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Doing business in Albania has undergone a short but interesting progression in the last fifteen years, first initiated by business regulatory reforms, then followed by a “gold rush” of foreign investors.

Although many articles have been published on the matter, white collar crime – crime committed by employees and/or executives of businesses – is a topic that deserves particular focus considering that the Albanian Government has publicly announced its intention to fight corruption and similar felonies in the public and private sector.

Albanian criminal legislation punishes corporate crimes committed by legal entities and individuals acting on their behalf, such as fraud, corruption, criminal acts related to bankruptcy, acts against the environment, and so on. White collar crime in Albania is punishable by fine, imprisonment, or both. Moreover, companies’ executives and even their agents may also incur criminal liability on behalf of the respective company.

Despite the fact that judicial practice is poor in white collar crime cases, there are a few interesting cases demonstrating a potential for greater enforcement of the legal framework by the competent authorities in the near future.

In a first case, the director of an Albanian company was convicted and sentenced to 3.6 years in prison for abuse of power after having withdrawn money from the company’s bank account, justifying it as an advance payment towards one of the company’s contractors. Following a shareholders’ audit, it was discovered that the contractor had not received any payment, and, therefore, the director was in illegal possession of the amounts withdrawn. Regarding the criminal offense, the court emphasized that abuse of power requires due consideration and punishment of the offenders in order to maintain proper operation of commercial companies.

The director signed a declaration acknowledging his debt to the company, and asked to be tried by a civil court. Nevertheless, the court declared that this acknowledgement would not absolve him from criminal liability. The court stated that the actions of the director were illegal and dangerous to the company, since they had infringed on the legal relationship established for the normal operation of companies and the safeguarding of their legitimate interests.

Moreover, the court also examined whether the act committed by the director might be classified as theft by abuse of power or theft by fraud, and therefore punished him more severely than they would for mere abuse of power violations. However, since there was no evidence proving that the defendant director had intended to steal from the company, the court took the most favorable legal interpretation for the defendant based on the principle of in dubio pro reo.

In a different case, the court found one of a company’s shareholders, a foreign individual, guilty of the criminal offense of “theft by abuse of power” and convicted him to 6.6 years of imprisonment. The decision was upheld by both the Court of Appeal and the Supreme Court. In this case, the holder of 4% of the share capital of a construction company was empowered, by virtue of a power of attorney issued by the company’s director, to execute contracts for the sale of apartments constructed by the company, as well as to collect and disburse the relevant sums in the company’s accounts. The company noticed that some buyers were in possession of payment receipts for payments they had made to the shareholder, acting on behalf of the company, while the accounting documents showed that the sums had never been disbursed into the company’s accounts. The power of attorney to the shareholder was revoked, but he still needed to cooperate with two other company representatives in order to resolve the problems he had created with the buyers. Even following the revocation, the shareholder in question not only failed to resolve the disputes but continued to engage in financial transactions – without any legal power – by collecting EUR 859,321 and another 4 million Albanian Leks in total payments from various buyers in the name of the company. The shareholder claimed that he had disbursed all received sums into the company’s accounts but did not possess any financial document to support his claim. In defining the type of punishment to impose, the court assessed the social threat of the felony and decided that imprisonment was appropriate, considering the negative financial and legal implications that the company had to suffer. 

In a last interesting case, the court held in its judgment that both a company and its director were criminally liable for fraud for collecting copyright royalties from the Albanian Copyright Office for various matters, in the process both acting without any license in the capacity of a copyright collection agency and failing to pay the owners for whom they were allegedly acting.

In order to prevent any similar crimes in the future, persons that have already been convicted shall not hold managing positions in any Albanian company for a period of 5 years, during which time they shall not have the right to exercise the duties of director, administrator, liquidator, undertaker, or any other duty related to the capacity of representative of a legal entity. Where the sentence is longer than 5 years of imprisonment, this restriction may be extended for a period of 5

By Besnik Duraj, Partner, Drakopoulos Law Firm

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Even though the concept of criminal liability for companies is relatively new in Latvia, the topic has become ever-more intensely discussed as several companies have already had coercive measures imposed, and there are several ongoing high-profile criminal cases that have caught the attention of the general public.

Pursuant to the Latvian Criminal Code, legal entities (both local and foreign) can be subject to criminal liability and have coercive measures imposed on them (which can be referred to as “quasi-criminal liability”).

The liability of companies is directly linked to criminal offenses committed by natural persons. In order to impose a coercive measure on a legal entity, a court must determine that the natural person has committed the crime: a) in the interests of a legal entity; b) for the benefit of the legal entity; or c) as a result of inadequate supervision or control by the entity. The coercive measures can be triggered both in the event of direct involvement of the legal entity (through its management/board of directors or other authorized persons) or by negligence of the company in failing to prevent the criminal offense committed in its interests or on its behalf.

