Vice Squad
Friday, March 07, 2008
Immoral transactions in Russia

I have recently come across a mention of an article in the Russian Civil Code that might not have been meant to address any vice problem, but it sure sounds like it should have been. This is Article 169 (in Russian) that says in its first sentence (in my translation) "A transaction, the goal of which is knowingly against the foundations of law or morality [emphasis added], is null and void." The Article then goes on to state that the punishment for such a transaction is forfeiture of the transacted amounts, although there are some nuances, depending on whether both parties were aware of the nature of the transaction or only one of the parties. As we all know, Jim has not been a fan of property seizure before a person is convicted of any crime. Russia, however, is a dictatorship of the law (I think Pres. Putin said that at one point) and the forfeiture takes place only after the court has determined that the transaction was indeed immoral.

So far, this Article has been used against "immoral" transactions by some oil refineries trying to avoid (or evade) taxes and to question the legality of PriceWaterhouse's audits of Yukos. But it might be only a matter of time before Russia's law enforcers wake up to its much wider applicability.


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