cases cannot be placed in pre-trial detention. This is possible only in specific circumstances.

Such circumstances could arise, for example, in cases where suspects do not live in Russia, if their identity has not been established, or if they have violated restraints imposed earlier. But in the absence of justified grounds, under the new rules suspects are to be released on bail or after signing a pledge not to leave the country. This is already written in the law and it now has to become a part of judicial practice. I want to discuss this matter too.

Why did I decide to hold this meeting today? I think that we need to apply these new rules not only to the tax crimes I just mentioned, but also to other kinds of economic crimes. I am talking about crimes not involving violence of course, not crimes such as robbery and holdups – these are different cases. I am referring to offences connected to business activity, in particular, crimes that fall under the provisions of Chapter 22 of the Criminal Code and several articles contained in Chapter 21 of the Criminal Code.

Chapter 22 concerns crimes related to economic activity. I propose changing the law, in particular, setting quite a high amount for bail, 500,000 rubles [$17,000] minimum in serious cases, and 100,000 rubles minimum for minor offences.

I think that, when it comes to bail, we should permit the use of not just money but also real estate and securities too, shares and bonds, but only those with an actual value on the market. These measures should help to decriminalise our society, modernise the laws and develop a modern and effective penal system.

I want to stress that penalties for such [economic] offences should be ineludible, but at the same time commensurate with the acts committed, and that the restraints applied should not be a punishment in themselves.

I also note that our penal system still has a whole number of problems and I hope that my proposals will go at least some way towards preventing possibilities for corrupt law enforcement officials to use arrest and pre-trial imprisonment for raider purposes, because we all know that there are more than enough such cases. Corrupt officials get the word from an entrepreneur’s competitor, put the entrepreneur behind bars, and then let him out after he coughs up a certain sum. That’s how the scheme works. If you know such examples you can share them with us if you want, but the time has come to put an end to this anarchy. I will submit a draft law on this matter to the State Duma within the next few days.

Now I want to say a few words not on criminal law or the penal system, but on the overall situation regarding the administrative burden on small and medium-sized businesses. We had a serious discussion on this issue last year in Zvenigorod [on August 5, 2009 at a meeting on lowering administrative barriers for small and medium-sized businesses]. We went point by point through all the problems hampering businesses’ development and holding them back, and we looked at ways of dealing with the numerous problems related to superfluous and often excessive or corrupt audits and inspections. Instructions were given following that meeting.

I realise, of course, that the situation is still far from perfect and we still have a great many problems, but I would like to hear from the business representatives about what you think has and has not changed.

The fundamental purpose of these measures was to bring order to the system of state and municipal control and oversight and improve procedures for provision of fee-paying services, issuing permits and a few other areas. As I say, I want to hear firsthand about what is actually happening in practice.

I held a meeting on improving Russia’s investment climate [on February 2, 2010]. In fact, the criminal law and penitentiary system and the way the law enforcement agencies and judicial system operate are also all part of the investment climate. This is obvious, but it is also something that we need to discuss.

In the same line as the issues we are reviewing today, we are to draw up a draft federal law simplifying visa and immigration procedures for foreign citizens involved in implementation of investment, research and high-tech projects in Russia, because we have had a few problems in this area.

We will also improve and simplify customs rules for the export of non-commodities and the import of high-tech equipment. This is something we have already agreed on. I would like to hear from you what has been done so far.

The executive authorities, local self-government bodies, municipal services and grid operators have been instructed to strictly comply with the set procedures for connecting sites to infrastructure networks, and are not to take arbitrary action in this respect.

We are drafting a package of measures to encourage investment in modernisation and innovation projects. This is a separate big issue. Of course, providing breaks and incentives in today’s economic climate is a rather complex matter, but we must take action nevertheless. We must not make excuses, as is sometimes the case in the government, when we hear that such and such a measure cannot go ahead “because of the economic crisis”. We need to act.

In short, these are the issues I want to discuss with you today. This does not mean that you cannot raise other matters too, but I would like us to examine in detail these sadly notorious problems affecting business in our country.

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