8 June 2022 – Online conversation
The Slovenian legal system provides different approaches to the recovery of illicitly acquired assets. Firstly, the traditional in personam confiscation in criminal proceedings, secondly the extended confiscation in criminal proceedings, and finally confiscation pursuant to the Confiscation of Assets of Illicit Origin Act (ZOPNI). Criminal proceedings provide for the confiscation of the proceeds of a concrete criminal offence under investigation. In contrast, the procedure determined by the ZOPNI allows, with certain limitations, the perpetrator to be deprived of any assets of illicit origin, not just those which were acquired through the criminal offence under investigation. For this purpose, the ZOPNI envisages the implementation of a financial investigation, which is initiated if during pre-trial or criminal proceedings against the alleged perpetrator of a criminal offence there are grounds to suspect that he or she possesses assets of illicit origin in value of over €50,000. which do not constitute the proceeds of the criminal offence under investigation. According to the ZOPNI, this financial investigation may last for up to one year with the possibility of extension for up to six months.
After the completion of the financial investigation, the state prosecutor invites the person under investigation to a hearing, at which he or she is informed of the results of the financial investigation. At this hearing he or she has the right to inspect the collected data, the right to make a statement, and the right to produce evidence. The state prosecutor draws up a record of the statement of the person under investigation and files against him or her the action as a plaintiff in civil proceedings for confiscation of assets of illicit origin. Under the conditions determined by the ZOPNI, the state prosecutor may, even before the civil action is filed, propose to the court to order provisional measures such as temporary insurance of the confiscation of assets of illicit origin or their temporary confiscation.
In the court procedure for confiscation of assets of illicit origin, the legislator provided for the application of the principle of the reverse burden of proof. While the state prosecutor as a plaintiff sets out the facts and proposes evidence to suggest that the origin of the defendant’s assets is unlawful, the defendant can challenge this presumption if he or she proves that the assets were not acquired illegally. If the court upholds the claim, it issues a judgment confiscating the assets of illicit origin. These assets become the property of the Republic of Slovenia with the final judgment.
Proceedings under the ZOPNI are civil proceedings that are inextricably linked to criminal proceedings. While the possibility of confiscation of assets of illicit origin which are not the direct benefit from the criminal act under consideration as a new legal tool of the State Prosecutor’ Office was intensively discussed even before the adoption of the ZOPNI, after its enactment the constitutionality of the statutory regulation was repeatedly reviewed by the Constitutional Court of the Republic of Slovenia. As 2022 marks ten years since the beginning of the implementation of the ZOPNI, the Department of Law and the Department of Criminology of the Faculty of Criminal Justice and Security of the University of Maribor (FCJS), in collaboration with the Central European Professors’ Network, organized a round table discussion on this sensitive topic. The event was held at the Criminal Justice and Security Conference 2022, organized by the FCJS on 8–9 June 2022 in the Congress Centre Thermana Park Laško. The speakers at the round table were Barbara Lipovšek,Senior State Prosecutor, Specialised State Prosecutor’s Office, Mitja Jelenič Novak, Attorney at Law from the Jelenič Novak law firm and Assoc. Professor Benjamin Flander from the Faculty of Criminal Justice and Security of the University of Maribor. The round table was moderated by Professor Bojan Dobovšek from the the Faculty of Criminal Justice and Security of the University of Maribor.
Professor Dobovšek greeted the participants, introduced the co-organizers and introduced the speakers. He informed the participants that the round table was dedicated to the tenth anniversary of the Confiscation of Assets of Illicit Origin Act. However, he looked further back and described as a turning point in Slovenia the foundation of the Commission for the Prevention of Corruption in 2004. He highlighted corruption as a red thread that connects the issues addressed in the round-table discussion. Professor Dobovšek also mentioned the organization of a conference on corruption in the economy, at which the leading topic was the principle of the reverse burden of proof. He emphasized that this was an advanced topic at the time which had also contributed to the adoption of the ZOPNI, and that a thorough public debate had been launched on the issue. Legal experts agreed that the instruments available to combat the accumulation of assets of illicit origin were obsolete and needed to be updated. According to Professor Dobovšek, two important steps in this direction are the two fundamental conventions of the United Nations: the Convention on International Crime and the Convention on Corruption, which are currently under revision. The Convention on Cybercrime is also under review. Professor Dobovšek announced that the discussion at the round table would be carried out from the bottom up, so that the view of the State Prosecutor’s Office would be presented first, then the view of the member of the bar, and finally the view of an expert in constitutional law.
