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International Internet Magazine. Baltic States news & analytics Monday, 01.06.2020, 01:24

'Not guilty' verdict for Tartu Mill left unchanged

BC, Tallinn, 29.04.2019.Print version
The verdict finding grain processing company AS Tartu Mill as a legal person and individuals Leonid Dulub and Priit Saar not guilty of a tax offense was left unchanged as the Supreme Court of Estonia did not admit into handling a notice of appeal by Public Prosecutor Marek Vahing, informed LETA/BNS.

As the top court will not discuss the appeal in cassation of Public Prosecutor Marek Vahing, the decision of Tartu Circuit Court to uphold a verdict by the first-tier Tartu County Court finding grain processing company AS Tartu Mill as a legal person and individuals Leonid Dulub and Priit Saar not guilty of a tax offense entered into force.

According to the statement of charges, Dulub in his capacity as sourcing manager forwarded to the accountants of the employer invoices for purchased grain which showed incorrect persons as sellers of the grain.

The accountants, who were not aware of the false nature of the invoices, showed the invoices in the VAT declarations of Tartu Mill filed with the tax administrator. As a result, the VAT obligation of Tartu Mill to the state decreased. However, Tartu Mill did not benefit from this as, under arrangement by Dulub, the portion of VAT not received was paid out to the intermediaries who sold grain to Tartu Mill and issued the invoices. 

The circuit court agreed with the lower court that Dulub presented the invoices to the accountants not in order to reduce the VAT obligation of Tartu Mill but for the purpose of personal gain.

Specifically, the intermediaries paid Dulub without the knowledge of the managers of Tartu Mill for buying grain from them for Tartu Mill based on the invoices shown in the statement of charges. Under law, presenting false data to the tax administrator is a criminal offense only if done with the aim of reducing the tax obligation. 

Since Dulub acted with personal gain, but not reducing the employer's tax obligation in mind, he did not commit a tax offense. The prosecutor's office however did nor charge Dulub with accepting of gratuities or a bribe. Dulub's acquittal on charges of tax offense also necessitated the acquittal of Tartu Mill and Saar.

The circuit court did not offer a conclusive assessment of whether the data presented in the VAT returns of Tartu Mill was incorrect and whether Tartu Mill must compensate the state for the tax. The dispute over this will continue in the ongoing administrative court proceeding.

The circuit court also explained, based on a recent decision of the Supreme Court, the attributes of a criminal organization. According to that, a criminal organization as a whole must have some more superior common interest and purpose which exceeds that of the commission of a specific individual crime or crimes. 

A criminal organization has to be such that its existence by itself poses a significant threat to public security.

In said criminal case, Dulub and Saar were accused of belonging to a criminal organization engaging in the brokerage of grain and in VAT fraud. The circuit court found that the association that Dulub and Saar allegedly belonged to was not a criminal organization. 

In the form described in the statement of charges, cooperation between the individuals mentioned in the statement of charges was not of a nature characteristic of a criminal organization. The alleged criminal organization was lacking rules and a code of conduct, as well as an established definitive structure and clear-cut hierarchy.

There is no information suggesting that the individuals committed acts in the knowledge that they belong to a criminal organization and are acting in the latter's interests and keeping in mind its goals. 

The individuals named in the statement of charges were only loosely connected between themselves and did not constitute an organization having an independent will, so to speak, the second-tier court found.

The circuit court also observed that even if it was possible to ascertain the existence of a criminal organization, it would not be possible to count Dulub as its member, but only a cooperation partner.

In addition, the college of the circuit court made up of three judges pointed out that the statement of charges drawn up by the prosecutor's office contained substantial shortcomings and did not fully meet the requirements of clarity and accuracy. 

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