Theoretically, coercive measures can be applied to legal entities for all types of criminal offenses set out in the Criminal Code that can be committed by a natural person. However, from a practical perspective coercive measures are more likely to be triggered if the committed criminal offense is connected to the business of the company – either committed in the interests of the company or where the company has failed to take appropriate and reasonable steps to prevent the criminal offense. The companies that participate in procurement procedures are especially exposed to liability risks. If a representative or authorized representative of the company has committed a white collar crime in relation to a procurement procedure – bribery, for instance – then there is a high risk that the liability of the legal entity will be triggered.

Coercive measures may be applied to legal entities by a court if a natural person has committed the crime acting individually or as a member of a collegial institution of the legal entity (such as a board of directors.) 

The Latvian Criminal Code provides for four types of coercive measures imposable on any legal entity: (a) Liquidation: a forced winding-up of operations of the legal entity. (b) Limitation of rights – an annulment of certain rights or permits, including the right to participate in public procurements; (c) Confiscation of property by the State; (d) Monetary levy: no less than ten and no more than 100,000 times the minimum monthly wage (so, at the moment, between EUR 3,600 and EUR 36 million).

Multiple coercive measures can be applied simultaneously, except for liquidation.

Compensation for damage is not considered a coercive measure. However, an obligation to compensate for the damage can still be imposed on the legal entity on the basis of general liability terms in addition to the coercive measures. 

Based on general practice, from the Criminal Law perspective, the following are likely to be considered as mitigating or even excluding factors for purposes of determining whether coercive measures should be applied to a legal entity in cases where a natural person has committed a crime which could be construed as having been carried out for the benefit of the legal entity or due to lack of its supervision and control: (i) Active and continuous implementation and maintenance of company guidelines, handbooks, and policies; (ii) Employee training; (iii) Active application of internal controls systems; (iv) Monitoring and supervision of responsible employees/managers/directors.

In evaluating whether adequate controls were in place, courts will take into account not only the formal existence of the controls, but also (and perhaps even more importantly), the extent and regularity of their application in practice.

Until the present almost all publicly-known cases that involved potential criminal liability of companies have been concluded by settlement in a pre-trial stage. Therefore, there is virtually no case law regarding various aspects of these legal instruments – though several criminal cases are currently in the process of court examination.

However, the increase of criminal cases involving potential imposition of coercive measures on legal entities suggests that the legal practice will develop considerably in the near future. 

Considering the scope of the potential negative legal consequences of coercive measures and the resulting damage to the reputation of companies on which they are levied, it is highly advisable for companies to think about these issues up front and to take preventive steps in order to mitigate potential risks in the future. 

By Daiga Zivtina, Partner, and, Andris Lazdins, Senior Associate, Lawin

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Among all white collar crimes the most difficult to fight is corruption, as it devours major components of social life.

In Ukraine, for instance, it has already taken over the Ukrainian healthcare and education systems and has already pervaded all state agencies. Consequently, corruption is the highest threat to the welfare of Ukraine. U.S. Business Council President Morgan Williams commented that “Kyiv is fighting two wars: one against Russian President Vladimir Putin and one against the old guard of corrupt bureaucrats who benefited from the previous system.”

Although the Ukrainian Parliament is working to refine Ukrainian anti-corruption legislation practically on a non-stop basis, the cornerstone for rooting out corruption is the full criminalization of bribery. If bribery was previously only in certain cases considered a criminal offense (for instance, bribery among public officials), now almost any act of active or passive bribery in the public or private sector can be considered a crime.

The implementation of the full criminalization concept has followed a long and complicated path, beginning with the ratification of the Council of Europe Civil Law Convention on Corruption in March 2005. Ukraine joined the Council of Europe’s Group of States against Corruption (“GRECO”) and had to adjust its laws according to its requirements. Consequently, in 2006 the development of new anti-corruption legislation started, and it is still going on.

New laws have resulted in prominent changes to the concepts of corruption and anti-corruption in Ukraine. Practically all actions connected with receiving an improper advantage were transformed into criminal offenses. For instance, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to Harmonize the National Legislation with the Standards of the Criminal Law Convention on Corruption” (the “Law on Harmonization”) excluded Articles 172-2 and 172-3 from the Code of Ukraine on Administrative Offenses, which established administrative liability for violation of restrictions related to abuse of office by offering or providing improper advantages. The Law on Harmonization refined and amended some articles of the Criminal Code of Ukraine in order to improve the statutory regime establishing criminal liability for bribery. Moreover, it provided amendments to Article 1 of the Law of Ukraine “On Grounds of Corruption Prevention and Counteraction,” so that now an improper advantage means funds or other property, advantages, privileges, services, or intangible assets promised, offered, provided, or received without lawful grounds. This definition provided grounds for the full criminalization of all actions connected with receiving an improper advantage. The term “improper advantage” has a very broad meaning, and covers both material and non-material values. Moreover, all acts of active and passive bribery are criminalized and the liability for corruption offenses in the public sector have become stricter.

