‘In order to avoid paying the single social tax, the management of Ural car factory JSC made some remuneration payments to its employees for the job they did on the basis of the work contract via Zlatoust subsidiary of RosProm Insurance Company. The payments were recorded in the accounting papers as the monthly insurance allowances that were actually ten times greater than the employees’ insurance contributions. In its turn, RosProm transferred the money into the employees’ bank accounts when they, following the recommendation of the factory management, signed life insurance agreements with monthly annuities.

‘This was, overall, a rather common scheme: the workers’ pay was turned into the insurance allowance, which let the company pay taxes quite different from the ones it had to.’ Deputy Head for Economic Safety of General Administration of the Interior in Chelyabinsk Region Vladimir Pavlov announced at the meeting of pay legalization committee.

‘This is why we initiated a criminal lawsuit against the management of the two companies that have failed to pay the total of over 40m RUR,’ Mr Pavlov said.