Judicial Alignment and Criminal Justice: Evidence from Russian Courts

Transcription

1 Judicial Alignment and Criminal Justice: Evidence from Russian Courts by André Schultz Frankfurt School of Finance & Management Vladimir Kozlov National Research University Higher School of Economics and Alexander Libman Frankfurt School of Finance & Management and Russian Academy of Sciences Abstract: The judiciary of an autocracy is often characterized by a dysfunctional bureaucratic organization and a disproportionately strong prosecution bias curtailing judicial independence and resulting in a repressive law implementation. This paper investigates the effect of informal ties between judges and prosecutors on the functioning of such a judiciary. For this purpose we use criminal law statistics for Russian regional courts in 2010 and determine the alignment between court chairpersons and prosecutors by measuring the period they worked together. We find that in courts with stronger chairperson-prosecutor alignment judges more often revert to conditional sentences instead of imprisonments in cases of fraud convictions which are used to harass private entrepreneurs. We conjecture that close informal alliances in the courtroom reduce the pressure from judges to deliver high conviction rates and severe sentences and mitigate the negative effects of existing imbalances in the judiciary. Keywords: Judicial independence, prosecutorial bias, informal ties, Russian criminal courts JEL Code: D73, K14, K40, K42 November 2012 Highly preliminary! Please do not cite without permission! We gratefully acknowledge the helpful comments of Ella Paneyakh, Kirill Titaev, Henrik Jordahl, and Hartmut Kliemt. The project was supported by the BMBF Competence Network Institutions and Institutional Change in Post-Socialism (KomPost). The usual disclaimers apply.

2 I. INTRODUCTION We want the judiciary to be independent in order to allow judges to make the right decisions. However judicial independence is at stake if other branches of the government can interfere with judicial ruling. According to the Positive Political Theory the biggest threat to judicial independence emanates from the legislature which is perceived to be in a power struggle with the judiciary. 1 The extent to which politicians can directly and indirectly limit judicial independence depends from the completion in the political marketplace. In general, political competition is found to be positively associated with judicial independence. Thus the larger the number of independent veto player (e.g. number of parties, legislative bodies) and the more distant their political ideologies the less likely they will be able to agree upon enactments with the purpose of overriding judicial ruling (Cooter and Ginsburg 1996; Beck et al. 2000). Judges will ex ante anticipate the threat of interference and adjust their judicial ruling accordingly. Moreover, politicians may find an insulated judiciary appealing whenever they seek to effectively monitor appointed bureaucrats (McCubbins and Schwartz 1984), make credible promises to their voters (Landes and Posner 1975), and reduce their political losses when facing an electoral defeat against an ideologically distant party (Ramseyer 1994; Hanssen 2004). Other contributions have rather highlighted specific organizational features of the judiciary driving judicial behavior. A number of papers studying procedures to select and retain US state court judges have found that appointed judges are in general more independent than their elected counterparts (Hanssen 1999, 2004; Besley and Payne 2003). However, Franck (2010) finds that although appointed constitutional court judges are not biased towards politician to whom they owe their appointment, but instead are biased against far-right politicians in contested parliamentary elections. In a series of paper on Japanese courts Ramseyer and Rasmusen (1997, 1999) show that judicial discretion can be driven by career concerns of judges who are punish with less attractive positions and bleak career prospects after deciding against the government in political sensitive cases. However, Hayo and Voigt (2007) demonstrate that some determinants of formal judicial independence are outside the scope of politicians and policy makers, such as trust in the legal system, or affiliation to certain religious groups. 2 1 The inter-relationship between the court and the legislature is modeled by assuming the presence of a former enacting and a present sitting legislature. In other words, the court interprets the statues of a past legislature in the presence of an incumbent legislature knowing that both have probably diverging interests and each statutory interpretation will potentially provoke a reaction of the sitting legislature (Ferejohn and Weingast 1992; Gely and Spiller 1990). 2 This finding corresponds to the literature on legal origin (civil vs. common law tradition) which argues that the exogenous variation in legal origin (for most countries the result of adopting the legal systems of their colonizers) determines judicial independence and various other measures for court quality. Thus Djankov et al.