In 2014 the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine to Implement the Action Plan for the European Union Liberalization of the Visa Regime for Ukraine, Regarding Liability of Legal Entities” (the “Law on Legal Entities”) entered into force. It established grounds for imposing criminal sanctions against legal entities by supplementing the Criminal Code of Ukraine with new articles concerning penalties against legal entities. As of September 1, 2014, criminal sanctions can be applied against any enterprise, agency, or organization except: state authorities, local self-governmental authorities, organizations established by them which are entirely financed from state or municipal budgets, compulsory social state insurance funds, the Deposit Guarantee Fund, and international organizations. Criminal sanctions can be applied to legal entities for crimes committed by authorized representatives on its behalf to obtain an improper advantage. If a crime has been committed, applicable sanctions can include a fine, seizure of property, or liquidation.

New anti-corruption legislation is only a first step in a long fight against corruption. Ukraine is fighting against the last 25 years of corruption, and there is still much to be done in this field.

By Oleksiy Didkovskiy, Managing Partner, Yaroslav Petrov, Counsel, and Oleksandr Yakovenko, Associate, Asters

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Montenegro, as a European state on the path to European Union (“EU”) accession, must fulfill a series of conditions and obligations before being granted EU membership. The fight against corruption and white collar crime in general is one of the most significant challenges faced by Montenegro and other countries of the Western Balkans in this regard.

Corruption is a complex social, economic, and philosophical phenomenon that slows economic development, contributes to governmental instability, and undermines democratic institutions. Combating corruption is extremely important for Montenegro, not only because of the country’s commitments towards the EU, but in order to uphold the rule of law and create an economically vibrant society that is attractive to domestic and foreign investments.

According to Transparency International’s figures from 2014, Montenegro ranks 76th out of 175 states in the Corruption Perception Index (42 out of 100 on a scale of 0 (highly corrupt) to 100 (not corrupt)). This ranking places Montenegro among countries with widespread corruption, manifested in the following forms: non-transparent privatizations, rigged public tenders, fraud, bribery, and other forms of abuse of power. The aforementioned results lead to the conclusion that previous anti-corruption activities and measures have not been effective in changing the culture of corruption that exists in the country.

This is mainly due to the fact that Montenegro has only partially completed its transition from a socialist planned economy to a free-market, capitalist-oriented economy. As a result, Montenegrin state institutions are still not sufficiently capable of creating and implementing an efficient system to fight corruption and to limit the impunity of state officials. Furthermore, corrupt behavior is encouraged by state bodies and institutions where employment continues to be based on political affiliation. This point was addressed in the European Commission’s report from October 2014 on Montenegro’s progress on the path towards EU accession.

Additionally, pursuant to a recent report of the Centre for Democratic Transition (the “Centre”), corruption in Montenegro is widespread – a conclusion based on the fact (among others) that until now there have been no prosecutions of “high level corruption” cases. The extent of corruption is equally prevalent on the national and local levels. However, the number of charges laid against public officials for corrupt behavior remains negligible. According to the Centre, in the second half of 2013 there were only 118 charges for corruption at the local level, 17 of which were filed in the nation’s capital, Podgorica. The only encouraging fact is that three high level corruption cases have been initiated against the former and current mayors of Budva and the mayor of Niksic.

In order to improve existing deficiencies in legislation and to have a stronger impact on the undesirable levels of corruption in the country, Montenegro adopted the Law on the Prevention of Corruption on December 9, 2014 (fittingly, the International Day against Corruption). This was the first in a series of systemic laws that Montenegro is obliged by the EU to introduce in order to provide a legal basis for the fight against corruption in the country. By the end of 2014, two additional laws were adopted: the Law on Financing of Political Parties and Electoral Campaigns, and the Law on Lobbying. Amendments to the Law on Prevention of Conflict of Interest and to the Law on Public Procurement were also passed, thus completing the legal framework necessary for combating white collar crime and corruption as one of its most dominant manifestation forms.

The Law on the Prevention of Corruption is particularly significant because it provides for the establishment of a special Agency for the Prevention of Corruption (the “Agency”) as well as comprehensive protection of “whistleblowers” – i.e., persons who report instances of corruption. This law provides that the Agency shall replace the largely ineffective Directorate for Anti-Corruption Initiative and the Commission for the Prevention of Conflict of Interest. Its main tasks are the prevention of conflicts of public and private interests and protection of persons who disclose the existence of alleged corruption. The Agency, as a central and independent body, is expected to become operational on January 1, 2016.

