Commentary on Article 189. Misappropriation or Embezzlement of Entrusted чуж Property of the Criminal Code of the Republic of Kazakhstan

1. Misappropriation or embezzlement, that is, the theft of another person's property entrusted to the guilty person, –

shall be punishable by a fine in an amount of up to one thousand monthly calculation indices, or corrective labour in the same amount, or engagement in community service for a period of up to eight hundred hours, or restriction of liberty for a period of up to three years, or imprisonment for the same period, with or without confiscation of property.

2. The same act committed:

1) by a group of persons by prior conspiracy;

2) excluded by Law of the Republic of Kazakhstan dated 21 January 2019 No. 217-VI;

3) by a person through the use of their official position, –

shall be punishable by a fine in an amount of up to three thousand monthly calculation indices, or corrective labour in the same amount, or engagement in community service for a period of up to one thousand hours, or restriction of liberty for a period of up to four years, or imprisonment for the same period, with confiscation of property, with deprivation of the right to hold certain positions or engage in certain activities for a period of up to three years or without such deprivation.

3. The acts provided for in parts one or two of this Article, if committed:

1) on a large scale;

2) by a person authorised to perform state functions, or a person equated to such a person, or an official, or a person holding a responsible public position, where such acts are associated with the use of their official position;

3) repeatedly, –

shall be punishable by restriction of liberty for a period of two to seven years or imprisonment for the same period, with confiscation of property, and in the cases provided for in subparagraph 2), by a fine in the amount of ten to twenty times the value of the stolen property or imprisonment for a period of two to seven years, with confiscation of property and lifelong deprivation of the right to hold certain positions or engage in certain activities.

4. The acts provided for in parts one, two or three of this Article, if committed:

1) by a criminal group;

2) on an especially large scale, –

shall be punishable by imprisonment for a period of seven to twelve years, with confiscation of property, with or without lifelong deprivation of the right to hold certain positions or engage in certain activities.

The public danger of the crime under consideration is expressed in the fact that the guilty person, using the powers available to them, unlawfully and gratuitously retains or converts another person's property to their own benefit, thereby causing material damage to the owner of such property.

In cases of misappropriation or embezzlement, on the one hand, the owner or other holder of the property is deprived of property that was in their ownership or possession and which they voluntarily and officially entrusted to the guilty person, thereby suffering property damage; and, on the other hand, the guilty person, instead of lawful possession, unlawfully, that is, contrary to and in circumvention of the established procedure for the distribution of material benefits, appropriates all the rights of the owner or lawful holder in respect of the entrusted property, as a result of which they become enriched by an amount equal to the value of such property.

Within the framework of the criminal law provision, two independent forms of theft are effectively combined: misappropriation and embezzlement of another person's property.

What these forms of theft have in common is the special relationship of the perpetrator to the property being stolen, which is in their lawful possession or under their control.

The object of the crime is property, that is, the totality of social relations concerning the possession, use or disposal of property.

The subject matter of misappropriation or embezzlement of entrusted property has the same characteristics as the subject matter of other forms of theft (Articles 187 and 188 of the Criminal Code).

From the objective side, the crime is expressed in the commission of two alternative acts: misappropriation or embezzlement of entrusted property belonging to another person.

The elements of the theft under consideration presuppose that the guilty person converts to their own benefit only property entrusted to them. If the property has not been entrusted to the person, a different form of theft is involved. Lawful possession must be distinguished from cases in which a person merely has access to property but does not possess it, for example, under supervision or at a guarded facility.

Misappropriation is the initial stage of embezzlement. However, sometimes there is no period of time during which a person unlawfully possesses another person's property (for example, a warehouse keeper at a storage facility sells the goods entrusted to them and converts the proceeds into their own property). In this case, the act constitutes embezzlement as a form of theft of another person's property. In such circumstances, the stage of misappropriation is absent.

The essence of criminal misappropriation consists in performing various actions aimed at taking possession of property: retaining entrusted property (concealing it, failing to return an item transferred to them by denying the fact that it was entrusted to them, or by making false statements that they disposed of the entrusted property in accordance with the owner's wishes, or under the false pretext that the transferred valuables were accidentally or negligently lost, destroyed or stolen by other persons); unlawfully refusing or evading the return of entrusted property; using entrusted property for its intended purpose; separating and removing entrusted property (distinguishing it from the general mass) by transferring it into their own property funds; converting entrusted property to their own benefit.

Embezzlement is the transfer of property to another person for the purpose of converting it to the benefit of the latter. In this case, the form in which the transfer was carried out (sale, gift, exchange) or the alienation of the entrusted property is irrelevant; the main point is that such property is gratuitously transferred to other persons for mercenary purposes or consumed by the guilty person. In judicial practice, embezzlement is most often charged where, at the time of the investigation of the criminal case, the entrusted property is no longer in the possession of the guilty person and only its value can be compensated to the owner.