3 This paper set out to study judicial independence of criminal court judges in Russia (a civil law judiciary). 3 Specifically, we focus on the role of a particular veto player in constraining judicial independence which is, however no external to the judiciary (and not part of the legislature), but an element of the criminal justice value chain : the procuracy. The influence of the prosecutor on judicial decision making is not a new story. The so-called prosecutorial bias is a regular observation for civil law judiciaries and is determined by the distinct trial procedure predominantly fond in civil law judiciaries: the inquisitorial procedure. 4 While in common law courts two equal, but opposing parties (prosecutor versus defendant for criminal cases) are invited to make their case in front of an impartial judge, in the inquisitorial procedure the prosecutor (as plaintiff of the society) appears as helping hand of the judge collecting evidence, interviewing witnesses, and evaluating arguments in favor and against the defendant in the pre-trial phase. Despite his relatively large influence on judicial ruling the fairness of the trial is ensured by relying on the (intrinsic) impartiality of the prosecutor and the judge. We will argue that in judiciaries in which the prosecutor is less interested in social welfare but instead opts for optimizing his work effort, and career prospects the prosecutorial bias can be abused, judicial independence restricted, and the implementation of criminal statues more repressive. For this purpose we look at the informal ties between the chairperson of the regional courts of general jurisdiction (which hear criminal cases) and the respective regional prosecutors (who is the top-tier public servant in the regional procuracy). We are interested in de-facto ties between these two influential judicial bureaucrats since de-jure they should not exist (the judiciary and the procuracy are two independent institutions). We measure the mutual career backgrounds of chairperson and prosecutors, which we call chairperson-prosecutor alignment and investigate its influence on judicial discretion to incarcerate convicted fraudsters or release them on probation. Criminal fraud cases are a popular tool used by prosecutors their paned reporting targets. We find that if the judge and the prosecutor are aligned, the regional courts turn less repressive towards entrepreneurs. The (2003) finds that civil law judiciaries have more judicial formalism which is positively correlated with the quality of the legal system, while La Porta et al. (2004) that civil-law courts are less independent than their common law counterparts (measured by tenure of constitutional and administration judges and whether judicial ruling is a source of law). 3 Previous studied who have investigated the quality of the legal system or judicial independence for a single country have either studied the behavior f judges of the highest court(e.g. Supreme Court) over time (Iaryczower et al. 2002) or are explanting a specific sub-national variation in terms of legal origin (Berkowitz and Clay 2006) or quality of the bureaucracy (Mendeski and Libman 2010). 4 There is a debate in the literature to which extent one legal procedure is superior over the other. The contributions are in general of theoretical nature an focus on the fact-finding efficiency of each that reveals the pertinent necessary for the impartial arbitrator to make inference of the truth (see Milgron and Roberts (1986), Shin (1998) for theoretic contributions and Block et al (2000) and Block and Parker (2004) for experimental design for juxtaposing inquisitorial and adversarial legal procedures).

4 most likely explanation for this finding is that whenever informal relations exist, judges may be less concerned about prosecutor pushing the appeals up to the limit. In this case then they have smaller pressure to make decision in strict accordance to the prosecution as in case when no alignment exists and the prosecutor is likely to be much more aggressive towards the judge. In this case the informal relations between the judges and the prosecutors actually improve the functioning of the Russian jurisprudence, serving as a tool liberating judges from enormous pressure to deliver results partially correcting the negative effect of a dysfunctional bureaucracy, giving judges more discretion in their decision-making and thereby reducing the implementation of criminal law. This paper contributes to three strands of the literature. First, by introducing the judicial alignment variable which can be interpreted as a measure of informal judicial independence we contribute to the literature attempting to quantify judicial independence. Most existing studies are based on a cross-country comparison and construct indices consisting of different indicators measuring various aspects relevant for judicial independence (Smithey and Ishyama 2000; Feld and Voigt 2003; La Porta et al. 2004; Hayo and Voigt 2007). 5 These indicators include various aspects related to the appointment and retention procedures, tenures, dismissal, remuneration, promotion of judges, as well as judicial activism, judicial budget which are normalized and averaged to an index. However, Feld and Voigt (2003) show for a sample of 71 countries that de-jure judicial independence is almost uncorrelated with de-facto judicial independence (and that only de-facto judicial independence is positively associated GDP growth per capita. We propose a novel measure for de-facto judicial independence which is based on the informal relationship between judges and prosecutors directly affecting court performance. Second, while previous studies merely focused on external determinants of judicial independence, we look inside the criminal justice value chain and identify the procuracy, specifically the regional prosecutor (as veto player) determining judicial independence. As a result we contribute to the literature studying the incentives and behavior of prosecutors. Previous studies show that prosecutors process criminal cases to increase social welfare and career prospects at the same time (Glaeser et al. 2000). Moreover, convictions rates are positively correlated with the budget of the procuracy and whether prosecutors are elected (Ramseyer et al. 2009). Finally, Feld and Voigt (2010) follow their method in Feld and Voigt (2003) and construct an index measuring de-jure and de-faco prosecutorial independence, confirming their previous findings that both measures are almost uncorrelated, while de-facto 5 Papers that focus on the single countries often measure the effect of certain historic conditions on toadys courtquality