Although Montenegro is in the process of creating the institutions necessary to combat corruption, this alone is not enough to eliminate corrupt behavior. First and foremost, Montenegro must demon strate the political willingness to fight corruption through high level prosecutions of corrupt officials, serious investigations into corrupt behavior, and the adequate protection of whistleblowers. The Montenegrin judiciary must be viewed as acting independently in the course of such prosecutions, and conditions must be established to ensure the smooth functioning of newly created independent bodies.

It remains to be seen how the Law on the Prevention of Corruption and other legislation will be applied in practice, the range of their provisions, and whether awareness about the importance of fighting corruption will be raised in Montenegro. 

By Marjan Poljak, Partner, and Milica Filipovic, Associate, Karanovic & Nikolic

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

General 

American criminologist Edwin Sutherland, who coined the term “White Collar Crime,” defined it “approximately as a crime committed by a person of respectability and high social status in the course of his occupation.”

White collar crime has the same character in the Turkish criminal law system as well. These are crimes of an economic nature that are usually committed by people who have certain authority as part of their official duties and that involve the abuse of trust by such people. It is treated separately from other types of crimes, such as murder or theft. Well-educated white collar employees who are usually trustworthy persons face severe sanctions if they commit crimes, as the legal system aims to ensure that public order is not disrupted.

Most Frequent White Collar Crimes in Implementation of the Turkish Criminal Law

“Abuse of trust” and “fraud” are the most common white collar crimes in Turkey. 

“Abuse of trust,” which is regulated in paragraph 155/1 of the Turkish Criminal Code (TCC), involves the abuse of an asset that belongs to another person but whose possession is transferred to a third person for purpose of protection or use in a certain way. Abuse of trust in this context also includes the disposal of such asset outside the purpose of transfer of possession or denial of the existence of this transfer for personal interest or for the interest of a third person. This paragraph regulates the basic form of this crime and the respective punishment varies from six months to two years.

Where an individual perpetrates an abuse of trust through embezzlement of property that is entrusted to him or her or that is under his or her control due to responsibility arising from his or her office based on a professional, artisanship, trading, or service relation, the person involved in the act faces imprisonment from one to seven years and a punitive fine of up to three thousand days. The aforementioned crime is the aggravated form of abuse of trust, and thus is subject to a stricter penalty, as it stems from a professional, commercial, or service relationship.

The basic form of fraud is defined under paragraph 157 of the TCC as an act in which a person is deceived as a result of fraudulent acts and the perpetrator obtains benefit for himself or for a third person to the detriment of the deceived person or another person. The punishment for this form of fraud is imprisonment from one to five years and a punitive fine of up to five thousand days. 

In the event fraud is committed during commercial activities of a tradesman or company managers or other persons acting on behalf of a company, it constitutes the aggravated form of the crime. Aggravated fraud is regulated under the paragraph 158 of the TCC, and the punishment equals imprisonment from one to seven years and a punitive fine of up to three thousand days.

In practice such criminal actions of employees, managers, or third parties of a company are usually identified as a result of detailed compliance programs. Company officials’ use of company cars, cash, and similar benefits for their own personal interest is the most common form of abuse of trust. Although it is similar to abuse of trust in terms of its elements, the existence of fraud can only be discussed if there are fraudulent actions. 

Deferment of Announcement of the Judgment

Turkish criminal law includes a mechanism called deferment of announcement of the judgment that applies to penalties of imprisonment of less than two years, provided that certain additional conditions are met. The most important provision of this mechanism is that a conviction and sentence of imprisonment of less than two years is not announced for five years and is not registered in the relevant person’s judicial registry record.

Given the direct impact of white collar crimes on the reputation and profitability of a company as well on a company’s overseas operations, senior executives should do their best to ensure their companies comply with the legal rules of the country where they operate. 

By Murat Karkin, Co-Managing Partner, and Yasemin Antakyalioglu, Associate, YukselKarkinKucuk

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The 2008 financial crisis that sent the economy into a tailspin posed questions about effective investigation and prosecution of white collar crimes.

Social unrest called for more transparency and accountability from financial corporations. Still, the question remains whether governments have learned the lessons from the crisis and seen the social turmoil as an opportunity to close loopholes and flaws in legislation and invest in effective and objective investigation. 

Combating white collar crime first requires developing adequate social consciousness of the crime’s manifestations. This is especially difficult when a society has gotten into the habit of tolerating corruption, with no elaborated legal culture and no trust in the objective and independent functioning of the judicial system. The lack of an adequate and proactive civil reaction makes it easier for the state to close its eyes and neglect its regulatory functions, and makes it more susceptible to influence from parallel social structures (i.e., oligarchy). This vicious circle becomes thriving soil for corruption, bribery, and fraud.

