Can Grant considered to be criminally obtained funds?

Analysis

One of the indictments against media representatives and activists arrested in recent years is the legalization of criminally obtained funds. This is applicable to both “Abzas Media” case, where court hearings on the merits have already begun, and the “Toplum TV” case, where the investigation is about to be concluded, for journalists and activists. The charges brought in both cases include the indictment better known as “money laundering.”

A number of questions come forward considering that the only source of funding for the activities of the aforementioned media entities is grants. One of these questions is whether the grant falls within the scope of criminally obtained funds.

“Tribunat” has provided an investigation into this topic.

Initially, several words about grants. 

According to the Law “On Grants”, a grant is an aid provided by donors for the preparation and implementation of programs in areas damaged mainly by war and natural disasters, rehabilitation works, social, environmental and humanitarian projects, education, healthcare, culture, legal advice, information, sports and other areas. Donors can be governments or international organizations. Grant funds are provided by a written agreement between the donor and the recipient (the party receiving) or a decision on the provision of a grant. The agreement or decision is the legal basis for the provision, receipt and use of a grant. The decision or agreement indicates the specific purposes for which the grant is provided.

The grant projects received by "Abzas Media" and "Toplum TV" are mainly intended to provide information, in other words, to support and strengthen media activity in the country.

The legislation has established a regulatory procedure for obtaining a grant. This includes norms requiring the registration and approval of decisions and agreements on the provision of grants. In accordance with the Resolution of the Cabinet of Ministers on the approval of the “Rules for the registration of grant agreements (decisions), an agreement is concluded between the donor and the recipient. Registration of an agreement or decision on the provision of a grant is carried out by the Ministry of Justice in relation to non-profit organizations and individuals.

The Resolution No. 339 of the Cabinet of Ministers dated October 22, 2015 regulates the "Acquisition of the right to provide grants by foreign donors in the territory of the Republic of Azerbaijan".

Both decisions were adopted on the basis of the Presidential Decree dated November 14, 2014 on the application of the Law of the Republic of Azerbaijan No. 1081-IVQD dated October 17, 2014 On Amendments to the Law "On Grants".

During and following these restrictive amendments, criminal cases were initiated against independent NGOs in Azerbaijan and many prominent civil society activists were arrested.

Although these revisions were criticized by a number of influential international organizations at the time, the Venice Commission of the Council of Europe in its opinion assessed the requirement for registration of grant funds with the Ministry of Justice before their transfer as excessive (paragraph 74). In a document prepared by the International Law Center for Non-Governmental Organizations, analysis of the rules for receiving grant funds stipulated that the requirement for registration of grant agreements was considered inconsistent with international practice.

According to the Code of Administrative Offenses, failure to submit a decision or contract on the award of a grant to the Ministry of Justice for registration is considered an administrative offense and is sanctioned by a levy of up to two thousand manats for individuals, up to two thousand five hundred manats for officials, and up to seven thousand manats for legal entities.

The concept of legalization of criminally obtained funds, which media representatives are accused of, and the penalty, are regulated by Article 193-1 of the Criminal Code, the UN Convention against Corruption, and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime. It is labeled as the conversion or transfer of property, with the knowledge on attainment through crime, with the aim of concealing the true source of its acquisition or of assisting the perpetrator to evade responsibility, or the implementation of financial transactions or other deals using property obtained through crime for these purposes; the concealment or suppression of the true nature, source, location, disposition, movement, rights to such property or their ownership, with the knowledge on attainment through crime.

This charge brought against those arrested in both media cases, includes aggravating elements: committed by an organized group or criminal association (criminal organization) (193-1.3.1) and committed in a large amount (193-1.3.2).

The Resolution of the Plenum of the Supreme Court of 20 February 2023 on the legalization of criminally obtained funds clarifies that property obtained through crime must be obtained directly or indirectly as a result of the crimes specified in the Criminal Code. The crime, as a result of which funds or other property subject to Article 193-1 of the Criminal Code were obtained, must, normally, be committed before the initiation of legalization actions (paragraph 6). Upon indictment of a person with legalization under Article 193-1 of the Criminal Code, there must be adequate evidence showing that the property could not have been obtained by any means other than a crime and property that has been subject to legalization (paragraph 18).

In other words, this article of the Criminal Code does not refer to funds obtained by any illegal means, but only acquired criminally.

Accordingly, even if it is assumed that those arrested in the "Abzas Media" and "Toplum TV" cases did not register grant agreements within the Ministry of Justice, this would not be consistent with the concept of criminally obtained funds.

It was noted above that violation of the legislation on receiving grants is considered an administrative offense. Nevertheless, the relevant act is not sanctioned in the Criminal Code. In this case, it is arbitrary to consider the receipt of grant funds through violation of the legislation on grants as criminally obtained funds.

Additionally, both the individuals arrested in the “Abzas Media” and “Toplum TV” cases categorically deny the initial and core indictment - the smuggling. Moreover, an analysis of information available in open sources shows that there is no credible evidence to confirm that the funds allegedly brought into the country through smuggling were transferred across the customs border outside customs control, hidden, through the fraudulent use of documents or customs identification means, without declaring or incorrectly declaring them. The investigative body maintains that these funds were discovered in the apartments where the journalists lived or in the offices where they worked. The location of smuggling into the country to be detected is not specifically limited by the legislation. Nonetheless, given that this criminal act is related to the violation of relevant rules at the customs border, the most fitting and common-sense place for the detection and investigation of such operations is the customs control zone. Ilkin Amrahov, an employee of the Institute for Democratic Initiatives, who is currently detained, has never left the country, and there are other journalists who have not left the country for the past 5-7 years. Resultantly, accusations are incompatible with the legislation and reason.

On the other hand, the crime of smuggling involves the violation of the established rules and conditions for the transfer of goods across the customs border of the country (paragraph 2 of that article is of a special subject and is outside this context). Conversely, the objective aspect of Article 206.1 of the Criminal Code is the illegal actions to transfer goods and other things across the customs border; the methods of committing such illegal actions; and the large quantity of goods and other things being transferred.

Consequently, even if we theoretically agree with the smuggling charges against arrested in media cases, the commission of this crime would still not fall within the scope of the concept of criminally obtained funds. As, smuggling criminalizes the illegal import (transit) of goods into the country, and criminally obtained funds sanctions the source of the property. While the crime of smuggling is related only to the smuggling of goods and objects, legalization implies an additional legal aspect, such as the “criminal acquisition” of funds.

In this case, grounding the allegation of smuggling grant funds allegedly found in apartments or offices into the country on the charge brought under Article 193-1 of the Criminal Code is contrary to the functions and basic principles of criminal justice.

Pursuant to criminal procedure legislation, one of the duties of criminal justice is to establish the guilt of those accused of committing a crime and punish them, and to acquit. The basic principles and conditions of criminal justice determine the legality and validity of each criminal prosecution.

Upon application of this standard to the cases of “Abzas Media” and “Toplum TV”, the conclusion of the investigative body that the grant funds, which were the sole source of the activities of these media entities, were obtained or legalized criminally, demonstrates that officials authorized to apply criminal legislation clearly failed to assess the behavior that was allegedly dangerous to society at the end of the criminal prosecution. It also draws attention to the deep contradiction between the facts of the indictment and its legal description. 

Thus:

“Tribunat” concludes that, since violation of the legislation on obtaining grant funds does not constitute criminal liability, and moreover, failure to register grant agreements only entails administrative liability, indictment of the journalists in the “Abzas Media” and “Toplum TV” cases with legalization of criminally obtained funds is incoherent with the duties of and violates the basic principles of criminal justice.