5 independent prosecutors pose a more serious threat to public officials and thereby decreasing the level of perceived corruption. Third, we contribute to the empirical studies investigating the functioning of civil law judiciaries in general and the Russian court specifically. So far only three empirical contributions have contributed to the understanding of the Russian judiciary, which however foced exclusively on commercial courts and use data from the late 1990s early 2000s (Lambert-Mogliansky et al. 2007; Shvets 2010, 2011). The remainder of the paper is organized as follows. In Section 2, we introduce the characteristics of the Russian bureaucracy and explain how judiciary and procuracy interact. In Section 3 we discuss our econometric strategy including dependent, explanatory, while Section 4 presents the results. In the following Section 5 we present a number of robustness tests and Section 6 concludes. II. RUSSIAN BUREAUCRACY, REGIONAL COURTS, AND THE PROCURACY This paper concentrates on the final link in the Russian criminal justice value chain: the relationship between the judiciary and the procuracy. The processing of criminal cases through the different layers of the criminal justice hierarchy (from the street to the courtroom) is driven by a specific reporting and monitoring system initially put in place to ensure that public officials perform their functions effectively (Paneyakh 2011). Each bureaucrat is assigned with numerous performance indicators which have to be fulfilled and reported on yearly basis with a positive trend to the hierarchical supervisor. Hence each bureaucrat has to achieve an improvement in the current period, compared to his performance in the previous period, knowing that the current period will be the benchmark for his performance in the next period. In order to minimize the burden of unrealistic performance targets civil servants will confirm their results from the previous period and in addition demonstrate a marginal improvement. In order to cope with the increasing work load, a regional prosecutor, for example, who is evaluated, among others, by the conviction rates of his cases filed in court, will not only accept more cases from the investigator (irrespective of the quality of the evidence), but also exert substantial pressure on the judge to ensure the conviction of the defendants (for the precise mechanisms see Section 2.3). Besides this horizontal performance pressure, higher ranked bureaucrats also face substantial vertical pressure. The performance indicators of their subordinate units (e.g. district procuracies for the regional procuracy) are summed up and used as an evaluation criterion for the respective superior.

6 2.1. Regional courts and their chairpersons This paper will focus on regional courts of general jurisdiction. 6 The courts of general jurisdiction can hear criminal, civil and administrational cases and organized in a three-tier hierarchy. The lowest level is formed by the district courts which exercise original jurisdiction for most cases (first instance courts). The middle level is formed by the regional courts of general jurisdiction, which function, in most cases, as appeal courts for district court decisions (second instance courts). 7 The highest level of general jurisdiction is the Russian Supreme Court which hears cases of national interest (only a few cases). 8 Specifically, we are going to focus on the chairperson of the regional courts of general jurisdiction. The court chairperson is appointed by the President of the Russian Federation after being nominated by the chairman of the Supreme Court. 9 In addition, a favorable recommendation of the Higher Judicial Qualification Board is required. 10 All chairpersons are appointed for a 6 year tenure which is once renewable. De-jure, the chairman is responsible for organizing and ensuring the functioning of the court and its judicial divisions. 11 However, his de-facto authority exceeds his official competency. Besides the court management he can use several formal and informal mechanisms to influence judges` work and ultimately case outcome. Specifically, he has the final word in the appointment, dismissal, and promotion of regional judges, can influence their salary, administrational support, and work load, and is in charge of the case allocation within the court (Volkov et. al 2012). In order to provide an illustrative example we briefly look at the appointment modus for regional court judges (for an overview, see Appendix A). The judicial appointment 6 Russia s judiciary distinguishes between three court systems. Apart from courts of general jurisdiction, there are constitutional courts and commercial courts. The former ensures the compliance of laws and regulations with the constitutions, while the latter resolves disputes between enterprises. 7 The naming of regional courts deviates according to their sub-national status of its respective region (e.g. Republican supreme courts, territory and regional courts, (federal) city courts, courts of the autonomous oblasts, and courts of the autonomous okrugs). The courts are located in the capital of each region and their jurisdiction corresponds to the regional borders. 8 Since 1989 the Supreme Court is headed by Vyacheslav Lebedev. 9 The chairperson of the Supreme Court is appointed by the Federation Council according to the proposal of the President. He also requires the previous approval of the Higher Judge Qualification Board. 10 The qualification boards are bodies of judicial self-regulation which operate at the national (Supreme qualification board) and regional level (Judicial qualification boards) and play an important role in the appointment, promotion, and dismissal of judges. 11 According to article 29(3) of the Law on Courts of General Jurisdiction of the Russian Federation (version of ) the court chairperson is responsible for the functioning of the court, monitors the compliance of rules and regulations, convokes meetings of the court presidium, allocates responsibilities among its vicechairpersons, studying judicial practices and court statistics, manages the complaint procedure for citizens, responsible for court staff (appointment, dismissal, function, incentives scheme, discipline procedure, professional development), provision of information on court performance to judges and staff and the exclusive right to qualification, disciplinary, dismissal requests for regional court judges and district court judges (including district court chairpersons) in front of the Judicial Qualification Board.