At the beginning of the 1990s, the Bulgarian market was liberalized. But the regulatory framework was caught unprepared for the challenges of shady transitional times. In a legal vacuum and harsh economic conditions, petty white collar crimes proliferated in every corner,  ranging from small cash bribes to traffic police and customs officers, to tax and social security dodging, to corruption of government officials.

The transition period also polished a new oligarchical class. Its representatives became well educated, smart, and well connected. They enjoyed media silence and institutional comfort. On top of everything, they enjoyed staying above the law.

The behavior of foreign investors was another element affecting the Bulgarian context of white collar crimes throughout its conversion to a market economy. The “wicked” transition opened up opportunities for shady foreign investments. Even reputable foreign companies learned the name of the game and adapted to the local climate. This was especially common in cases where foreign investors wanted to avoid a heavily bureaucratic administration and an ineffective judicial system unable to guarantee investment protection. By sparing court costs and time, investors were often lured into fixing the problem by payment of a “small cash.” Thus, foreign investments also fed bribery and corruption on the local market.

Today, Bulgaria is still seeking to define the line between creative and aggressive entrepreneurial activity and fraud. Although the country is not starting from scratch in terms of legislation, it finds it difficult to implement adopted rules. Enforcement deficiencies have resulted from a lack of expertise and investment in the investigation departments. Poorly paid and trained investigators have been unable to resist corruption pressure. Another major issue is the objectivity of the judicial system, as nepotism and a lack of transparency are still major concerns in the magistrate selection procedures. Moreover, Bulgaria is still tackling the challenge of ensuring a professional and objective functioning of its regulatory oversight authorities. The latest 2014 crash of a major Bulgarian bank again raised questions about the credibility of financial oversight.

In Bulgaria, companies have faced two major manifestations of white collar crime: crimes committed within a company and those targeting a company from outside.

The first group has been more complex to tackle, as the company required pressure from the outside world for catalyzing investigations. The Bulgarian legislature might have had good intentions by allowing for the foundation of limited companies with capital of BGN 2 (approximately EUR 1). What was behind the BGN 2 is, however, questionable. Similar to tax preferences, this is another example of how financial incentives could drive laundered capitals. White collar crimes within the company especially raise a question about manager liability. In Bulgaria, corporate entities are not criminally liable. This provides a niche for managers to hide behind collective, and non-punitive, corporate responsibility. Although Bulgarian law generally provides for the criminal liability of managers, board members, and procurators, particularly for concealment or delay of insolvency, enforcement of this liability is practically at zero.

Investigating white collar crimes targeting a company from outside could be facilitated by the company itself, as it is easier to win management and employees over when they do not feel personally threatened by the investigation. Typical Bulgarian cases of targeting a company are fraud through suppliers or embezzlement, particularly in car leasing. On the crossroad between East and West, Bulgaria especially faces the challenge of combating illegal organized channels of embezzled vehicles going to the Middle East and West Europe. The organizers of these illegal channels also profit by the cracks in the system such as corruption within police and customs.

Indeed, no other crimes can slip through the cracks in the system as well as white collar crimes. The Bulgarian legislature has recently adopted amendments to the Criminal Code allegedly closing loopholes in social security. The amendments thus foresee up to 5 years in prison and penalty for evasion of social security contributions. Still, the question is not just to produce laws for small-fry cases but effectively to enforce the adopted rules through accountable and independent authorities. In Bulgaria, no higher-ups have ever been convicted of corruption.

By Desislava Todorova, Senior Associate and Head of the Bulgarian White Collar Crime Practice Group, CMS Reich-Rohrwig Hainz

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Increased crime in the IT field has resulted in legislative proposals for the entry into force of new Criminal Codes in Romania, which would regulate the investigative techniques involving computer system searches.

Accordingly, in response to the increased frequency of cyber criminality, the legislative commissions in charge with drafting the legislative proposals for the new Criminal Code and Criminal Procedure Code have given shape to the means and investigative techniques related to computer system searches, empowering investigators to collect relevant evidence in the pursuit of criminals.

Background of the Regulation

Initially regulated by Law no.161/2003, the computer system search appeared a perfect investigative tool for combatting cyber criminality: a new and overwhelming phenomenon for both judges and prosecutors, due to the complexity of the cases and a poor understanding of technical conditions.

The regulation stated that whenever a computer system or a data storage system search was necessary for the collection of evidence, the competent authority could order a search. 

Furthermore, the computer system search seemed indispensable for the investigation of offenses committed in violation of Law no. 8/1996 on copyright and the related rights, which were perpetrated through a computerized system or constituting a violation of software copyrights.

