BGP Litigation attorney Georgy Baganov speaks with Vedomosti about the likelihood of criminal charges being filed when it is found that inflated prices have been used at controlled companies

"If the TASS source is correct, then a criminal case could be instituted on charges of tax evasion and fraud, says Georgy Baganov, an attorney at BGP Litigation. There is such a risk, because, according to the news agency's report, the ultimate parent company, Renova, admitted to overstating expenses in the sphere of state regulation of energy at companies under its control, he says. If that's the case, then theoretically everyone who was involved could end up under investigation, said the expert.

The penalties under the current version of the Russian Criminal Code range from up to six years' imprisonment for the first offence up to ten years for the second. But if the old version of the Civil Code was in effect when the offences were committed, the penalties could be less severe, says Baganov".

Expanding on those comments, Georgy Baganov noted that a change of management at the companies would not pose any barrier to the institution of criminal cases, either against persons who were involved in the unlawful schemes earlier or based on the fact itself, without specific suspects.
Criminal prosecution for non-payment of taxes can be terminated under certain circumstances, notes by the BGP Litigation attorney (e.g., compensation of damage, etc.). But Article 159(4) of the Russian Criminal Code, under which a criminal case may most likely be instituted, does not envisage any grounds for the termination of criminal prosecution.

Among the tax evasion schemes used by businesspeople are the widespread practices of understating the tax base or creating conditions for unjustified VAT refunds, says Georgy Baganov. In the worst-case scenario for persons under criminal investigation they, as a rule, are forced to cooperate with law-enforcement authorities abroad, where they seek shelter from arrest. In instances where it isn't possible to physically arrest a suspect, the courts can issue an arrest warrant in absentia. But many countries do not comply with Russian requests to hand over accused persons. The most difficult place to secure an extradition from in such cases is England.

If an extradition request is denied, says Georgy Baganov, criminal prosecution is suspended pending extradition of the accused. In such situations the statute of limitations stops running until the accused becomes available for the investigation.

The full article is available here: "ТАСС: по данным следствия, «Т плюс» и «Ренова» выводили деньги в офшоры".