7 depends on two conditions. The necessary condition is the prior approval of the candidate by the regional Judicial Qualification Board. The sufficient condition is the court chairman s recommendation. Hence the acceptance of a potential candidate by the Board does not guarantee his appointment, while a chairman s refusal to recommend an approved candidate to the chairman of the Supreme Court inevitably prevents the judicial appointment. 12 As a result the chairman can ensure that only loyal judges are appointed to his court. Second, one of the chairman s authorities is to allocate lawsuits among regional court judges. In addition, the chairman knows about the judges` backgrounds and their preferences for certain crimes and most importantly the severity of their decisions. Thus by transferring specific cases to certain judges he can directly influence the trial outcome. In addition to his almost unrestricted authority the regional chairperson can directly influence the district courts. Especially the subordinate district court chairpersons are directly accountable to the regional chairperson through a reporting system which is used by the regional chairperson to evaluate the district court performance. The respective incentives are at his disposal. The regional court chairperson has the exclusive right in front of the Judicial Qualification Board to request judicial qualification promotion, disciplinary proceeding, and the dismissal of district court chairpersons and judges. As a result, we are confident to assume that by studying the court chairpersons we are able to capture the legal preferences of the regional judiciary Regional prosecutors The organizational structure of the Russian procuracy is a mirror image of the previously described courts of general jurisdiction hierarchy. It is a tree-level bureaucratic system with local district procuracy, the middle-level regional procuracy, and the top-tier office of the General Prosecutor. The regional procuracy represents the regional government in criminal trials heard in regional courts of general jurisdictions. The regional procuracy is headed by the regional prosecutor who is appointed for 5 years by the Prosecutor General (one re-appointment possible). 13 The office of the regional prosecutor includes a number of administrational and prosecution-specific departments headed by assistants of the prosecutor, while the leadership of the procuracy is made up of the regional prosecutors and his viceprosecutors. Unlike the court, where the chairman s authority over the judges is more indirect, 12 Moreover, the chairperson has the exclusive right to propose a candidate to the Judicial Qualification Board and can veto the decision of the Board (the board requires a two-third vote to overrule this veto). 13 The Prosecutor General is nominated by the President and appointed by a majority the Federation Council for a 5 year term.

8 in the Prosecutor s Office supporting staff is directly subordinate to the prosecutor and has to implement her decisions. Due to the organization of the Russian judiciary, prosecutor is, probably, one of the most powerful participants of a trial for the criminal case. Similar to regional court chairperson he has various exclusive right for initiation the appointment, promotion, transfer, and removal of her subordinates in front of self-governing bodies of the regional procuracy. Regional prosecutors are subject to a rotation scheme which transfers each high-level bureaucrat of the procuracy after one or tenure periods to other regions in order to fight high corruption among prosecutors Judicial community and the prosecutorial bias In the interaction between the members of the judiciary and the procuracy to ambivalent observations are apparent. On the one hand, the members of both institutions can be characterized by a high degree of interaction and esprit de corps. Both judges and prosecutors have studied law, often in the same universities. A large share of judges has initially worked in the procuracy before joining courts. On the other hand, the staff of the prosecutor s office is evaluated on the outcome of the cases filed in the court. According to the respective reporting scheme acquittals are considered lost cases and negatively influence the evaluation of the prosecutor s work (and may lead to his dismissal). As a result the prosecutor will try to ensure that the court decision will not substantially deviate from his initial conviction claim and sentencing recommendation. For this purpose, he will appeal and any acquittal and soft sentence at the next higher instance court.14 At the same time court judges are evaluated, among others, by the confirmation rate at the higher instance courts.15 Frequent reversals are interpreted as indicator of the judge s incompetence and can give rise to suspicion of corruption (Volkov et al. 2012). As a result judges, do take into account the probability of appeal by the prosecution and therefore frequently decide in favor of their initial, and in most cases, maximum sentence claim. III. DATA AND ECONOMETRIC STARATEGY 14 There are other means with which the prosecutor can create incentives fort he judge to follow his recommendation. First, however less common, he can file a charge against the judge. Second, he create problems fort he judge at his next (re-)appointment. Formally the prosecutor s office has to check the validity of the application documents of judge candidates and may use its discretion to uncover some irregularities. 15 Most regions organize yearly judge performance contests in which the best regional judges are awarded on the basis work experience, case volume, case complexity, and quality of case proceeding (which is measured exclusively by the confirmation rate of higher instance courts). In order to be short-listed for a prestigious award judges need to demonstrate a confirmation rate of 100 percent. The wards are given to judges from each tierlevel of the judiciary and by distinguishing between civil and criminal division judges.

9 The paper is based on two datasets. First, we use a dataset which includes biographical information on the regional court chairpersons and regional prosecutors. 16 We compile an explanatory variable that measures the duration of their mutual career paths to which we refer to as judicial alignment. Second, we utilize criminal court statistics for 2010 to set up a dependent variable measuring the repressivity of criminal law implementation by regional courts. Specifically, we focus on the incarceration rate for fraud convictions. In the following we describe both explanatory and dependent variable in more detail Explanatory variable The aim of this paper is to study the informal relationship between the regional court of general jurisdiction and the respective procuracy. The proximity between the two institutions is directly by the informal ties between court chairperson and regional prosecutor. While in some regions chairperson and prosecutor can look back on a long mutual career path, in other jurisdictions this horizon is rather short. In this paper we are going to be interested in the chairperson-prosecutor alignment. We define alignment in terms of the duration the incumbent court chairperson and the regional prosecutors worked side by side, hence in the same region at the same time. Specifically, we are interested in the inter-regional variation of chairperson-prosecutor alignment in Obviously, one has to ask, when does alignment start? This decision is a tradeoff between two extremes. On the one hand, if one merely looks at the duration in which chairperson and prosecutor worked together during their incumbent tenure, one ignores that their career trajectories could have intercepted at a much earlier stage of their careers. In other words, their alignment is much longer than their joint-period in office would suggest. On the other hand, by simply assuming that alignment starts whenever the public officials worked as judge and assistant prosecutor in the same region, one runs into the risk that both effectively never met. On a municipal level this is selfevident, considering that each region is composed of numerous districts. But even on a regional level with an average number of judges per court, it is not necessarily the case that both judge and assistant prosecutor interacted on a regular basis. Therefore we define alignment in terms of years the incumbent chairman and prosecutor have worked side by side (so at the same time in the same city) while being in the position of at least vicechairperson of the regional court of general jurisdiction and vice-prosecutor of the regional procuracy. Both the seniority and the few vice-positions in each institution make the 16 We use publically available biographies posted on regional court websites or on other judiciary-specific internet platforms (e.g. pravo.ru). The same comment refers to the biographies of regional prosecutors. 17 The average number of judges per court in 2012.