When committing embezzlement, the guilty person does not establish unlawful possession of the entrusted property even for a short period of time, but consumes it (usually food products) or disposes of it directly from their lawful possession, converting into their own benefit or the benefit of other persons the money or other property received from the sale of the entrusted property, or uses non-property services paid for with the entrusted property.

The distinguishing feature between misappropriation and embezzlement is whether or not the property is in the possession of the guilty person at the moment the theft is completed. In the case of misappropriation, the property remains with the guilty person, who establishes unlawful possession over it in place of lawful possession; in the case of embezzlement, the property is absent because it has been unlawfully alienated, spent or consumed as a result of the replacement of lawful possession with unlawful use or disposal.

Paragraph 4 of Clause 18 of the Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan “On Judicial Practice in Cases of Theft” emphasises that misappropriation is a form of theft consisting of the unlawful and gratuitous conversion, for mercenary purposes, of property belonging to another person and entrusted to the guilty person, to their own benefit or to the benefit of other persons, causing damage to the owner or other holder of such property, provided that the guilty person has not yet spent or otherwise alienated the property. Where the guilty person has spent or otherwise alienated the stolen property, their actions must be classified as embezzlement.

An act is subject to classification as misappropriation or embezzlement of another person's property if such property was in the lawful possession of the guilty person by virtue of their official duties or contractual relations formalised by the relevant legal documents (agreement, employment contract, official powers, etc.), as well as without a written agreement (for example, an oral agreement with a shepherd, etc.).

In terms of its structure, misappropriation and embezzlement are recognised as crimes with material elements. Misappropriation is considered a completed crime from the moment unlawful possession of the property is established. Failure to return property within the prescribed period or failure to present it during an audit or inspection may indicate misappropriation as a completed crime. However, these facts may also result from other circumstances (loss of the property, its destruction, damage, theft by other persons, etc.). Embezzlement is considered completed at the moment the property is used (consumed or otherwise expended) or alienated.

The subjective side is characterised by direct intent and a mercenary purpose. The person is aware that they are unlawfully retaining entrusted property or alienating it, foresees that their actions cause material harm to the owner and, acting out of mercenary motives, desires this outcome.

The subject of the crime (special subject) is a sane individual who has reached the age of 16 and to whom the property has been entrusted in lawful possession.

As qualifying elements of the offence under consideration, the legislator has provided for the commission of misappropriation or embezzlement of entrusted property belonging to another person:

— by a group of persons by prior conspiracy (subparagraph 1) of part 2 of Article 189 of the Criminal Code);

— by a person through the use of their official position (subparagraph 3) of part 2 of Article 189 of the Criminal Code).

The qualifying element “by a group of persons by prior conspiracy” is discussed in the commentary to Article 188 of the Criminal Code.

The subjects of theft involving the use of official position are persons holding relevant positions in organisations, enterprises and institutions, regardless of their form of ownership, and exercising powers in relation to property entrusted to them in connection with the positions they hold (team leader, freight forwarder, salesperson, cashier, etc.).

The theft of non-cash funds, including electronic funds, by transferring them from the account of their owner to the account of the perpetrator or another person must be classified under Article 189 of the Criminal Code as theft of property belonging to another person and entrusted to the guilty person, committed through the use of official position, provided that the guilty person has the right to dispose of the funds held in the victim's bank account by virtue of their official position. In the absence of such a right, the act is subject to classification as theft under Article 188 of the Criminal Code or fraud under Article 190 of the Criminal Code.

The use by the guilty person of their official position constitutes a qualifying element of theft; therefore, additional classification of the act under Articles 250, 361 or 362 of the Criminal Code is not required.

If misappropriation or embezzlement of entrusted property belonging to another person is committed by a person authorised to perform state functions, or a person equated to such a person, or an official, or a person holding a responsible public position, and the act is associated with the use of their official position, their actions must be classified under subparagraph 2) of part 3 of Article 189 of the Criminal Code, and additional classification as abuse of official powers under Article 361 of the Criminal Code is not required.

Misappropriation or embezzlement of entrusted property belonging to another person has similar features to a number of other crimes against property. First and foremost, these include theft (Article 188 of the Criminal Code), fraud committed through the use of official position (subparagraph 3) of part 2 of Article 190 of the Criminal Code), as well as causing property damage through deception or abuse of trust involving the use of official position (subparagraph 2) of part 3 of Article 195 of the Criminal Code).

The distinction between misappropriation and embezzlement of property belonging to another person and entrusted to the guilty person, on the one hand, and related offences, on the other, is made according to the object, the characteristics of the subject matter, the objective elements of the crime, as well as the characteristics of the subjective side and the subject of the crime.