Senior State Prosecutor Lipovšek emphasized that before 2011, the State Prosecutor’s Office did not carry out procedures for the confiscation of assets of illicit origin which are not the direct benefit from the criminal act under consideration. The adoption of the ZOPNI and the introduction of the instrument of confiscation of assets of illicit origin was a novelty and a great challenge for the State Prosecutor’s Office, which gave the state prosecutors important new powers. In her opinion, the State Prosecutor’s Office responded to the new law quickly and in an organized manner. Soon after the adoption of the ZOPNI, however, it became clear that the new law needed to be amended. In the amendment adopted in 2014, several proposals of the State Prosecutor’s Office were taken into account, particularly those aimed at greater efficiency of the instrument of confiscation of assets of illicit origin.
According to Ms Lipovšek, the State Prosecutor’s Office recently sent to the Ministry of Justice new proposals for updating the current law. The State Prosecutor’s Office proposes, inter alia, that the duration of the financial investigation as a preliminary phase of the judicial procedure for confiscation of assets of illicit origin should be extended to at least two years. The period of one and a half years is too short, especially in cases where assets which allegedly are of illicit origin are located abroad or when data and documents need to be obtained from the authorities of other countries. Also necessary is an amendment to Article 34 of the ZOPNI. Pursuant to the provisions of this article, the State Prosecutor’s Office may file an action for confiscation of assets of allegedly illicit origin only in relation to assets still owned or possessed by the defendant. If he or she has sold, spent, or simply no longer possesses such assets, the State Prosecutor’s Office can no longer trace them. Ms Lipovšek asserted that it is in the interest of the Republic of Slovenia to confiscate the value of illicitly acquired assets, even though at the time of issuing the judgment the specific assets, which were found to have been illicitly acquired, are no longer in the domain of the defendant. Therefore, she explained, the State Prosecutor’s Office proposed to amend the ZOPNI with provisions which would allow the courts to order the defendant to pay a sum of money in the amount of the established value of assets of illicit origin, and for the state to take enforcement action against the assets in case of non-payment by the defendant. The Senior State Prosecutor believes that it is neither in the interest of the Republic of Slovenia nor in the public interest that assets, which for example represent 1/16 of certain real estate, are seized and become state property. This would cost the state more than it would benefit it, which is why, in her opinion, the proposal of the State Prosecutor’s Office to amend the current regulation is reasonable and meaningful.
Ms Lipovšek also referred to the instrument of financial investigation, which she described as the strongest tool in the hands of the State Prosecutor’s Office in this type of case. In the future this instrument will be strengthened if the exchange of data and information between the competent authorities in Slovenia and the authorities of other countries becomes more intensive. She emphasized the need for greater specialization of domestic institutions that participate in procedures for confiscation of assets of illicit origin.
Mitja Jelenič Novak, attorney at law, began his speech by noting that the State Prosecutor’s Office is most interested in tools for the confiscation of assets of illicit origin, while practising lawyers have contact with their clients and, as a result, their view is more nuanced. Practising lawyers also ask about irregularities and anomalies that may occur in these procedures and the reasons for them. Mr Jelenič Novak emphasized that a decade ago, when the ZOPNI was in the process of adoption, he was one of the few who opposed it. He pointed out that the original proposal of the ZOPNI was even stricter in terms of interference with fundamental rights than the version of the law that was adopted. He is worried, however, that by amending the ZOPNI we will slowly revert to the draft version. He noted that Professor Emeritus Ljubo Bavcon, who was also sceptical about the ZOPNI, pointed out that during the socialist period special commissions that dealt with the origins of citizens’ assets were established with the aim of equalizing social differences. According to Mr Jelenič Novak, the ZOPNI is similar to that concept, which caused many injustices in the past.
Mr Jelenič Novak warned of irregularities in the implementation of theinstrument of confiscation of assets of illicit origin. According to him, the ZOPNI sets a low standard of proof that triggers the use of this instrument. He also sees a problem, firstly, in the fact that the outcome of the criminal proceedings does not affect the initiation of proceedings under the ZOPNI, and, secondly, in the principle of reverse burden of proof. The 2014 amendment to the ZOPNI regulated this principle even more strictly than its original version. The former stipulated that the defendant must demonstrate the legality of the source of assets as probable, while the amendment determined that the legality of the source of assets must be proven. According to Mr Jelenič Novak, providing such proof can be extremely difficult because the entire procedure is based on the assumption that the defendant is the perpetrator of a crime. Those under financial investigation are often pushed into a complicated position – even if they acquired the assets legally, it was said that 80% have serious difficulties in proving it. Mr Novak explained that this was not a criticism of the work of the State Prosecutor’s Office, but a criticism of the tools that the law made available to them. He clarified that he has no problem with the ZOPNI insofar as it is used against professional criminals. In his experience, problems arise when the State Prosecutor’s Office and the financial administration deal with individuals who have been engaged in entrepreneurship all their lives and then suddenly fall under the suspicion that part of their property is of illicit origin. Mr Jelenič Novak concluded by presenting a case that illustrated the problems he was talking about.