10 interaction between the two bureaucrats very likely. Based on this definition of chairpersonprosecutor alignment we find a regional variation from 0 up to 20 years (as of 2010). 18 For illustrative reasons we will briefly discuss two regional cases with a short and a long alignment horizon. For example, a long alignment period can be found in Tatarstan region (for a timeline of the chairperson-prosecutor alignment logic for Tatarstan see Appendix B). The chairman of the regional court of general jurisdiction, Gennadi Baranov, can look back on a long career in the region s judiciary. After graduating from the prestigious law faculty of Kazan university in 1967, he was appointed judge to one of Kazan`s district courts. 19 After five years he was promoted to the regional court. First as a regular judge (1972), followed by the position of vice chairman (1973), and eventually as court chairman (1985). 20 He remained court chairman for 26 years and resigned in The incumbent regional prosecutor, Kafil Amirov, started his career as investigator in 1972 in one of Tatarstan district prosecutors` offices. 22 From 1973 he held the position of senior prosecutor in Tatarstan regional prosecutor s office. Between 1980 and 1989 he worked as prosecutor in one of Kazan district offices and from he was first deputy prosecutor of Kazan city. In 1992 he was appointed vice prosecutor, in 1997 first vice, and in 2000 prosecutor of Tatarstan region. If merely considering their duration of presidency both bureaucrats can look back on a 10 year period of alignment. However, if one considers the vice period as well, both bureaucrats achieve alignment of 18 years. In Vladimir region the situation is entirely different. The chairman of the Vladimir regional court, Alexander Malishkin, graduated from prestigious Sverdlovsk law institute in 1987 and worked in two district courts of Vladimir region. 23 In 1995 he was appointed judge of Vladimir s regional court. 24 From 2006 to 2009 he was in the Russian Supreme Court in Moscow, after which he was appointed regional court chairman in Vladimir region. His counterpart in the prosecution office, Vyacheslav Chebotarev, graduated from Krasnoyarsk state university and worked in the district prosecution office of Krasnoyarsk city from 1979 until he eventually reached the position of vice-prosecutor of Krasnoyarsk region. In 2005 he 18 Chairperson-prosecutor alignment = 2010 the year in which alignment started. 19 Tatarstan has 51 district courts, 7 of which are located in Kazan, the capital of Tatarstan region. 20 As of 2012 the regional court of Tatarstan includes 92 judges, 3 vice chairpersons, and 1 chairpersonman. 21 Note that the rule restricting chairperson tenure to two successive periods has been enacted only in Tatarstan has 43 district prosecutor s offices. 23 There are 19 district courts in Vladimir region. 24 Vladimir court has 54 judges (as of 2012)

11 was appointed regional prosecutor of Vladimir regional court. 25 According to our definition of alignment both bureaucrats have an alignment of merely one year Dependent variable In order study the effect of judicial alignment on criminal court decision-making we are going to study the implementation of a specific article of the Russian criminal code (art. 159). The fraud article is a very vivid example how prosecutorial and judicial discretion interact and result in a repressive implementation of the criminal law in the tight corset of bureaucratic reporting scheme. Prosecutorial discretion refers to ability of the prosecutor to choose the article of the criminal code which is most suitable to convict a criminal suspect (and to recommend an appropriate sentence respectively), while judicial discretion is the decision of the judge to declare to suspect guilty and punish him accordingly. In Section 2.3 we have shown that judicial discretion to convict or to acquit is none existence. In the following we will demonstrate the judicial description of the respective sentence term is limited as well. However, alignment can reduce the pressure from the judge to punish the convicted with the severe sentence. Prosecutorial discretion and Article 159 : The best known example for prosecutorial discretion in the last years is the implementation of Article 159 of the Russian criminal code intended for fraud crimes. 26 This article enjoys great popularity among prosecutors for prosecuting entrepreneurs and managers for crimes in the sphere of entrepreneurial activities. However, the fact that the fraud article is used for prosecuting entrepreneurial crimes is highly problematic, because fraud is not a specific crime which falls in the category of entrepreneurial crimes. Although fraud is broadly classified as economic crime (art ), specifically it falls in the category of crimes against property (art ). 27 Hence a large share of the of incoming fraud cases are no real offences that qualify as stealing of other people's property or the acquisition of the right to other people's property by swindling or breach of trust but attempts to convict entrepreneurs for law violations in the sphere of entrepreneurial activities. But why do prosecutors deliberately choose Article 159 instead of going for the prescribed articles in the section for entrepreneurial crimes (art )? The answer is that less evidence is required; due to the proliferation of fraud cases almost all bureaucrats are familiar with the requirements; and the catalogue of possible 25 Krasnoyarsk and Vladimir are almost 4000km apart from each other. 26 For the specific wording of article 159 (fraud) of the Russian criminal code see Appendix C. 27 Fraud convictions make up 6.9% percent of all economic crime convictions in Specifically, there were convictions of criminal crimes in convictions were in the economic sphere of which were for convictions for fraud (art. 159).

