Franz Kafka, “The Trial”
According to the Serbian Criminal Code acquisition of benefit for a physical or legal entity by abuse office is a punishable offence. However, company owners and management are being charged with abuse of office for making commercial decisions within their competence and authority, even when all company shareholders and other stakeholders are in agreement with those decisions.
Illegal gains or damages to parties in a transaction are often said to be the differences between achieved transaction prices and supposed “fair“ prices arbitrarily determined by the Prosecutor, as in the case of Ribarsko gazdinstvo. Cases are not uncommon where the Prosecutor labels the profit made in a legal transaction as “illegal gain“, or a loss as “illegal damages”. In some cases, such as Hotel Prag, there is no qualification of damages, but only an unfounded assertion that business decisions are somehow criminal, which suffices for the initiation of criminal proceedings.
A legal environment in which entrepreneurs and private company management have to fear prosecution for legitimate business decisions is a huge detriment to entrepreneurial activity. In recent years the number of politically instigated prosecutions for abuse of office in private companies has risen significantly. Many of these cases have been coupled with unjustified prolonged pre-trial detention as an added means of pressure.
This is why in 2012 the European Parliament called for a revision of the Serbian Criminal Code and the termination of the application of article 359 to private companies. Serbian legal experts have been pointing out for years that changes to the vague wording article 359 are necessary to reduce opportunity for misuse.
Despite the outgoing Serbian Government’s proclaimed intent to amend the provision in line with EU standards, in 2012 it submitted a Draft Law on Amendments and Additions to the Criminal Code which contains no such changes. Serbian officials have falsely advertised the proposal as approved by EU and Council of Europe institutions. All other pending bills including this one were pulled from parliamentary procedure for review by the new Serbian government at the end of July 2012.
(1) An official or responsible who by abuse of office or authority, by exceeding the limits of his official authority or by dereliction of duty acquires for himself or another physical or legal entity any benefit, or causes damages to a third party or seriously violates the rights of another, shall be punished by imprisonment of six months to five years.
(2) If the commission of the offence specified in paragraph 1 of this Article results inacquiring material gain exceeding four hundred and fifty thousand dinars [note: 4,500 euro], the offender shall be punished by imprisonment of one to eight years.
(3) If the value of acquired material gain exceeds one million five hundred thousand dinars [note: 15,000 euro], the offender shall be punished by imprisonment of two to twelve years.
Note: Inclusion of the word “responsible” in paragraph 1 makes persecution of private company management possible.
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