The third speaker, Professor Benjamin Flander, presented the view of a constitutional lawyer, emphasizing that other constitutional law experts might see things differently. He began by referring to the case presented by Mr Jelenič Novak and noted that the Constitutional Court has already dealt with a similar case. It was a case in which the constitutional complaint and the petition to review the constitutionality of certain provisions of the ZOPNI were not filed by the person suspected of a criminal act, but by the person to whom the suspect allegedly transferred the assets of illicit origin. By appealing to the Constitutional Court, this person challenged the order on the initiation of a financial investigation, by arguing that disproportionate measures were taken against her, i.e. measures that are normally carried out against someone suspected of a criminal act. In her constitutional complaint, she emphasized that she was not suspected of a criminal act and that only measures aimed at investigating the reasons for suspecting that assets that were allegedly illicitly acquired by someone else were transferred to her should be taken against her. In contrast, she was subjected to severe measures, as if she were a suspect in a criminal act. Although the Constitutional Court dismissed both the constitutional complaint and the petition, and did not rule on the merits of the case, Professor Flander expressed the opinion that, in accordance with the principle of proportionality and other principles of the rule of law, the financial investigation into the person to whom the assets were allegedly transferred should not be of the same intensity as the one aimed at the perpetrator of a crime.
Professor Flander assessed that the ZOPNI created a great deal of discussion and controversy during the first decade of its existence and that it was doing so even before its adoption by the National Assembly. According to him, the ZOPNI is a comprehensive statutory act and contains many safeguards that can prevent arbitrary ordering and conducting of financial investigation. For example, the financial investigation, as a preliminary phase of civil court proceedings, is regulated by a special chapter which contains 11 articles and the investigation procedure is time-limited to a maximum of one and a half years. Furthermore, in the procedure under the ZOPNI, investigative acts from the Criminal Procedure Act (such as personal and home searches and seizure of objects) may be carried out, but only under the conditions stipulated by this Act. Last but not least, it is also an important safeguard that the confiscation of assets is carried out in a judicial proceeding in which the defendant must be guaranteed all procedural rights.
Nevertheless, Professor Flander agreed with the concerns of Mr Jelenič Novak and drew attention to the conceptual aspect of the principle of reverse burden of proof. According to him, the problem is that in the financial investigation, as a preliminary stage of civil legal proceedings, investigative measures from the Criminal Procedure Act can be used. The procedure under the latter is based on the presumption of innocence, while the principle of reverse burden of proof in the assets confiscation proceedings implies a presumption of guilt, i.e. the assumption that the defendant acquired the assets illicitly. In view of the above, Professor Flander was not surprised that the advocates of the principles of the rule of law were critical when the ZOPNI was adopted, but he also understands the concerns and warnings of its defenders. The latter believe that equating the status and procedural rights of a party in a proceeding under the ZOPNI with the position of a defendant in criminal proceedings would seriously jeopardize the effectiveness of the instrument of confiscation of assets of illicit origin.
Professor Flander drew attention to the status of the defendant in the financial investigation. He made it clear that the original version of the ZOPNI did not contain provisions on the position and rights of the defendant. Two and a half years after its enactment an amendment to the ZOPNI was adopted. This introduced certain rights that the defendant has after the completion of the financial investigation (i.e. before the state prosecutor files a civil lawsuit for confiscation of assets of illicit origin). These rights are (1) the right to be informed of the collected data, (2) the right to make a statement, and (3) the right to present evidence. Professor Flander highlighted as problematic the fact that it follows from the ZOPNI amendment and from the implementation of its provisions by the State Prosecutor’s Office that these rights are guaranteed to the defendant only if, after the completion of the financial investigation, a civil lawsuit is filed. If this does not happen, the person against whom the financial investigation was conducted cannot assert these rights.
Towards the end of his presentation, Professor Flander briefly referred to the ZOPNI-related decisions of the Slovenian Constitutional Court. He emphasized that the Constitutional Court issued only two decisions, namely the decision that annulled the retroactive effect of the provisions of the ZOPNI on financial investigation and the decision that referred to the deadline for appeal against the decision of a court on temporary insurance or confiscation of assets in the period before the adoption of the amendment to the ZOPNI. In all other cases in which it was approached by individuals whose finances were being investigated, the Constitutional Court rejected both the constitutional complaints and the petitions for the review of constitutionality of provisions of the ZOPNI.