12 punishments is larger. First, the fraud article is deliberately written in an very opaque way allowing for a wide range of interpretations (for an English translation of the fraud Article see Appendix C). 28. Thus, there is much more discretion of courts as to how to deal with it (as to, say murder or manslaughter articles) and very often substantial economic rent to be extracted by all participants of the process; allowing for all sorts of possible crimes to be convicted under this article). In comparison the articles in chapter 22 are of very specific nature, are riveted to specific crimes, provide for specific evidence to legitimize a conviction. In most cases the collection of such evidence requires specific economic and financial knowledge which prosecutors normally do not have (e.g. for the analysis of financial statements). Second, due to the frequent implementation of this article there are standardize procedures for the acceptance of incoming fraud cases and in the internal processing has been established. These standardized bureaucratic patterns allow the staff of courts and prosecution office to save time and effort and increase the chances of acceptance (e.g. minimize the risk of formal errors). Third, for fraud differentiate between three level degrees and therefore allow the whole arsenal of possible punishments (up to 10 years of imprisonment) and allows pressure tools such as pre-trial detention (which is prohibited for other entrepreneurial crimes). Judicial discretion and conditional sentences: Second, we look at sentencing outcome for fraud offenders. Although the criminal code provides a large number of possible punishments, fraudsters are most often either sentenced to prison, or released on probation. 29 In 2010 nationwide individuals were convicted for fraud of which 8481 were sentenced to prison (29.8%) and released with a conditional sentence (41.6%). According to Article 73 the court can prison sentence condemn the defendant to a conditional sentence if the judge premises that the convicted can be corrected without enduring the punishment than the convicted can receive a conditional release. 30 When given a conditional sentence the court considers the character and degree of social danger by the committed crime, the personality of the convicted, in particular mitigating and aggravating circumstances. The way how condition for release is defined in the Russian criminal system is very vague and imprecise; thus, in many cases the judges could have a substantial discretion in this area, leading to very different outcomes for essentially the same crimes and types of accused. Thus 28 The fact that the article is missing any concrete description of fraud (fraud types) has moved the Supreme Court to think about an update of the fraud article. 29 Next to imprisonment (art. 56) and conditional sentence (art. 73) the criminal code, among others, allows for fines (art. 46, which is the third most frequent punishment for fraudsters), or the deprivation of the right to hold a specific office, or engage in specific activities (art. 47). 30 According to the same Article a conditional sentence can not be granted to felons convicted for sex offenses against minors (under the age of 14), for a crime committed during the probation period of a conditional sentence or during imprisonment, and for a criminal relapse (recidivism)

13 we define the repressiveness of the Russian criminal courts as the share of prison penalties in the total number of prison penalties and conditional releases in the region. This variable, as Figure 1 show, varies a lot across Russian regions, and forms the basis of our investigation. As a result any explanatory variable should be orthogonal to the dependent variable. Figure 1: Repression index for articles 159: fraud Density totalfraud_credibility Note: Ratio of imprisonments divided by the sum of imprisonments plus conditional sentences for fraud convictions (article 159) 3.3. Method In a nutshell, we regress the court repression ratio on the chairperson-prosecutor alignment while controlling for controlling for a number of region-, court-, judge-, and prosecutor-specific variables. During the year 2010 a number of criminal justice bureaucrats had been subject to replacements. 31 For the respective regions we apply the following allocation logic: we assign the region to the court chairman (the same applies to regional prosecutor) with the longest tenure duration in If a prosecutor had been replaced in October 2010, we still credit him with the year, since his successor was only two months in office (we test of this assumption in a specific robustness test, see Section 5). Our empirical analysis will be based on 78 regions (out of 83 regions). We have to exclude four regions because of the following reasons. First and a standardized procedure in empirical research on the Russian Federation, we exclude Chechnya region and the three autonomous okrugs. For the former the data is unreliable, while the later geographical entities are sub-units of other regions. Second we exclude Belgorod region (a small region at the western border to 31 Apart from the critical case of Belgorod region which witnessed a chairperson and a prosecutor replacement (which is discussed in footnote 21) three more regions deserve close scrutiny: Ingushetia region in which the chairperson resigned in October 2010 and Volgograd and Leningrad region in which new regional prosecutors were appointed in April 2010.

