Chairman of the State Duma Committee on property Victor Pleskachevsky
Photo: Sergey Mikheev
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Punishment for False Bankruptcy
The Russian State Duma passed the third reading of amendments to the Criminal Code and Administrative Violations Code imposing responsibility for false or intentional bankruptcy. The act will be punishable by up to six years' prison. The codes had specified punishment for intentional bankruptcy only in cases of large losses, and the articles were poorly worded. Therefore, of 2000 cases that were investigated, only two or three cases made it to court. Intentional bankruptcy (creation of insolvency by the management or owner of an enterprise) will be punishable by fines 200,000 to 500,000 rubles or a prison term of up to six years. The maximum term had been three years. Fictitious bankruptcy (false declaration of bankruptcy for the non-payment of debts) will also be punishable by up to six years in prison or fines of 5000 to 10,000 rubles. Concealment of property, property right or documents containing information on the economic activities of a legal entity will be punishable by prison terms up to three years. Illegal interference with the activities of the arbitration management or temporary management by a credit organization will be punishable by a fine of up to 200,000 rubles or a prison term of up to three years. Failure to carry out the decisions of the arbitration or temporary management will be finable for sums between 2500 to 5000 rubles.
The current law on bankruptcy was passed in 2002. That law established a balance between debtors and creditors and ended the era of forced bankruptcy as a means of taking over an enterprise. The debtor participates in the bankruptcy process and can pay his debt in full or protest creditors' actions. Arbitration managers are appointed by an independent organization and are financially answerable for their actions. Loopholes were found in the law though that allowed businessmen and government officials to become rich. These included fictitious bankruptcies and concealment of financial information. In the state sector, state unitary enterprises ran up debts even if they were capable of paying them. Then the director of the enterprise found a buyer for it and lists him as a creditor. Then bankruptcy is begun, leading to a profitable situation for the director, the government official responsible for the enterprise and the buyer.
www.kommersant.com
All the Article in Russian as of Nov. 28, 2005
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