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On criminal liability for illicit enrichment

The ruling of the Constitutional Court of the Republic of Lithuania of 15 March 2017

ON CRIMINAL LIABILITY FOR ILLICIT ENRICHMENT

Summary

In this ruling, having investigated the case subsequent to the petitions of the Supreme Court of Lithuania, the Vilnius Regional Court (Vilniaus apygardos teismas), the Šiauliai Regional Court (Šiaulių apygardos teismas), the Marijampolė District Local Court (Marijampolės rajono apylinkės teismas), and the Joniškis District Local Court (Joniškio rajono apylinkės teismas), the Constitutional Court declared Paragraph 1 of Article 1891 of the Criminal Code (CC), which provides for criminal liability for illicit enrichment, to be not in conflict with the Constitution. Under Paragraph 1 of Article 1891 of the CC, a person who holds by right of ownership property whose value exceeds 500 minimum subsistence levels (MSLs) (18 830 euros), while being aware or having to be and likely to be aware that this property could not have been acquired with legitimate income, is punished by a fine or by arrest, or by the deprivation of liberty for a term of up to four years.

According to the petitioners, the impugned legal regulation provides for a disproportionate, inexpedient, and ineffective legal liability measure, which imposes a disproportionate limitation on the ownership rights of persons; under the impugned legal regulation, in determining the guilt of a person, it is assumed that his/her income has been illegal and the burden of proof is shifted to the accused; thus, the principle of the presumption of innocence and the prohibition on compelling anyone to give evidence against themselves are violated; the impugned legal regulation is contradictory, vague, and ambiguous; therefore, it precludes the possibility of formulating a charge in such a manner that counsel for the defence would be fully aware of its actual and legal ground in order to effectively challenge this charge; consequently, the right of a person to defence is violated; relating the application of the impugned legal regulation to the possession, but not the acquisition of this property after the entry into force of this regulation, the constitutional prohibition on the retroactive effect of a criminal law may be violated; the impugned legal regulation also creates the preconditions for violating the constitutional prohibition on punishing twice for the same offence, since not only criminal liability may be applied for the acquisition of property and failure to pay taxes on it, but also a fine may be imposed under the Law on Tax Administration.

The Constitutional Court noted that, under the Constitution, the criminalisation of concrete acts and the differentiation of criminal liability for them is, first of all, a matter of the criminal policy pursued by the state, which is decided by the legislature by using its wide discretion and taking into account the dangerousness and scale of the said acts, the priorities of crime prevention, as well as other important circumstances, but without violating the Constitution and the imperatives arising therefrom. Thus, even though the legislature must evaluate in every concrete case the expediency of declaring a concrete act as a criminal one by assessing at the same time what results may be achieved by means of other measures, as such, the mere existence of doubts as to the expediency of criminalising a certain act or as to the effectiveness of such a legal regulation does not give grounds for questioning the compliance of this legal regulation with the Constitution, unless it transpires that the same legal regulation at the time of its consolidation in legal acts was clearly directed against the welfare of the nation, the interests of the State of Lithuania and its society, and clearly denied the values consolidated in and defended and protected by the Constitution (such a fact has not been established in this case).

The Constitutional Court held that, when implementing the criminal policy pursued by the state, the legislature has declared illicit enrichment as a dangerous criminal act and prohibited it by Paragraph 1 of Article 1891 of the CC, seeking to make economically not viable the commission of crimes related to corruption, property, economy, finance, as well as other selfish crimes, and to prevent such acts and damage inflicted on the state and society. Thus, the legislature has implemented its wide discretion to choose the norms of a particular branch of law in order to define certain violations of law and to impose concrete sanctions for these violations. Having assessed the purpose of the impugned legal regulation, the dangerousness of illicit enrichment, and the sanction imposed for this crime in Paragraph 1 of Article 1891 of the CC, the Constitutional Court held that there is no ground for stating that, as a legal measure, criminal liability established for illicit enrichment is disproportionate.