In terms of the object and physical characteristics of the subject matter, this crime is distinguished from acts provided for in Articles 284, 291 and 298 of the Criminal Code, the subject matter of which includes radioactive substances, radioactive waste or nuclear materials, weapons, ammunition, explosives and explosive devices, narcotic drugs or psychotropic substances, and their analogues. However, the actions of a guilty person who steals the above-mentioned items or substances are classified not under Article 189 of the Criminal Code, but under the articles establishing liability for the theft or extortion of the listed items, the object of which is public safety and public order (Chapter 10 of the Criminal Code) or public health and morality (Chapter 11 of the Criminal Code).

Misappropriation or embezzlement of entrusted property belonging to another person differs from theft in the method of committing the offence: in the case of theft, the property of the owner or other holder is secretly taken, whereas in the case of misappropriation or embezzlement, there is no seizure, and the property being stolen has been entrusted to the guilty person on lawful grounds.

The main distinguishing feature between these forms of theft is the subjective side, that is, the attitude of the subject of the crime towards the property being stolen. When committing theft, the subject either has no relationship whatsoever to the property being stolen or merely has access to it for the performance of technical or production functions, which do not give rise to any powers concerning its possession, use, disposal or protection. Misappropriation or embezzlement is characterised by the fact that the guilty person uses the powers they possess in relation to the property being stolen. Theft of property committed by a person who does not possess such powers but has access to the property in connection with their work must be classified as theft under Article 188 of the Criminal Code.

These crimes also differ in terms of their subjects. Under part 1 of Article 188 of the Criminal Code, the subject of theft is a person who has reached the age of 16; under parts 2–4 of Article 188 of the Criminal Code, the subject is a person who has reached the age of 14, whereas the subject of misappropriation or embezzlement is a special subject.

Misappropriation or embezzlement of entrusted property belonging to another person must also be distinguished from fraud (Article 190 of the Criminal Code). When committing fraud, the guilty person does not directly seize another person's property themselves, but obtains it from the victim through deception or abuse of trust, whereby the victim voluntarily hands over their property to the offender. Fraud also differs from misappropriation or embezzlement in that, in the case of fraud, the guilty person unlawfully obtains the right to another person's property through deception or abuse of trust, while no seizure of the property takes place.

Misappropriation as a form of theft must be distinguished from the temporary borrowing of another person's property by a person who was responsible for it. If entrusted property is unlawfully used, but without the intention of converting it into the ownership of the guilty person or third parties, such actions should not be regarded as theft. Where the relevant elements are present, the actions of the guilty person may be classified as arbitrary self-help (Article 389 of the Criminal Code). The intention to subsequently return the property taken or its equivalent may indicate the absence of mercenary motives on the part of the guilty person.

Part 3 of Article 189 of the Criminal Code provides for particularly qualifying elements of misappropriation or embezzlement of entrusted property belonging to another person:

on a large scale;

by a person authorised to perform state functions, or a person equated to such a person, or an official, or a person holding a responsible public position, where the act is associated with the use of their official position;

repeatedly.

According to subparagraph 38) of Article 3 of the Criminal Code, a large amount or large-scale damage under Article 189 of the Criminal Code means the value of the property or the amount of damage exceeding one thousand times the monthly calculation index.

The concept of “repeatedly” is explained in the commentary to Article 188 of the Criminal Code.

In accordance with subparagraph 27) of Article 3 of the Criminal Code, persons authorised to perform state functions include civil servants in accordance with the legislation of the Republic of Kazakhstan on public service and deputies of maslikhats.

The concepts of persons authorised to perform state functions, persons equated to persons authorised to perform state functions, officials and persons holding responsible public positions are set out in the commentary to subparagraphs 27), 28), 26) and 16) of Article 3 of the Criminal Code.

A mandatory condition for criminal liability under subparagraph 2) of part 3 of Article 189 of the Criminal Code is the use by the specified person of their official position when misappropriating or embezzling another person's property.

Part 4 of Article 189 of the Criminal Code establishes liability for the acts provided for in parts 1, 2 or 3 of this Article, if they are committed:

by a criminal group;

on an especially large scale.

The concepts of these particularly qualifying elements are provided in the commentary to Article 188 of the Criminal Code.

The acts provided for in parts 1 and 2 of Article 189 of the Criminal Code are classified as crimes of medium gravity.

The acts provided for in parts 3 and 4 of Article 189 of the Criminal Code are classified as serious crimes.

Commentary of 2021 to the Criminal Code of the Republic of Kazakhstan, by Isidor Shamilovich Borchashvili, Honoured Figure of Kazakhstan, Doctor of Law, Professor, Academician of the National Academy of Natural Sciences of Kazakhstan, member of the Scientific Advisory Councils under the Constitutional Council of the Republic of Kazakhstan and the Supreme Court of the Republic of Kazakhstan, member of the working group on reform of the law enforcement system under the Security Council of the Republic of Kazakhstan, Honoured Employee of the Ministry of Internal Affairs of the Republic of Kazakhstan.

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