FIA Official Letter: Sanctioning System Reform

Wednesday 13 December, 2017
r-o-m-a-n-o-v-m-d-8

No. 026

Date: December 13, 2017

To whom it may concern:

Dear colleagues, representatives of the business community, civil society, state-owned institutions, citizens,

Foreign Investors Association, established in 2003 and which includes some of the largest foreign investment companies in the Republic of Moldova, actively promotes actions aimed at improving the investment climate. The Government and the Parliament have recently adopted a series of reforms of the regulatory framework, in particular in the field of state control over the business activity and permissive acts.

However, these reforms have less covered an important segment of state interference in business activity – the law enforcement bodies. Today, the law enforcement bodies, in particular the Economic Fraud Investigation Division, subordinated to the Ministry of Internal Affairs, and the National Anticorruption Center, enjoy a range of competences such as to seize goods, documents, information systems, to arrest, make proposals to preventively arrest and others, which may lead to a stop in the business activity and laying off of employees. Abusive enactment of such measures may cause major losses to the entrepreneurs and may ultimately determine the decrease in the potential to attract investments to Moldova, as a result of the deteriorated image of the investment climate.

Therefore, the Association welcomes, in principle, the initiative of the Ministry of Justice to promote the draft law amending and supplementing certain legislative acts (Criminal Code, Criminal Procedure Code, Contravention Code and other legislative acts) aimed at improving the investment climate by introducing less repressive criminal norms related to economic crimes and establishing additional procedural safeguards against abuses by the law enforcement and control bodies.

The draft was discussed in several meetings organized by both the Ministry of Justice as well as the Economic Council to the Prime Minister. The last meeting, with the participation of the Prime Minister, was held on 08.12.2017. Given the publicly launched suspicions referring to the recent high profile banking fraud cases, the participants to that meeting wanted to make sure that all the persons involved in these cases would not also benefit from the provisions of this initiative.

We understand and commend the fact that the Ministry of Justice has accepted to make changes, which would guarantee that this does not happen, and proposed to organize an additional technical meeting to discuss further proposals from the stakeholders with the subsequent completion of the draft.

To follow up on the above, we believe it is opportune to expressly provide for in the draft the manner in which the acts of the control bodies can be challenged, which would avoid putting the individual/legal entity in the situation of having to tacitly accept the accusations which are brought up to them and accept the starting of the criminal case.

We also draw your attention to a series of other provisions, which raise concerns among the business community, such as for instance:

  • Applying criminal liability for not obtaining any permissive act required for business operation, including regardless of the damages caused;
  • Applying criminal liability for concluding any anticompetitive agreement which causes extremely large scale damages or which generate extremely high profits (in international practice, such liability applies only in case of cartels, not vertical agreements);
  • If, during a control, a control body identifies that a crime had been committed, it has to mention in its control act the exact amount of damages caused by the crime and the actions which must be undertaken to remedy the violation. The act of control cannot be challenged in the court and serves as evidence for the criminal prosecution. There is the risk that common procedural safeguards, applicable to collecting evidence in the course of a criminal prosecution (including against self-incrimination) be disregarded by the control body;
  • Applying criminal liability for doing business in violation of the intellectual property rights and not indicating the fiscal code in the documents or indicating it with mistakes (it is not clear how these two issues can be combined).

In relation to the above, we express our readiness to continue the consultations with the authorities of the Republic of Moldova for finalizing the respective draft, taking into account the relevant comments, and we kindly call upon the Government, the Parliament and the President of the Republic of Moldova to support the respective legal initiative of the Ministry of Justice, that will substantially improve the business and investment climate in the Republic of Moldova.

The Foreign Investors Association also urges the representatives of other business associations and business community to join this call.

With profound respect,

 Dr. Alexander Koss

Chairperson

Foreign Investors Association

Our Members


Foreign Investors Association (FIA) is a non-profit, apolitical association from the Republic of Moldova, founded in September 2003 by the largest companies with foreign capital in the country, covering the whole range of fields of activity of the economy — agriculture, industry, banking sector, telecommunications, distribution and audit.