The Computer System Search under current Criminal Legislation

The Criminal Procedure Code that came into force on February 15, 2014, represents an effective framework for the computer system search, drawing a distinction between that above-mentioned investigative technique and a classic home search.

Most significantly the legislator has established the basis for issuing a computer system search warrant: the necessity of investigating a computer system that holds or may hold evidence for a cyber crime. The judge of rights and liberties or the court itself are the entitled authorities to issue such a warrant – which is distinct from and often proceeded by a traditional home search warrant. 

Thus, investigators holding a home search warrant may seal computer systems found at premises that fall under the scope of that warrant, in order to prevent data loss, damages or alterations, but in the absence of a separate computer system search warrant they are not entitled to perform investigative procedures over those computers or data storage systems.

As a guarantee of the right of defense, the investigated entity may request a copy of the sealed data from the investigators, whenever it is necessary for the preparation of its defense of for continuing its current business activity.

The lines draw by the legislator are clear: a computer system search warrant is strictly limited to a specific computer system that has been sealed and lifted by the investigators in order to have its datum content analyzed. Also, whenever the investigator discovers during the computer system search that datum are hosted by another computer or storage system, the initial warrant shall be amended by the judge of rights and liberties or by the court to cover and allow a more extensive search.

The Search Warrant and the Restrictions of Rights and Liberties

In other words, a home search warrant cannot cover or constitute an authorization for any infringement into a computer system. To the contrary, a home warrant only justifies the investigation of a domicile, and it exclusively relates to the necessity of collecting physical evidence, rather than allowing any investigation or search into, or change of, the contents of computer or electronic devices.

The main reason for the restrictive interpretation of the criminal legislator is evidently triggered by the necessity to protect and recognize the supremacy of other two important conventional rights that have been guaranteed, stated, and restated in European Court of Human Rights case law (respectively the privacy of the “domicile” and the right to private life). 

Following this line of argument, a computer system search shall be justified and motivated by distinct circumstances of fact, separate from those which led to the issuance of the initial home search warrant, and must rely on the necessity of collecting data and analyzing the contents of the computer system.

Technical Requirements and Guidelines

When dealing with a computer system search, the investigation shall be conducted under the same conditions as the home search, yet under the restrictions dictated by the nature of the investigation. 

Although the regulation now in force does not set extensive guidelines for the authorities conducting a computer system search, data should be carefully collected and analyzed by IT specialists and computer systems should be verified with special software and antivirus programs, in order to prevent data loss or permanent damage to the investigation. 

From this perspective, the investigators should avoid the indications of the suspect, present at the moment of the search (for instance, should avoid a potential indication to shut down an electronic system, as it might trigger a delete mechanism), and should seal and lift the computer system when special analysis is required.

Conclusions

Seen as a modern and extremely useful means of investigation, the computer system search represents the efforts of the criminal legislator to craft an adequate framework for investigative techniques to cope with the development of white collar crimes and cyber criminality. 

“What is the robbing of a bank compared to the founding of a bank?” B. Brecht

By Emil Bivolaru, Partner and Cristian Militaru, Senior Associate, Nestor Nestor Diculescu Kingston Petersen

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

White collar crime (“WCC”) is usually contrasted to street crime, which constitutes the subject matter of traditional criminal law and has offered the bulk of the cases introduced into the criminal justice system.

As things have changed over the last three decades, the white collar criminal has made his appearance in criminal law theory and practice. The noticeable delay is due to the fact that the political and economic parameters of WCC have prevailed over its criminal facets: a mixture of black economies, grey zones, interweaved interests, and political arrangements fostered uncertainty over whether WCC is really crime and endowed WC criminals with impunity. 

Although there is an open debate on the most appropriate way to deal with WCC, and more specifically about whether it should entail imprisonment or merely the confiscation of the proceeds from the criminal economic activity (possibly accompanied by a lenient prison sentence – usually not served), the Greek legislator has enacted a series of special laws aiming at the effective prosecution of WCC. Two elements are most significant in explaining this development: first, the increasing social demand to properly address “crimes in the suites,” fostered by the financial crisis and its devastating social consequences; and second, the transposition of the relevant European legislative acts into the Greek legal system. 

Of course, this enactment of a series of special criminal laws does not mean that previous generations had no weapons to combat WCC: offences against property, like fraud, misappropriation, embezzlement, etc. are addressed in the 23rd and 24th chapters of the special part of the Greek Criminal Code, entailing imprisonment, the duration of which depends on the amount of the damage caused. What is more, Law 1608/1950, dealing with the abuse of public and banking funds, was adopted sixty-five years ago to increase the protection of the State’s economic interests. The severity of the sentence threatened (life imprisonment) as well as the obscurity of its provisions has led to conflicting verdicts, resulting in the expression of serious reservations with respect to its compatibility with the Principle of Analogy and the Greek Constitution. Although the vehement criticism formulated against this Law both by academics and by practitioners gradually brought about a cautious interpretation of its provisions by the courts, its abolition remains a constant demand.

