The litigation with a Pension Fund
INTELLECT-C proved that the Russian-based operate of the international company acted in good faith in the trail vs Pension Fund
INTELLECT-S is currently representing the Russian-based operation of the leading international recruiter and HR outsourcer employing over 31,000 staff and 650,000 associates in more than 5,100 offices in 60 countries.
Our client quarterly contributions to the statutory social insurance and pension funds for its more than 6,000 people in Russia alone amount to millions of rubles, as much as any fines the funds may impose for any irregularity they may find in reporting — as was exactly the case at hand: the Russian Pension Fund refused, on no valid grounds, to accept the Company's quarterly reporting for the 3rd and 4th quarters of 2013 and then accrued over RUB10 million in fines for the delay through its own fault. The matter was compounded by the threat of similar refusals and fines in the future, whereas the Pension Fund gave neither merits nor valid coherent reasons for its refusal, and generally avoided any contact with the company.
Disagreeing with the regulator's unreasonable refusal and fines, the Company sued. In representing their client, INTELLECT-S's attorneys conducted a massive task of reviewing: they went through the entire history of it's contributions to the Pension Fund, tracked the Fund's acceptance acknowledgments, and checked and reconciled all figures in order to rule out technical or clerical errors, poring through hundreds of pages of codes, digits and abbreviations, and made extensive research of relevant procedural law.
Finding no breach in the client's reporting which the Pension Fund used to accept without comment in the past, we arrived at the conclusion that the misstatements which the Fund had alleged must have been the Fund clerks' own fault. Our client had made no corrections or adjustments to any of its contributed amounts and could not have been blamed for the discrepancies.
Moreover, we found gross errors in the accrual of the fines imposed on our client: the Fund accrued them on the aggregate amount of contributions over the period of account at the ineffective 10% rate, whereas any fine, if at all applicable, would have applied only to those amounts which were supported with allegedly inaccurate data, at the effective 5% rate.
We also argued in court that no errors, even if our client's, had provided any valid grounds for the fines. The fund must have first notified the contributor of the errors, if any, and required relevant explanations, and then either permitted the Company to make corrections or submit supporting documents, even before evaluating all facts and evidence and holding the contributor liable. The regulator had done none of what it had to, committing a gross breach of procedure.
Our exposition of the Fund's breaches in court persuaded the judge to find the multimillion fines unfounded and strike down the regulator's decision. The Fund accepted all of our client's disputed reporting without comments.
The case was carried out by Julia Kurmambaeva, Partner, INTELLECT-S.