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Protecting Business: Balancing Economic Development and Public Order

15 June 2022
Защита бизнеса: баланс между развитием экономики и обеспечением правопорядка

Key findings

We need to develop a responsible attitude towards business, the state, and society as a whole

"Why do businesses keep asking for protection? Why do they ask for measures to be taken regarding excessive unproductive administrative costs? I believe the answer lies in fact that we haven't managed to shape responsible attitudes towards SMEs, neither among the authorities or society as a whole. Feelings of envy towards these mostly successful people still reign… If we want to be successful, we need to establish a truly nationwide responsible attitude towards SMEs and support it with legislation," – Sergey Morozov, First Deputy Chairman of the Committee of the Russian State Duma on Regional Policy and Local Self-Government.


"Demonization issues are an important piece of the jigsaw. Perhaps sometimes it is a very effective way of forcing us to look at the problem. But still, I think that when talking about coercive pressure, we shouldn’t blame the Prosecutor's Office, the Ministry of Internal Affairs of the Russian Federation, the Investigative Committee, or the Federal Security Service, and accuse them of doing nothing. Believe me, they are doing a lot. 615 entrepreneurs have been prosecuted for economic crimes and handed a custodial sentence. This official figure from the Supreme Court of the Russian Federation confirms once again that the process is ongoing and it is not 1,000," – Elina Sidorenko, General Director, Platform for Working with Entrepreneurs’ Enquiries.




Businesses do not always feel supported by the government


"We handle inquiries and requests filed by entrepreneurs, so how are things looking now? We see that governments have taken steps to reduce administrative pressure; new legislation has been enacted, and we are monitoring its application. But in terms of coercive pressure, fears remain, as surveys show that a large number of inquiries, requests and complaints have been filed," – Dmitry Petrovichev, Vice President, All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses OPORA RUSSIA; Managing Director of the Bureau for the Protection of the Rights of Entrepreneurs and Investors.


"Today we are building trust between business and the executive authorities, but sometimes the federal authorities, including law enforcement agencies and the regulatory authorities, are generally disconnected from the executive branch of government in the regions. In some cases there are misunderstandings, but in others there is simply no dialogue between the institutions. This causes some cognitive dissonance on the part of entrepreneurs  they feel like they do and do not get support at the same time. This is a problem that we need to address right now," – Elina Sidorenko, General Director, Platform for Working with Entrepreneurs’ Enquiries.

"Businesses are afraid to approach the state authorities unless they really need to  as they say, it is cheaper to not do so. But it shouldn’t be like that. Things are changing now and we are creating transparent development institutions, and trying to make them fully accessible for business, for everyone without exception, no matter how big or small," Alexander Remiga, Acting First Deputy Governor of the Vladimir Region.


Entrepreneurs periodically resort to unfair competition and manipulate the law


"If a person wants to do business, they need to have a clear understanding of what is permissible by legislation: what can and cannot be done. Unfortunately, there are many businesspeople that do not have this understanding and believe that they are entitled to illegally exert pressure on their competitors, companies with which they previously had good relations but whose interests have now diverged. In my opinion, a businessperson should hire a good lawyer who will help them with this. And it is the role of the state, public institutions, and commissioners for entrepreneurs' rights to provide legal education and prevent this from happening," – Alexey Bessonov, Acting Rector of the Moscow Academy of the Investigative Committee of the Russian Federation.


"To develop successful relations, we must respect our partners and the work they do," – Elina Sidorenko, General Director, Platform for Working with Entrepreneurs' Enquiries.


Business inspections can be excessive and can harm entrepreneurs


Firstly, businesses are inspected only when we receive notification from the prosecutor's office. Secondly, licensed activities are subject to inspection. The current situation is probably optimal or near optimal for business.Unfortunately, businesses are in a state of constant stress from all the inspections, and that's not right. We need to do something about it at the regional and federal levels," – Alexander Remiga, Acting First Deputy Governor of the Vladimir Region.


"Businesses should have the right to make a mistake, and they should not be punished for this. But inspectors and supervisors should not have this right, and this should be prescribed in legislation," – Sergey Morozov, First Deputy Chairman of the Committee of the Russian State Duma on Regional Policy and Local Self-Government.




For business to develop, it needs to engage in open dialogue with the government


"Without open dialogue, the development of regions will be stymied and tax revenues will not increase. When we talk about investment projects on a regional or federal scale, from the outset issues related to administrative pressure and oversight often take third, if not fourth place, but sometimes situations arise when during the implementation process such issues arise at the very beginning. And then important questions are asked. We endeavour to stay a step of reforms carried out by regulatory authorities, as far as is allowed under our regional powers, and to build a dialogue of trust between the authorities and business," – Andrey Klychkov, Governor of the Orel Region.


"Unfortunately, the volume and proportion of federal regulatory authorities and the frequency of their inspections is decreasing at a sluggish pace. We now have an online working group where businesspeople can liaise with representatives of the prosecutor's office and territorial federal regulatory authorities. Today, in all industry groups of the Investment Council, at least 60% of businesses are involved in discussing these issues. These measures have helped us significantly improve the situation with regional supervision and administrative pressure. Our next job is to work just as closely with the federal inspectors," – Yulia Morozova, Deputy Prime Minister, Kamchatka Territory Government.


Knowledge will help inspectors and entrepreneurs to balance their interests


"I attach great importance to ensuring that future investigators develop the legal awareness and level of professionalism required to quickly gain an understanding of legal twists and turns. When a crime is reported, it has to be immediately dealt with. This is where both speed and knowledge are important," – Alexey Bessonov, Acting Rector of the Moscow Academy of the Investigative Committee of the Russian Federation.


"We tried to implement legal retraining at the MGIMO Department of Financial Economics. When a financier graduates, they know everything about finance, accounting, and building models, but have absolutely no idea how to apply these models in a legal way from the point of view of Russian law," – Artem Malgin, Vice Rector for Development, Head of the Rector's Office, MGIMO University.


The state is doing a lot to align the interests of businesspeople and the law


"In recent years the state and law enforcement bodies together with civil society have achieved a lot, implementing ambitious measures to protect bona fide entrepreneurs from unjustified pressure. Supervision and control over operational and procedural activities has been strengthened and legislation has been updated. The launch of a digital platform where entrepreneurs can exercise their rights has over the years been successful in terms of balancing the rights of entrepreneurs and the requirements of criminal procedure legislation.

During this time we together, dozens of meetings have been held covering more than 30 regions of the country. We take part in each of them, listen to what is said, and take the required measures. The Investigations Department has dealt with more than 500 inquiries and requests from businesspeople. The fact that the number of inquiries received, including on the platform, has dropped by almost 30% in the current year testifies to the effectiveness of our joint measures," – Danil Filippov, Deputy Head of the Investigative Department.