Among the latest legal instruments enacted to enrich the criminal arsenal against WCC, the following are especially worth mentioning: Law 3691/2008 and Laws 3943/2011 and 4022/2011, functioning at substantial and procedural levels, respectively. In particular, Law 3691/2008 (amended by Law 3932/2011) resulted from the transposition of Directive 2005/60/EC of the European Parliament and the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing into the Greek legal order. The main purpose of this Law is to protect the integrity, proper functioning, reputation, and stability of the financial system by preventing massive flows of dirty money deriving from criminal activity. Laws 3943/2011 and 4022/2011 introduced a special procedure for the prosecution, investigation, and trial of financial crimes, different from the procedure applicable to other crimes. In short, the first of the two laws introduced the institution of the Prosecutor of Financial Crimes, while the second introduced the institution providing for the Prosecutor of Crimes of Corruption. The Prosecutor of Financial Crimes is competent to prosecute financial crimes perpetrated against the Greek State or the European Union, while the Prosecutor of Crimes of Corruption is competent to prosecute acts of corruption perpetrated by politicians or civil servants as well as crimes of great public interest. It goes without saying that both laws serve a common purpose: the speedy and affective prosecution of crimes committed in the intersection of economic and political power. 

Two high-profile cases are expected to start within 2015: the so-called “Siemens bribery scandal” and the “Proton Bank loan scandal.” Within the context of the former, sixty four Greek and German nationals have been indicted to stand trial for acts of bribery and money laundering that allegedly took place during the course of corporate dealings from 1992 to 2006 between Siemens AG and Hellenic Telecommunications, causing approximately EUR 2 billion in damages to the Greek State. As concerns the second scandal, the former manager of Proton Bank and forty two other individuals are facing charges of consecutive perpetration of felonious fraud, misappropriation, embezzlement, and money laundering in connection with the approval of bad loans worth EUR 701 million between 2010 and 2011. 

These two scandals bring together all the distinctive elements of a typical WCC: complex economic deals, political arrangements concluded in the background, enormous financial gains, and golden boys. Of course, it remains to be seen whether the allegations in these two cases will be considered “business as usual” by the Greek courts, or whether they will be classified as WCC. 

By Petros Machas, Managing Partner, and Athanasios Chouliaras, Senior Associate, Machas & Partners Law Firm

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Current Regulation – Rules Just on Paper

Generally speaking, in Slovakia only a natural person can be held liable for committing a crime. Nevertheless, as of 2010, a piece of national legislation regulates the so-called indirect criminal liability of corporations.

The idea behind this legislation was that while legal entities would remain protected from liability, they could be sanctioned for the actions of their directors or employees. Those sanctions even include the possibility of having all assets confiscated. The idea of this law was that in order to be able to impose sanctions upon the legal entity, it would not be necessary to determine who exactly within the company was responsible for the punishable action; instead, it would be sufficient to determine with certainty that it was someone from the company. In addition, if the person who actually committed the crime was identified, he/she too could face criminal charges.

And How It Is In Practice

So, those are the rules on paper – but in practice things are completely different. In the four years since this law came into force, no sanctions have been imposed on a legal entity in Slovakia. And this status quo will likely remain unchanged.

There are various reasons for this. First of all, prosecution of an economic crime (which is where indirect criminal liability of legal entities is most likely for to apply) is usually stopped for lack of evidence even before reaching a court hearing. And when prosecutions are not stopped, sanctions on legal entities are typically not imposed for a range of other reasons, for instance when a legal entity is just a shell company without any real assets. According to experts, other reasons include the dearth of experts in economic crime within the authorities responsible for prosecution, and the reluctance of judges to impose appropriate sanctions, – a new mechanism to which the judges are not accustomed. Thus, white collar crime is mostly going unpunished in Slovakia. 

Proposed Legislation

In light of the ineffectiveness of current legislation and the resulting pressure on Slovakia from international organizations (above all, the OECD), state authorities have prepared a bill for a completely new act on direct corporate criminal liability. 

According to a publicly available draft of this act, legal entities can be held directly criminally liable for the commission of certain crimes – including economic crimes and all forms of corruption. The crime will be deemed committed by a legal entity if it is committed in the entity’s interest, on its behalf, within its activity, or through the entity, and is committed by stipulated persons, including (mainly) members of a legal entity’s bodies, members of its management, or employees. 

Potential sanctions applicable to legal entities include fines, being barred from bidding in public tenders or applying for subsidies, having all or some assets confiscated, being prohibited from certain activities, or even being forced to wind-up completely. 