Professor Flander noted that in one of these cases two constitutional judges who voted against the majority decision took the position that the provision of the ZOPNI on the right to make a statement after the completion of the financial investigation and the ex post judicial protection in civil proceedings do not guarantee the defendant an effective legal remedy and judicial protection. In the opinion of these two judges, in the event of an arbitrary financial investigation or implementation of disproportionate measures during the course of the investigation the defendant should be guaranteed an ad hoc legal protection. The legal nature of the financial investigation, which is referred to as a preliminary phase of the civil court proceedings for confiscation of assets of illicit origin, de facto is not civil, but quasi-criminal. Professor Flander agreed with their argument, that ex-post civil court procedure is not an adequate legal framework for effectively preventing and eliminating the consequences in cases where arbitrary financial investigation would be initiated and disproportionate investigative measures would be implemented.
Professor Dobovšek, the moderator of the round table, responded to the speakers by asserting that tectonic shifts have taken place in the field of crime. Nowadays, economic and white-collar crime prevail; these are significantly more difficult to detect, investigate and prosecute than other types of crime. According to Professor Dobovšek, a characteristic of this so-called elite crime is that it is often difficult to distinguish it from legitimate economic activity. For this reason, the European Union proposed to the member states and their justice systems the introduction of instruments for tracking assets of illicit origin such as financial investigation, reverse burden of proof etc. Professor Dobovšek agreed that in Slovenia the adoption of the ZOPNI in 2011 was and still is a great challenge for the State Prosecutor’s Office. According to him, the State Prosecutor’s Office, other stakeholders of proceedings under the ZOPNI, and independent legal experts are still looking for optimal solutions that, on the one hand, pursue the effectiveness of the mechanism and, on the other hand, acknowledge the fundamental rights and procedural safeguards of the defendants.
Senior State Prosecutor Lipovšek responded to Mr Jelenič Novak and Professor Flander by pointing out that, similar to judges, state prosecutors are obliged to implement laws, both the Criminal Procedure Act and the Civil Procedure Act, as well as the ZOPNI. She emphasized that in financial investigations and procedures for confiscation of assets of illicit origin, the main guideline of state prosecutors is the equal treatment of all who are involved in these procedures. If the state prosecutor decides that the conditions for ordering a financial investigation are met, he or she is obliged by law to order such an investigation. She estimated that the condition that assets of allegedly illicit origin must have a value of at least €50,000 is a high threshold for ordering a financial investigation.
She referred to a hypothetical case where the state prosecutors were investigating a suspect for the crime of trafficking in illicit drugs. In the integrated financial investigation, the police tried to find out how much material and financial benefit the suspect had obtained from the commission of the crime. During the course of the investigation, the Police and the State Prosecutor’s Office found that the suspect has assets that significantly exceed his legal income. The police established that the suspect was unemployed, yet owned expensive vehicles, often travelled abroad, bought luxury goods, etc. According to Senior State Prosecutor Lipovšek, the competent authorities cannot remain indifferent in such a situation and are obliged to order procedures according to the ZOPNI. The State Prosecutor’s Office is obliged to determine, on the basis of the police report, whether the conditions for the initiation of a financial investigation are met. If so, the state prosecutor orders a financial investigation.
Lipovšek emphasized that Article 17a of the ZOPNI, which introduced the right to a statement after the completion of the financial investigation, was added at the initiative of the State Prosecutor’s Office. She pointed out that in a financial investigation, the State Prosecutor’s Office obtains 99% of relevant data and information from public databases managed by stakeholders who participate in the financial investigation team through their representatives. Nevertheless, the defendant’s statement and explanations are also important for the decision of the State Prosecutor’s Office on whether to file a civil lawsuit for confiscation of assets of illicit origin. The State Prosecutor’s Office wishes that the defendants and their legal representatives would be more active at the hearings after the completion of the financial investigation, that they would use the right to make a statement more often, and that they would contribute to a greater extent to the correct finding of the facts that are the basis for the decision of a state prosecutor to file a lawsuit. Senior State Prosecutor Lipovšek made it clear that it is in the interest of the State Prosecutor’s Office that the procedures are legal and fair and that assets are confiscated only in cases where they were acquired illicitly.
Professor Dobovšek concluded the round table discussion by thanking the speakers and inviting the participants to attend other round tables and panels that will be organized during the rest of the conference.