14 Ukraine), because the regional prosecutor had been replace twice during the year making any region-prosecutor allocation difficult. 32 In addition, Belgorod is the only region in which both the incumbent chairman and prosecutor were dismissed during the year. In our baseline specification we control for a number of region-specific variables which may affect both the dependent and explanatory variable. Specifically, we include the gross regional product, the number of population and urban population, and the share of the population living below the minimum level. Moreover we add the crime rate 33 and its squared term in order to account for its non-linear effects (the results are robust to the exclusion of the squared term). We average all controls over the preceding 10 years ( ) and use natural logs to minimize the influence of outliers on our results. In further regressions we control for further court-specific variables such as total convictions (as well as total convictions for fraud and economic crimes), acquittal rate, as well as the regional murder and alcoholism rate (number of registered alcohol addicts in medial facilities). Moreover we test for other alignment proxies such as the tenure and age differences 34 of chairpersons and prosecutors. We create a dummy which is equal to one, whenever the court and procuracy office are located on the same street. Finally, to be confident to rule out the omitted variable bias we control for chairperson-and prosecutor-specific characteristics: age, local origin 35, mobility 36, gender, federal background, experience in the police forces, dummy which is one for bureaucrats who moved to their region of office only after their chairperson/prosecutor appointment, and a dummy equal one for chairperson/prosecutors who previously were in charge of a different regional court of general jurisdiction/regional procuracy. When looking at chairperson exclusively we further control for the sub-sample of chairpersons who have a background in the prosecution (regardless of the administrative and hierarchical level), as well as experience as private lawyer (after 1991 only). In terms of prosecutor-specific variables we control for experiences in certain branches of the prosecution, specifically for career backgrounds in the military, transport, and environment procuracy. 32 In May 2010 the regional prosecutor resigned. His position was temporarily assumed by the regions vice prosecutor until November 2010 when eventually a new prosecutor was appointed. 33 Registered crimes on 100 thousand population (Rosstat). 34 Judge age and tenure minus prosecutor age and tenure. 35 Dummy equals one whenever the bureaucrat was born in his region of office, zero otherwise. 36 Number of region the bureaucrats as worked after graduation from university.

15 IV. RESULTS Table 1 reports our basic results. In specification (1) we simply regress the repression ratio for fraud convictions on the chairman-prosecutor alignment while controlling for some region-specific variables. The alignment variable turns out to be negative and highly significant. In other words, a long period of mutual interaction between court chairman and regional prosecutor is associated with a less repressive implementation of criminal justice for fraud convictions (in terms of imprisonments and conditional release) by the regional court. What does this mean in real terms? For example, Krasnodar region is characterized by a chairman-prosecutor alignment of 4 year and a repression ratio of (the sample average is 0.417). 37 An increase of the bureaucratic alignment by one year 1, ceteris paribus, will decrease the ratio by 0.01 percent points. This reduction can be translated into a 4 percent reduction imprisonment sentence (if the alignment would double to 8 years the reduction could reduce inpriosnments by 16 percent from 406 to 343 prison sentences). Moreover, we find a positive and highly significant coefficient for the regional crime rate. The negative and highly significant quadratic term indicates that an increasing crime rate is associated with an increasing repression ratio until the turning point is reached at about 7.3 (for specification (1)). 38 Throughout regressions (1)-(9) alignment and the crime rate remain robust while no other covariates are significant (gross regional product, population, urban population, and the share of population receiving income below living minimum wage). In regressions (2)-(9) we separately control for different court- and region-specific variables, without any significant results. In regression (10) we substitute our initial alignment variable by a new alignment variable based on a different definition. Instead of assuming that alignment starts if both chairman and prosecutor worked side by side in at least a vice position, this version argues that alignment can only develop if both are leading bureaucrats in their respective institution (if one looks at the previously discussed example of Tatarstan region, see Appendix A, alignment based on the mutual tenure duration will drop to 10 years). Once substituted in regression (10) tenure alignment is insignificant (respective p-value: 0.147). Therefore, we conclude that the significant results of our initial alignment variable are driven by the regions in which chairpersons and prosecutors were able to develop close ties before their appointment as top bureaucrats of their institution. At the same time, this means that in these regions judicial bureaucrats were able to make a career in public service without being subject to inter-regional rotation scheme (particularly relevant for prosecutors). The respective 37 In 2010 the Krasnodar regional court of general jurisdiction imposed 406 prison sentences and 226 conditional sentences based on based on Article 159 (fraud) violation. 38 The average crime rate (log) is 7.6

16 regions are: Voronezh, Lipetsk, Moscow region, Moscow City, Kabardino-Balkaria, Tatarstan, Udmurt, Chuvash, Perm, Samara, Kurgan, Buryatia, Khakassia, Zabaikal, Kemerovo, Primorsky, and Magadan (18 regions). In Table 2 we turn our attention to chairman specific characteristics. We find a positive and significant effect for chairpersons who previously worked in police units (there are only three chairpersons who used to work in police units). 39 Thus having a background in law enforcing agency increases the repressivity of criminal law implementation by regional courts. Moreover, we find a negative and marginally significant coefficient for chairpersons with a background in prosecution. Considering that that the prosecution should be independent from the judicial system, it is surprising to find that 21 of 79 regional courts have completed stages of their career in the public prosecution. However, the experience among those chairpersons in prosecution units varies substantially. One the one hand there are cases like the chairperson of Pskov region, who only worked 10 years after graduation in the regional prosecution, after which he became appointed judge and eventually of the regional court. On the other hand, one finds cases like the chairperson of Chukotka region that spend his whole professional career in prosecution, including a 10 year term as regional prosecutor of Chukotka region, after which he changed sides and became appointed chairperson of the regional court. In a nutshell, courts headed by chairpersons with prosecution experience make less repressive judgment in fraud convictions. Throughout regressions (11)-(21) the chairmanprosecutor alignment remains negative and significant, while all other chairman-specific variables turn out to be insignificant (age, local origin, mobility, regional position, private business experience, gender, appointed from a different region, regional court chairman in some other region in the past, and federal position). In a further attempt to test the robustness of our results we add a number of prosecutor-specific characteristics to our baseline regression (1). The results are reported in Table 3. The judicial alignment variable is the only prosecutor s characteristic that is significant. Throughout regression (22)-(29) the negative association between alignment and the repression ratio prevails. Age, local origin, mobility, police, different prosecution branches (prison, military, transport, environment), appointed from a different region and the sub group who already were regional prosecutor in a different region have no effect. Summing up, our main result suggests that if the judge and the prosecutor are aligned, the regional courts turn less repressive towards entrepreneurs. There are several possible explanations for this finding. First, if informal relations exist, judges may be less concerned 39 Specifically, these are the chairpersons of Murmansk, Karbardino-Balkaria, and Altai Krai. All three spend about 10 years police forces after graduating.