The new rules are scheduled to become effective on July 1, 2015. However, discussions on the bill are currently stalled, since many legal entities are expressing concerns regarding the expected and potential effects of the legislation. Thus, the timeline for the bill’s adoption is currently unclear. Nevertheless, it is highly probable that the bill will be adopted, albeit with some further changes. 

Will It Change Anything?

That is a tricky question. Whether the new regulation will lead to any “real” sanctions being imposed on legal entities will depend heavily on the state authorities active in prosecuting such crimes and on the courts. Without effective application in practice, even the best-drafted legislation is useless. 

In the Czech Republic, where functioning legislation for imposing sanctions on legal entities has been in place since 2012, legal entities have been sanctioned for committing crimes. The reason for the different status in that neighboring country might lie in either better legislation (which already contemplates the direct criminal liability of legal entities) or the better application of the legislation in practice by the relevant authorities. Unfortunately, our bet is on the latter. 

In addition, as a concluding remark regarding the practical use of the new legislation, an important role may be played by another piece of recently-adopted Slovak legislation: the new regulation on whistleblowing in the workplace. This new act mainly contains rules focused on protecting employees who “blow the whistle” on white collar crimes (among others), but in addition it also provides for rules with respect to the internal handling of whistleblowing reports. 

By Sona Hekelova, Partner, and Michal Lucivjansky, Associate, Schoenherr

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The most typical white collar criminal offense in the Republic of Macedonia is the misuse of official position and authorization. This is also one of the most frequent white collar crimes as well.

The Criminal Code of the Republic of Macedonia defines the offense as the exploiting of an official position by an official, violating the boundaries of an official authorization, or non-performance of official duties with the purpose of acquiring some benefit on one’s own or another’s behalf or causing damage to others. 

Exploitation of an official position in the Republic of Macedonia occurs when an official has vast authority to appraise the fruitfulness of a single act and adopt concrete decisions but does not follow the interests of the company the official represents, instead executing his or her official duties for interests which are contrary to the service, with the purpose of acquiring benefit for himself/herself or someone else or causing damages to another.

Violating the boundaries of an official authorization consists of acts which are within the competence of some other official. The non-performance of official duties occurs in cases when an official has not acted in a way he or she was required or by what is called a formal non-performance of official duties. One must always call upon the appropriate Macedonian legislation and bylaws of the service when such misuse is identified, considering the description of the unlawful activities of the official person. 

The Criminal Code prescribes relatively high punishments. Basic crimes are punished with monetary penalties or a jail sentence of at least six months to three years, while acquisitions of larger benefit can be punished with imprisonment of five years, whereas individuals convicted of offenses involving significant property benefit or who caused significant damage to others or to the state budget’s assets can be sentenced to between three and 15 years. Depending on whether larger or significant property benefit is acquired, or bigger or significant damage is caused, the person causing such misuse shall also be Republic of Macedonia at the time when the criminal offense was caused. Obviously, Macedonian courts have a strict punishment policy towards indictees for misuse of official position and authorization.

According to available statistics, most people charged with misuse of official position or authorization live in urban areas, are aged from 46 to 65, are citizens of the Republic of Macedonia, and are first-time offenders of this criminal statute.

Although it is one of the most frequent white collar crimes, the percentage of convictions due to misuse of official position and authorization is slightly lower than it is for individuals charged with other crimes, and convictions are slightly lower than convictions for other white collar crimes. Of 254 persons indicted for this crime in 2012, only 103 have been convicted.

Very often the indictments for misuse of official position and authorization do not follow properly from or make clear the distinction between the three main statutory subtypes of this offense. These shortcomings in the indictments result in trial court rulings that are ambiguous and contradictory. This represents a significant infringement of the provisions of the Criminal Procedure Code, which ought to be ex officio assessed by the higher appellate courts. Usually, such infringements lead to the quashing of first instance decisions and referral of the cases back to the trial courts, thus causing delays in the administration of justice. 

Information found on the websites of certain Macedonian state organs shows an increase in other white collar crimes in the last few years in the Republic of Macedonia, such as computer fraud and credit and debit card fraud.

Due to this increase, specialized departments within the Macedonian Ministry of Interior have been formed, investigating potential offenses and instigating indictments for these new white collar crimes.

The current forms of white collar crime that have gained ground in the last few years are those involving responsible persons in trade companies in the Republic of Macedonia, such as damaging creditors or putting other creditors in favorable positions and intentionally causing bankruptcy. Individuals who perform such criminal offenses shall be sentenced to jail sentences of between six months and five years, and if the act caused significant property damage, it shall be punished with jail sentences of one to ten years.

The persons convicted of such criminal offenses are prohibited from founding or managing trade companies for the duration of the legal consequences that follow conviction.

By Olivera Grozdanovska, Partner, Cakmakova Advocates

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.