Under the Constitution, the right of ownership is not absolute, it may be limited by law in pursuit of legitimate aims by paying regard to the constitutional principle of proportionality; the ways of acquiring the right of ownership may be varied ones; however, they may not be in conflict with the requirements that stem from the Constitution, among others, with the principles of justice and good faith. Thus, having held that Paragraph 1 of Article 1891 of the CC does not violate the constitutional principle of proportionality, there is no ground for stating that this provision disproportionately limits the rights of ownership.

In this ruling, the Constitutional Court also held that Article 1891 of the CC does not regulate the procedure for proving the criminal act provided for therein. This procedure is regulated under the norms of the Code of Criminal Procedure by which the prosecutor is obliged to prove the commission of a crime, while the court must investigate the case comprehensively, assess evidence, and substantiate its judgment with this evidence. Implementing his/her right to defence, a suspect (accused person) has the right to give evidence and challenge the suspicions (charges) brought against him/her; however, the suspect (accused person) is not obliged to prove the fact that the criminal act of illicit enrichment has not been committed. Thus, the legal regulation laid down in Paragraph 1 of Article 1891 of the CC does not shift the burden of proof to a person suspected of (charged with) illicit enrichment, such a person is not compelled to give evidence against himself/herself, and the principle of the presumption of innocence is not violated.

Responding to the argument of the petitioners that the impugned legal regulation violates the right of persons to defence, since its vagueness precludes the possibility of formulating a charge, due to which counsel for the defence cannot effectively challenge it, the Constitutional Court noted that Paragraph 2 of Article 190 of the CC clearly provides that legitimate income is income derived from activities not prohibited by legal acts, irrespective of whether or not it has been accounted for in accordance with the procedure laid down by legal acts, whereas the impugned legal regulation makes it clear that a person may be held criminally liable for illicit enrichment provided that he/she has committed this crime intentionally or as a result of reckless criminal negligence; illicit enrichment due to reckless negligence is only possible when a person accepts property whose value exceeds 500 MSLs where this property could not have been acquired with legitimate income of other persons. Thus, according to the Constitutional Court, the legal regulation laid down in Paragraph 1 of Article 1891 of the CC does not violate the requirement, stemming from the principle of a state under the rule of law, for the clarity of a legal regulation or the right of a person to defence and the right to the due court process.

Having assessed whether the legal regulation established in Paragraph 1 of Article 1891 of the CC violates the constitutional prohibition on the retroactive effect of a criminal law, the Constitutional Court noted that this regulation applies only in cases where a person acquired certain property as ownership not earlier than on the day (11 December 2010) when Article 1891 of the CC came into force; the acquisition by a person of the above-mentioned property before the specified date where this person holds (held) it after the entry into force of Article 1891 of the CC means that he/she may not be held liable under this article. Since the impugned and related legal regulation is to be understood exclusively in this way, there are no legal grounds for stating that the impugned legal regulation has established the retroactive effect of a criminal law.

At the same time, the fact that a person who acquired certain property before the entry into force of Article 1891 of the CC may not be held criminally liable under the same article does not mean that state institutions and officials are released from the duty to investigate other criminal acts or other violations of law if elements of such acts or violations are found.

According to the Constitutional Court, the legal regulation laid down in Paragraph 1 of Article 1891 of the CC does not violate the constitutional prohibition on punishing twice for the same offence, either. As noted in the ruling, as such, this legal regulation and the one established in the Law on Tax Administration do not imply that illicit enrichment and a violation of tax laws are identical things; the fact whether the said things are identical can be established only in the course of considering concrete criminal cases and cases of tax law violations; consequently, the establishment whether illicit enrichment and a violation of tax laws are identical things is a matter of the application of law.

In view of the above arguments, the Constitutional Court ruled Paragraph 1 of Article 1891 of CC to be not in conflict with Articles 23 and 31 of the Constitution and the constitutional principle of a state under the rule of law.