17 about prosecutor pushing the appeals up to the limit. In this case then they have smaller pressure to make decision in strict accordance to the prosecution as in case when no alignment exists and the prosecutor is likely to be much more aggressive towards the judge. Second, it is possible that the prosecutor and judge could be more likely to form rent-seeking coalitions, where entrepreneurs can receive lower punishment in exchange for informal payments (though, of course, obtaining direct evidence with respect to this hypothesis is very hard). In the first case the informal relations between the judges and the prosecutors actually improve the functioning of the Russian jurisprudence, serving as a tool liberating judges from enormous pressure to deliver results (and thus to be repressive). One could hypothesize that the presence of informal relationships could grease the wheel of the judiciary. Similar to corruption, which can grease the wheel of economic growth (however, which is according to the respective literature highly debatable, see Aidt 2003; Svenson 2005) chairpersonprosecutor alignment can partially mitigate the negative effect of a dysfunctional bureaucracy, giving judges more discretion in their decision-making and thereby reducing the implementation of criminal law. In the second case, results are more ambiguous. While repressions against entrepreneurs become weaker, at the same time there is strong evidence of rent-seeking. However, we still believe that in this case the grabbing hand may be the first-best option, as opposed to the repressive functioning of the courts driven entirely by the bureaucratic logic. V. CONCLUSION It remains to summarize the results of our investigation. We have attempted to find out whether the existence of informal links between the judges and the prosecutors does affect the repressiveness of regional courts while dealing with the entrepreneurs. Our findings indicate the existence of a strong and robust effect: alignment of judges and prosecutors results in a decrease or repressiveness of courts. We provide two interpretations for this result. First, alignment may reduce the pressure of prosecutors on the judges, and allow them to behave in a less repressive way, and second, judges and prosecutors may form rent-extracting coalitions, which, on the one hand, reduce the repressiveness of the courts, but on the other hand extract informal payments from the entrepreneurs. In both cases, however, we can cautiously conclude that the informal alliances tend to somewhat correct the existing imbalances in the Russian law enforcement system, reducing the pressure to generate results by demonstrating higher conviction rates.

18 Table 1: Impact of chairman-prosecutor alignment on the implementation of criminal justice for fraud convictions in 2010; dependent variable: share of prison penalties in the total in the total number of prison penalties and conditional release OLS (1) OLS (2) OLS (3) OLS (4) OLS (5) OLS (6) OLS (7) OLS (8) OLS (9) OLS (10) Alignment (vice) *** ** ** *** *** ** *** *** ** (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) Log grp (0.05) (0.05) (0.05) (0.05) (0.05) (0.06) (0.05) (0.05) (0.05) log urban population (0.13) (0.13) (0.13) (0.13) (0.13) (0.13) (0.12) (0.12) (0.10) Log population (0.12) (0.12) (0.13) (0.12) (0.12) (0.12) (0.11) (0.12) (0.10) Log below minimum (0.10) (0.10) (0.10) (0.10) (0.10) (0.10) (0.10) (0.11) (0.09) Log crime 1.902*** 1.927*** 1.908*** 1.888*** 1.930*** 1.875*** 2.046*** 1.978*** 2.070** 1.957*** (0.71) (0.71) (0.71) (0.70) (0.72) (0.70) (0.72) (0.73) (0.80) Log crime squared ** ** ** ** ** ** *** ** ** ** (0.05) (0.05) (0.05) (0.05) (0.05) (0.05) (0.05) (0.05) (0.06) Total convictions (fraud) 0.00 (0.00) Total convictions (economics) 0.00 (0.00) Rate of acquittal (fraud) (1.21) Alcoholism 0.00 (0.00) Murders 0.00 (0.00) Tenure differences (0.00) Age differences (0.00) Same street (0.08) Alignment (head) Constant *** *** *** *** ** *** *** *** ** *** (2.59) (2.60) (2.60) (2.57) (2.71) (2.58) (2.61) (2.63) (2.95) (2.63) Observations R Notes: robust standard errors in parentheses; *** 1% significance level; ** 5% significance level; * 10% significance level. Significant results marked bold.

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